Essentials of Marketing A Marketing Strategy Planning Approach 15th Edition
Full download link at:
Test bank: https://testbankpack.com/p/test-bankfor-essentials-of-marketing-a-marketingstrategy-planning-approach-15th-edition-byperreault-cannon-mccarthy-isbn-12595735329781259573538/
Solution Manual:
https://testbankpack.com/p/solution-manual-foressentials-of-marketing-a-marketing-strategyplanning-approach-15th-edition-by-perreaultcannon-mccarthy-isbn-12595735329781259573538/
CHAPTER 7: IMPROVING DECISIONS WITH MARKETING INFORMATION
CHAPTER 7 – COMMENTS ON QUESTIONS AND PROBLEMS
7-1. The Dunkin’ Donuts chapter opener describes the role of marketing research and how Dunkin’ has used it to guide strategy. Examples of key terms and concepts from this chapter include but are not limited to:
• Decision support systems – the Copernicus “product design software” and store location software.
• Hypotheses – the prototype stores allowed Dunkin’ Donuts to try different hypotheses about what a new store would look like.
• Qualitative research – asking customers to shop at a different coffee shop and interview them to learn more,
• Survey – a psychographic survey gave insights on attitudes, values, and interests.
• Focus groups – were used to test new menu items
• Secondary data – showed how customers purchases changed after getting the DD card
• And more.
7-2. Before and after opening stores in Russia, Dunkin’ Donuts might want to (1) find secondary data that showed where its target market lived – perhaps based on demographic characteristics. (2) Secondary data might also predict areas for faster growth. Both of these might reflect a situation analysis. (3) It might experiment by asking prospective Russian customers to taste different flavors of coffee to determine which were liked best. (4) a focus group might help it design a store. And (5) A survey of customer satisfaction might help Dunkin’ Donuts know if what it was doing was working.
7- 3 This question relates to the text discussion in the section, “Effective Marketing Requires Good Information.” Basically, a marketing information system is an organized way of continually gathering and analyzing data to provide marketing managers with information they need to make decisions It is important for marketing managers to be involved in planning the system because they are the ones who know what information they need – and what form it should be in to use it effectively IT specialists who set up an MIS may know a great deal about organizing and processing information, but they may not know much about marketing strategy planning or how the gathered information is to be used. Note: many of the early efforts to develop marketing information systems were not successful because marketing managers were not involved in planning the systems Now that managers know more about the capabilities of information processing – even if they don't know all of the technical computer details – they can do a better job of specifying what they want In addition, many firms turn to outside consultants, who specialize in marketing information, when they are designing (or changing) their system Because the consultants often have experience with marketing practices in a number of firms and industries, they often bridge the communications gap between a firm’s marketing people and the IT specialists.
7- 4 A decision support system is a computer program that makes it easy for a marketing manager to get and use information as he is making decisions It allows the manager to "interact" with the information Students will provide a variety of possible examples here The emphasis should be on applications where it is useful to "see" some data – and then probe deeper For example, a marketing manager might do an initial analysis of sales by different sales reps, and then look in detail at the numbers for a specific rep (e.g., sales by customer or sales by product) if the initial information showed that the rep was experiencing problems somewhere Some firms develop decision support tools that are based on general-purpose business software packages like Microsoft Excel or Microsoft Access An Excel spreadsheet with welldesigned “macros” to automate a set of analyses can be very powerful Often, however, decision support software tools are quite complex and designed specifically to the needs of the company Decision support software has become a multibillion-dollar market In fact, this is creating tension in some marketing research departments Their firms are spending so much money to upgrade information systems and decision support tools that budgets for traditional marketing research are being reduced. Both types of information play a role, so managers must find the right balance in how they spend money for information to improve marketing decisions.
7- 5. This question can be addressed in different ways. Students will likely contrast the output of an MIS with the results that might be developed, for example, by doing a marketing survey In that case, the emphasis is on the extent to which the MIS focuses on recurring information needs, whereas "special" marketing research projects often focus on "one-shot" marketing information needs. In addition, an MIS often allows the marketing manager to access a much broader base of information – and thus enables him to analyze relationships across more types of variables Often, the results of specialized marketing research studies are included in an MIS – so that they can be used in combination with other information the firm may have gathered or
analyzed As computer capabilities continue to expand and as data processing becomes easier and more convenient, we will see growing usage of MIS.
7- 6. Access to the Internet and better software search engines have simplified the "computer" part of efforts to search for competitive information. Even so, depending on the size and significance of a competing firm, there may be enormous amounts of information that need to be digested and analyzed before the competitor’s marketing strategy makes sense A small software firm that thinks it is going to keep up with all of the information about Microsoft, for example, is likely to have a rude surprise Further, much of the competitive information that is available will be old, not very useful, or just plain wrong There is little basis on which to check or verify the correctness of much of the information taken from the Internet, unless the source website is considered highly reliable On the other hand, when marketers are closer to the market and have a better understanding of competitors, their judgments will be superior to those made by someone who does not have any clue what competitors are doing As the old saying goes, “in the land of the blind, the one-eyed man is king.”
7-7. The key characteristics of the scientific method are its focus on being objective and orderly in testing ideas before accepting them This is important to marketing managers because it helps them to see when more detailed information will really be useful – and when more information might be too expensive, too slow, or not relevant to the real problem It also helps because it discourages a manager from trying to use research to "prove" a prior point of view. See section, “Five Step Approach to Marketing Research” for additional detail.
7- 8 See section “Analyzing the Situation Step 2.” Ideally, one step should build on another Otherwise, there may be duplication of effort and inefficient use of resources For example, asking important customers about problems that could easily be answered within the company merely wastes time that might be used probing for answers that the customers alone could supply
7-9 Secondary data is information that has already been collected or published Primary data is information that is specifically collected to solve a current problem For example, data published by the Census Bureau is secondary data for the marketing manager A survey of current customers' product preferences, on the other hand, would be an example of primary data See section “Analyzing the Situation Step 2.”
7- 10 There may be a great deal of secondary data that is useful, but often it is not as specific as the marketing manager would like, especially when it comes to customer reactions to the firm’s marketing mix decisions, present and future. This is especially the case when a product idea is new and different Further, secondary data on consumers is likely to be quite general and it may be out-of-date.
7- 11. The Statistical Abstract (or the Census Bureau website) would be a good place to start, another source (mentioned in the Appendix) is Sales and Marketing Management's "Annual Survey of Buying Power.” The Abstract would provide basic references to various types of income data
7-12 As in Question 7-11, the Abstract would probably be the best first source This would provide references to reports published by the U.S. Department of the Interior (www.doi.gov)
7-13. This seems to be very illuminating for most students. They seem to enjoy reporting what they have found to the class – be careful this doesn't go on too long! (Note: If your students seem to need more experience in working with secondary data, you might want to assign the Learning Aid exercise for this chapter that specifies a more detailed set of information for the student to find).
Instructor’s Manual to Accompany Essentials of Marketing IV-7-3
7-14 The main advantage of the focus group interview approach is that it would stimulate the respondents to interact What one person says might prompt another person to elaborate on the idea and/or share his own view Focus groups tend to be less structured than most personal interviews, however, so the researcher might not be able to get quite as detailed information from each person as in a separate interview setting.
7-15 Basically, quantitative research seeks structured responses that can be summarized in numbers – like percentages, means, and other statistics Usually the focus of quantitative research is on getting representative information about a population of interest Qualitative research, on the other hand, seeks in-depth, open-ended responses This allows the researcher to probe deeper into what the respondent is thinking It is often difficult to summarize qualitative research in an objective fashion See section “Getting Problem-Specific Data Step 3” for more detail on the advantages and limitations of both approaches.
7-16 Response rate is the percentage of people contacted who complete a question (or interview) The response rate may affect how representative the responses are – especially if there is a difference between customers who respond and those who do not. For example, a manager might do a survey of 1,000 customers and ask how satisfied the customers are with the firm's product. It might be that only the dissatisfied customers would bother to respond. In that event, the marketing manager might conclude, based on a summary of the responses, that most people are dissatisfied with the firm's product. Of course, the response rate also affects the relative cost/benefits of doing the research as well If a survey of 1,000 people costs $10,000 and only 100 respond, the research has cost $100 per respondent. If all 1,000 responded, the cost per respondent would only be $10 Thus, the response rate may affect both the cost and quality of information obtained in research
7-17. The table on the next page provides a summary of the advantages and disadvantages of the different types of surveys as they are discussed in the text Note that in the text, the information does not appear in a table format, but a student should be able to extract all of the information in this table from the textual treatment.
Type Survey Advantages Limitations
Mail and E-mail Facilitates extensive questioning
Completed at respondent's convenience
May be able to ask personal questions
(can be returned anonymously)
Economical per contact
Easy and convenient
Phone Fast and less expensive than personal Allows probes
Can use computer-aided interviewing to ask specific sequence of questions (based on initial answers)
"Real time" recording of data for fast analysis
Personal Easier to get and keep respondent's attention
May be only practical approach with business customers
Interview can record observations (type of home, race of respondent, etc.) as well as ask questions
Questions may not be answered completely
Directions/questions must be simple to understand and follow
Questionnaires may not be returned (non-response problems)
Delays in getting replies
Difficult to get open-ended replies
Literacy limitations
Email users may be different from other consumers on relevant issues
Consumer/company concerns about email spam (and possible virus threats)
Response not anonymous
Respondent not absolutely certain who is calling May be difficult to get people at home Call may come at inconvenient time
People may refuse to accept calls or be listed on “do not call” registries
More expensive per interview than mail or telephone
Respondent may try to "please" the interviewer
Respondent may be hesitant to give any information (identification of interviewer)
Reaching respondents may be difficult, time consuming, or expensive
7-18 A firm may want to subscribe to a shared cost data service even if the same data is available to competitors In fact, if competitors will definitely get some type of useful information, then the firm may have little alternative but to subscribe as well However, just because shared cost data may be available to different clients does not mean that they will all use the information in the same way or even get precisely the same information
For example, a marketing manager might be very interested in customer reactions to certain competitors’ offerings how they compare with customer reactions to the manager's own offering On the other hand, the manager might pay little attention to data about a competitor who doesn't appear to be a significant threat
7-19 The free variable here is Promotion How much can be expected from retailers and how much ought to be sought? To find out, researchers could be sent to various stores to observe the prominence of display and the rate of movement for similar products in various kinds of stores
The survey method could query retailers directly on their intentions and the sales volume they expect Or, consumers could be asked directly about the likelihood of their purchase of such a product Questioning consumers directly, of course, would presume that the consumers could correctly reflect their future behavior An experimental design might involve different kinds of displays in different types of stores – perhaps matching them against similar "control" stores –to get a measure of the movement of the product under various conditions Alternately, the
product might be distributed in a test area and a careful observation made of the kind of display and extent of distribution obtained when varying amounts of sales effort are applied
7-20. A highly experienced executive bases his judgment on the past, which may have little or no relevance to the current situation Research, then, updates his knowledge of the market and enables him to use his experience most effectively
7-21 This is a broad question; it prompts some very useful thinking and discussion about how one gets started searching for information about a new market opportunity, including one that involves a foreign country This question also serves as a set up for the material that is discussed in detail in the next chapter Students will be more receptive to thinking about demographic data if they have already encountered a problem and "discovered" that understanding demographic trends can help them solve the problem.
Since the manager is interested in doing some initial screening of alternative markets, she will certainly need to consider what consumer/market characteristics are most relevant For example, if the products are targeted at consumers with a certain level of discretionary income, then it might be possible to screen countries based on the distribution of income, literacy or other characteristics. The text discusses some of the sources of data that are available on international markets, but as noted above the next chapter in the text gives students much more insight about the types of data that are available for segmenting international markets.
7-22. See sections “Defining the Problem Step 1” and “Solving the Problem Step 5.”
DISCUSSION OF MARKETING ANALYTICS: DATA TO KNOWLEDGE, PROBLEM 7: MARKETING RESEARCH
In this problem, a company has done a survey to help determine the size of a market for a new industrial product it is developing. The manager wants to see how profitable the market might be – based on responses from a sample. The problem focuses attention on issues of interpreting marketing research data, especially on the importance of understanding that estimates based on a sample may not be precise. Students evaluate the sensitivity of their conclusions to small – but important – variations in estimates from the sample respondents.
This problem gives students a (simplified) example of how a firm might use the results of a survey to evaluate a potential market opportunity for a new product. This is quite helpful because students often don't see how responses from sample surveys get converted to profitability information. At the same time, however, the questions for the problem alert students to the problems of treating survey responses
and calculations based on them – as if they were "exact." In this problem, the firm's expected sales volume, and its profitability, vary substantially with relatively small variations in estimates from the sample. This makes more concrete the ideas related to confidence intervals, validity of response to questions, the representativeness of the sample, and other important marketing research topics. In addition, the ideas introduced in this problem serve as a prelude to some of the behavioral concepts (especially buying intentions) discussed in the next chapter. The problem could also be used effectively to illustrate evaluation of new product opportunities – a topic discussed in detail in Chapter 9 of the text. Similarly, it can be used with Appendix B that covers issues related to forecasting the likely size of a market.
The initial spreadsheet for the problem appears below:
NOTE: As a general convention, when reviewing the spreadsheets for these problems, cells that the students may modify in the tool are denoted with an asterisk (*) as can be seen in the initial spreadsheet below.
Answers to Computer-Aided Problem 7:
a. If the total market actually consists of 5,200 firms – not Texmac's "guesstimate" of 5,000 firms, the estimate of expected replacement machines increases from 880 units to 915 units (Answer B). The spreadsheet for this analysis appears below:
b. Continuing the analysis above, the estimate of expected replacement machines increases from 880 units to 915 units – and that increase results in an increase in expected profits from $3,520,000 to $3,660,000 (Answer C). When students see that this "minor" error of judgment makes a "bottom line"
difference of $140,000 they develop a better understanding of why it is important for marketing managers to have good information. The spreadsheet for the analysis appears above.
c. If the total market is actually 5,200 machines and the number of old machines per 500 is really 200 (not 220 as estimated from the sample), the estimate of profits is $3,328,000 – a decrease in expected profit of $332,000 (Answer A) from the $3,660,000 profit expected with 220 machines per 500 firms.
This question provides a good opportunity to discuss the importance of knowing about the population when drawing a sample. In this case, being off by only 10 percent in the estimated size of the total population of concern makes a significant difference in expected profits.
The spreadsheet for this analysis (based on 5,200 firms) appears below:
d. The results of the What If analysis for this problem appear in the table below. At 44% (Answer E) the Estimate for Total Market Replacements equals 1,007 units. Note the large changes in the quantity estimate and the estimated profitability – depending on the relatively minor change in the estimate developed from the responses in the sample.
d. The results of the What If analysis for this problem appear in the table above. At 38% (Answer B) the Estimate for Total Market Contribution equals $3,476,000.00.
MARKETING ANALYTICS DISCUSSION
The question provides a good opportunity to discuss the quality of data one can get from marketing research – and how precise the data might be. The spreadsheet shows that it does make a difference!
CHAPTER 7 – COMMENTS ON USE OF SUGGESTED CASES WITH THIS CHAPTER
Case 3: Real NOCO Soccer Academy
This case can be used to discuss gathering marketing information Wesley Diekens of Real NOCO Soccer Academy appears to have relatively little factual information about his market A discussion might center on what type of market research he could do to fill this knowledge gap. The instructor might show the marketing strategy planning process model (from the beginning of the chapter – or Exhibit 2-9) and walk through each element For example, the case gives relatively little information about competitors Does Wesley have this information? How could he gather such information? What does he currently know about his customers? Wesley also has to make decisions about a marketing strategy. What information would help him make better decisions about his marketing mix for each target market? How could he gather that information?
There are opportunities to talk about both primary and secondary data. The five-step scientific approach to the marketing research process (see Exhibit 7-3) could also be used to guide students through a discussion. See case discussion in Part V.
Case 8: Salvaggio’s Trattoria
This case can be used to illustrate how our strategy planning framework can help identify the right problem level and help focus marketing research in this case on the target market The case can also be used to discuss how the five-step approach to marketing research would be applied, starting with definition of the problem As small as this company is, however, it probably could not afford much formal research – this can be used to emphasize the need for careful execution of the first two steps See case discussion.
Case 9: Restful Night Motel
This case can be used in the same way as suggested for Case 8 Both require more careful analysis of alternative target markets And both are small companies that probably will not be able to afford a formal
research project – so the importance of careful execution of the first two steps can be emphasized In fact, it is quite important that this point be made because many students feel that only "big companies" with marketing research departments can do marketing research They tend to feel that smaller companies have to neglect the research process and simply "shoot from the hip.” The thrust of this chapter is to emphasize that market analysis and (maybe) marketing research should be used to guide marketing strategy planning in all cases See case discussion.
CHAPTER 7 – COMMENTS ON USE OF ETHICAL DILEMMA QUESTIONS WITH THIS CHAPTER
Situation: What would you do? You’re the new marketing manager for a small firm that offers computer repair services The company’s owner approves your proposal for a telephone survey to learn more about the needs of firms that are not current customers. You identify local firms for the sample and hire a researcher to call them. The interviewer tells respondents that their answers will be anonymous and used only for research purposes. About halfway through the data collection, the interviewer tells you that respondents are confused by one of the questions and that their answers to that question are probably useless. The question concerns the issue that is most important to your new boss. Do you admit the problem to others in your company? If the sales manager asks for the completed questionnaires, including all the names and responses, what would you say?
The AMA Statement of Ethics (Exhibit 1-7) clearly prohibits selling under the guise of conducting research If the names and answers are turned over to the sales manager that is exactly what is happening Thus, one of the issues in this situation is clearly a violation of the AMA Statement of Ethics.
The AMA Statement – and hopefully a student’s personal code of conduct – should prohibit lying about research (sources, findings, discrepancies, etc). However, the authors have certainly observed situations where research flaws were concealed because they cast doubt on the conclusions drawn People are hesitant to take initiative and admit things have gone poorly, especially if they think it was in part due to a mistake of judgment on their part But, smart marketers know that organizations learn from their mistakes and hopefully improve what they do the next time. When mistakes and problems are hidden, as they will be when a manager is constantly looking for someone to blame, quality can’t improve Thus, the culture of a successful marketing organization must reward openness and honesty
Another interesting issue in this situation that warrants discussion is: How does a new, junior-level employee tell a sales manager “no,” when he or she is asked to engage in an unethical activity? The sales manager will not be happy to hear that she cannot use the information (names and answers) produced by this research to help her generate more sales There is no easy answer to this question, but it is useful for students to consider how they would respond if they were asked to engage in an activity they viewed as unethical
Perhaps the issue would be easily resolved in this case if the sales manager accepts the explanation that respondents were told that their answers were confidential Sometimes conflict about potential ethical issues can be avoided by anticipating potential problem areas and discussing them in advance
CHAPTER 7 – COMMENTS ON USE OF MARKETING PLANNING FOR HILLSIDE VETERINARY CLINIC QUESTIONS WITH THIS CHAPTER
Appendix D (the Appendices follow Chapter 19) includes a sample marketing plan for Hillside Veterinary Clinic. Look through the “Customers” and “Competitors” sections in the Situation Analysis and consider the following questions.
a. What different types of marketing research were conducted to fill out these sections of the marketing plan?
b. What are the strengths of the research conducted? What are the weaknesses?
c. Keeping in mind probable cost and time to complete, what additional research would you recommend?
To learn more about customers, the plan included a survey of current customers and an analysis of secondary data (e.g., housing starts and population) The source for local housing starts data was collected from the local real estate company (which prints a monthly report) The Census Bureau was used to gather current and future population statistics The competitor section was developed by looking at Yellow Pages ads and by calling competitors and asking them questions
The strengths of the data collection were that it was done relatively quickly and at a low cost But the emphasis on speed and low-cost led to some trade-offs Weaknesses include the sample used for the survey, the survey itself, and neglecting other sources of data The convenience sample of customers who happened into the clinic calls into question the reliability of the findings There is no survey data from non-customers The survey focuses on limited information – students will suggest additional questions that might have been asked in the survey As students suggest more questions, ask them why each additional question would be helpful Students often don’t think about the need to ask questions to guide marketing strategy planning.
In a class discussion, the instructor might ask how much longer they could make a survey and still expect people to fill it out This is a constant struggle and requires prioritizing questions and making hard tradeoffs. Students might also be critical of some of the questions in the survey. Note that the secondary data collected was quite limited – additional information about local pet ownership may have been available from other sources.
Cost and time are critical for a small business The marketing plan demonstrates that while textbook treatment of marketing research emphasizes reliability and validity, trade-offs must be made for small businesses with limited budgets.
Other low-cost options might include interviews with customers For example, an interview guide could be prepared and administered by phone to current customers and non-customers HVC might develop a customer satisfaction survey to make sure it understands customers’ satisfaction with the clinic HVC might also conduct some online research of best practices at other veterinary clinics Such benchmarking studies might help HVC generate additional ideas for its marketing strategy.
CHAPTER 7 – SUMMARY OF CONNECT HOMEWORK EXERCISES
Question 1: Plaza Pointe Grocery
Question Type: Case Analysis
Learning Objectives: 7 3
Topic: Getting problem-specific data
AACSB: Reflective thinking
Bloom’s: Remember, understand, evaluate
Question 2: Five-Step Approach to Marketing Research
Question Type: Timeline/Sequencing
Learning Objectives: 7 2, 7 3, 7 4
Topic: Five-step approach to marketing research
AACSB: Reflective thinking
Bloom’s: Remember
Question 3: Data Collection Methods
Question Type: Video Case
Learning Objectives: 7 3
Topic: Getting problem-specific data – step 3
AACSB: Reflective thinking
Bloom’s: Remember, understand
Question 4: Occupancy and Marketing Challenges for the Restful Night Motel
Question Type: Case analysis
Learning Objectives:
Topic:
AACSB: Analytic, understand
Bloom’s: Remember, understand, apply
Question 5: The Marketing Research Process (iSeeIt)
Question Type: Video Case
Learning Objectives: 7.4, 7.5
Topic: The Scientific Method and Marketing Research
AACSB: Reflective thinking, analytic
Bloom’s: Remember, understand, apply
Question 6: Marketing Research
Question Type: Marketing Analytics
Learning Objectives: 7.4, 7.5
Topic: Marketing Research process
AACSB: Analytic, technology, reflective thinking
Bloom’s: Apply, analyze
Instructor’s Manual to Accompany Essentials of Marketing
Copyright © 2017 McGraw-Hill Education. All rights reserved.
IV-7-12