The Ten-Day MBA 4th Ed. Read online

  This seven-step marketing process is comprehensive, and MBAs will often refer to more abbreviated ones, such as STP (segment, target, position), or the four C’s of marketing (consumer behavior, company analysis, competitor analysis, context), but the methodology presented here covers it all.

  1. CONSUMER ANALYSIS

  Consumer Analysis → Market → Competition → Distribution → Marketing Mix → Economics → Revise

  All marketing plans should begin with a look at the all-important “consumer” and his or her needs. People do not have the same needs or desires. The objective of consumer analysis is to identify segments or groups within a population with similar needs so that marketing efforts can be directly targeted to them. Starting anywhere else tends to restrict your thinking and all subsequent analysis. Several important questions must be asked to find the market that will unlock untold marketing riches:

  What is the need category?

  Who is buying and who is using the product?

  What is the buying process?

  Is what I’m selling a high- or low-involvement product?

  How can I segment the market?

  What is the need category? Who needs us and why?

  What is the need or use that your product addresses? The question may seem unnecessary, but in answering it you may uncover a potential market for the product that was previously overlooked. That is why this question has to be addressed first, before you begin to pollute your mind with conventional thoughts. The people at Arm & Hammer baking soda have done a great deal of this type of analysis. They have made use of their powder in their own brand of toothpaste, air freshener, and carpet freshener. In addition, they profitably recommend their raw baking-soda powder for hundreds of uses.

  Who is buying versus who is using the product?

  Buyers many times are different from users. Women, for example, make the majority of purchases of men’s underwear and socks. If an advertising campaign wanted to target the buyer of men’s socks, it would probably be inappropriate to buy space in Sports Illustrated. Determining the buyer as well as the user provides the essential initial insights to create a marketing plan.

  What is the buying process?

  Once you have established the need, and who is making the purchases, you should try to form a hypothesis on how the product is bought. Marketing research is a prime source of information, but just as valid are your own observations, investigation, and intuition.

  Understanding the buying process is critical because it will lead to the possible routes to reach buyers. The buying process includes all the steps that a person takes leading to a purchase. It is also called the adoption process and the problem-solving process by some academics. Some researchers call it a Learn/Feel/Do process. Others call it AIDA, for Attention/Interest/Desire/Action. I have read extensively on this topic and have boiled the theories down to five steps. For any particular product, the buying process can include one or all of the following steps:

  Awareness → Information Search → Evaluate Alternatives → Purchase → Evaluate

  In the instance of a soap purchase, the process would look like this:

  Smell Body → What Should I Use? → Soap → Ask Wife for Advice → Make Trip to the Store → Read Labels → Buy Dial Soap → Bathe → Smell Body for Odor → Buy Dial Soap Next Time

  The steps of the buying process explained:

  Awareness. (Interest, Problem Recognition). “I might need something.” At some point a person will realize a need, like the need to use soap. Advertising may trigger that need. Prestige products such as designer clothes and fragrances trigger desire. They meet emotional needs such as love and group acceptance. Head & Shoulders preys on the fear of a loss of love and group acceptance. You need to ask yourself, “How do consumers become aware of my product?” “Where are my targets likely to be exposed to my message?”

  Information Search. “Sounds good, let me find out more about it.” People involved in purchase decisions are confronted with information from a variety of sources: Consumer Reports, salespeople, blogs, specialty magazines, family, friends, and local experts. As a marketing manager, you want your target market to get as much favorable information as possible about your product when and where buyers make their buying decisions. For example, store displays play that role at the point of purchase (POP). Cover Girl Cosmetics has a display in drugstores to help buyers select colors. For the same purpose, Estée Lauder has its Clinique ladies in department stores to do its talking.

  Evaluate the Alternatives. Which one is best for me? This includes not only products within a category, but substitutes as well. When confronted with the high prices of automobiles, a college student may end up buying a motorcycle, a moped, or a bicycle. Depending on the importance of the product, consumers may seek additional information and advice. Car purchases often include a trip to the local mechanic or the neighborhood car buff. Placing positive information where your buyers are likely to look is one key to marketing success.

  At this stage of the buying process the marketing manager would like to identify the influencers of his target’s buying behavior. In the golf industry the club pro is a key influencer in the equipment-buying decision of golfers. If you can sell the pro, you can sell to the club’s members.

  Distribution is also crucial at the evaluation stage of the buying process. If a product is not readily available, a comparable substitute may be chosen just for convenience or immediacy of need. Coca-Cola’s and Pepsi’s wide distribution makes it tough for any new cola competitor to ever be any more than a fringe brand. Even if you crave Dr. Brown’s creme soda, you will probably accept a Coke or a Pepsi when you’re thirsty at the beach.

  The Purchase Decision. This is the big sale. Even though the decision to buy could be yes, in certain instances the first purchase is only a trial. Adoption of “new and improved” Bounty paper towels as your regular brand occurs only after a successful test with those tough spills. With many big-ticket items, such as ocean cruises and appliances, a trial is not possible. In those instances the decision process is more time-consuming and difficult to make because there is more risk involved. It is very important for the marketer to understand risk. Through the use of a number of marketing tools, such as advertising, knowledgeable salespeople, warranties, and printed materials, purchase risk can be reduced by offering the buyer information explaining what level of performance he or she can expect, as well as providing a basis of comparison with competing products.

  Evaluate. (Postpurchase Behavior). Did I make a mistake? This conclusion can be reached either on a physical level by testing the product’s efficacy or on a psychological level by checking for peer approval. Buyer’s remorse and postpurchase dissonance are terms to describe the period of confusion that often follows a purchase. Automobile advertising, for example, is not only targeted at potential buyers, but also at recent buyers to reassure them that they didn’t screw up when they bought a Dodge Caravan minivan instead of a Honda Odyssey.

  In trying to understand the buying process, the first sparks of a marketing plan can be ignited into a tentative idea about advertising or promotion (to be considered later in Step 5 of the strategy development process).

  Research Can Help to Understand the Buying Process. Consumer research is a major tool in helping make the buying process theory useful. Research can show a marketing director where he has succeeded and where his efforts need to be redirected. Research is valuable if it can be translated into tangible marketing actions. Before you embark on research, you must ask yourself:

  “What specific question do I need answered?”

  “How am I going to use the information once I have it?”

  If you haven’t thought through these two simple questions, you will probably waste your time and money. I can assure you that many marketing research companies will be glad to help you waste money.

  Is the product a high- or a low-involvement product?

  As the discussion of buyer behavio
r indicates, different products elicit different purchase behaviors because of their inherent importance to the buyer and user. If the consumer feels a high level of “risk” in buying a product, then it is considered a high-involvement product. There are several reasons for high-involvement purchase decisions:

  High price

  The need for the product’s benefit (e.g., reliability, as in the case of a pacemaker)

  The need for the product’s psychological reward (e.g., status, love)

  Clothing, cars, and professional services are examples of high-involvement purchases. They are usually higher priced and at times difficult to compare. Determining the differences between alternatives makes high-involvement purchases difficult, especially if the buyer is not an expert. Thus, the information search can be quite extensive. When litigating a damage claim, for example, usually there is no second chance to take the case to trial. Therefore, the choice of a lawyer is a high-involvement selection. With low-involvement products the decision is simpler. For example, if a candy bar isn’t tasty, you can always pitch it and buy another one.

  A helpful matrix below captures the possible behaviors resulting from the interaction of the levels of involvement and product differences. By understanding the possible behaviors, you, as a marketer, may be able to take advantage of this knowledge to sell your product.

  CONSUMER BEHAVIOR MATRIX

  Adapted from Henry Assael, Consumer Behavior and Marketing Action, 4th ed. (Boston: PWS-Kent Publishing Co., 1992), p. 100.

  This academic model does have real-world implications for action. A high-involvement product, such as a Harley-Davidson motorcycle, would appear in the upper left-hand corner of the matrix. The model would suggest that Harley’s marketing efforts should be geared toward demonstrating its technical superiority, but also include an emotional appeal—“buy an American classic”—to engender loyalty.

  The marketer’s magic is at work when he or she transforms a previously low-involvement product into a high-involvement one. Athletic shoes are a prime example. Once just functional shoes for gym class, sports shoes have become a status symbol for young people and even the cause of murder on inner-city streets. The conversion of a low-involvement product to a high-involvement product can make a simple commodity product stand out against an undifferentiated field of competitors. There are four generic ways in which this can be accomplished.

  Link Product to a High-Involvement Issue. Linking no-cholesterol cooking oil to a wife’s fear of a husband’s heart attack is a classic example of an advertising ploy.

  Use Involving Advertising. If the advertising creates a value-expressive message about the product or service, then a product can become important. Such messages link values, such as social status and love, instead of promoting physical product attributes to differentiate the product from the competition. Pepsi tries to link being modern and youthful with its products by using singers in elaborate commercials to sell its soda.

  Change the Importance of Product Benefits. Products as well as services provide a variety of benefits. If through marketing action a benefit can be raised to a heightened level of importance, buyers are likely to become more involved. The beer wars of the 1980s made calories an important competitive issue. An overlooked attribute—calories—made health-conscious drinkers more aware of their purchasing decisions, and consequently Miller Lite made out like a bandit. In the 2000s it is carbohydrates. In 2012 the “gluten-free” labels on baked goods were attractive to many, even to those with no gluten allergy.

  Introduce Important Characteristic to Product. A marketer can also tinker with some of the elements of the product itself to distinguish it. When childproof caps were introduced on household cleaners, the involvement of parents in this purchase decision was heightened. The first products with protection caps stood out on the store shelves. But once all competitors copied the cap, new avenues of differentiation were needed and the purchase returned to its low-involvement status.

  Truly low-involvement products often are that way because a minimum level of acceptable performance is required. A thumbtack, for example, does not have a difficult job to perform. No matter what the brand, you can’t go too wrong. If the cost of trial is low, such as for a pack of gum, involvement is difficult to stimulate.

  Related to involvement is the level of purchase planning. Is the purchase planned or an impulse buy? High-involvement products are usually planned, while impulse products are bought on the spur of the moment. If a purchase is planned, then a buyer is likely to seek information. If not, the proximity of the product to the need is important. Snack foods are an example of impulse buying. Midday hunger leads to the nearest junk food.

  Do I intend to segment the market? Why? How?

  I skirted around this issue in the buyer behavior section, but the question “Who is our consumer?” is central to the marketing task. If you think you have something that is for everyone, then a mass market strategy is appropriate. If your product satisfies the masses, then feed it to them. If not, you must choose a segment or segments of the market to target. Segments are homogeneous groups of similar consumers with similar needs and desires. For instance, Coca-Cola uses a mass-market approach to get everyone drinking the “real thing.” Snapple, a specialty tea, appeals to a more narrowly defined market segment. It’s priced higher and its bottle is shaped different. Snapple appeals to a special segment of the soft drink market.

  Segmentation of the market serves the following functions:

  To identify segments large enough to serve profitably.

  To identify segments that can efficiently be reached by marketing efforts.

  To help develop marketing programs.

  By having a definite segment in mind, you can effectively aim and efficiently execute your marketing activities to yield the most sales and profits. Without a target, you risk wasting marketing dollars on disinterested people. There are four major variables used in segmenting consumer markets:

  Geographic

  Demographic

  Psychographic

  Behavioral

  Geographic Segmentation. Divides the market by country, state, region, county, and city. The federal census lists 310 Standard Metropolitan Statistical Areas (SMSAs) to define the major geographic population centers of the United States. Arbitron, a large media research firm, has defined a similar measure to capture the 210 major television markets of the country, called Areas of Dominant Influence (ADIs). A. C. Nielsen, a competitor, has a similar measure called Designated Market Areas (DMAs).

  Demographic Segmentation. Divides a population based on the following measurable variables to reach a homogeneous group of people:

  Age—Different generations’ different wants and needs

  Sex—Gender use and buying patterns

  Income—The ability to purchase

  Marital Status—Family needs

  Family Life Cycle—Starting out, empty nesters, etc.

  Education/Occupation—An indication of the sophistication of the consumer

  Ethnicity, Religion, and Race—Particular tastes and preferences

  Psychographic Segmentation. Divides the market by psychological differences:

  Lifestyle—Activities, interests, and opinions

  Personality—Conservative, risk-taking, status-seeking, compulsive, ambitious, authoritarian, gregarious. (People may have different hot buttons that advertising can try to trigger.)

  Psychographic segmentation is difficult. Personality variables are tougher to identify and quantify than demographics, but they can be valuable.

  Behavioral Segmentation. Divides the market by observable purchase behaviors:

  Usage—Amount of use, manner of use, benefits sought

  Purchase Occasion—Gift, vacation, seasonal, etc.

  Brand Loyalty—Loyalty to one product indicates receptiveness to others

  Responsiveness to Price and Promotion—Some groups respond to special marketing efforts more than others. Housewives use more coup
ons than single professional women.

  Marketers must not only select the “right” group of variables but also decide how many to use. The correct number of “useful” variables will identify the most accessible and receptive target, not the most specific. For example, it is possible to describe a target segment for Corvettes as brown-haired, male, twenty-five to sixty-five years old, with income over $75,000. However, the ability to target just brown-haired men with effective advertising is limited and its usefulness would be dubious. Is brown hair a necessary segmentation variable? There are no magazines exclusively targeted to brown-haired males. Besides, blond and redheaded men may also be a reasonable market for Corvettes. You should use the following criteria to evaluate possible marketing segments:

  Measurability—Can you identify the segment? Can you quantify its size?

  Accessibility—Can you reach the segment through advertising, sales force or distributors, transportation, or warehousing?

  Substantiality—Is the segment large enough to bother with? Is the segment shrinking, maturing, or growing?

  Profitability—Are there enough potential profits to make targeting it worthwhile?

  Compatibility with Competition—Are your competitors interested in this segment? Are competitors currently investigating it or is it not worth their trouble?

  Effectiveness—Does your company have the capabilities to adequately service this segment?

  Defendability—Can you defend yourself against a competitor’s attack?

  With that theoretical background, here’s a sample demographic profile of gourment coffee buyers that marketers actually use:

  Twenty-five to fifty-four years old