case study- MANAGING MARKETING INFORMATION TO GAIN CUSTOMER INSIGHT

1. Primary data consist of information gathered for the special research plan which consist of Ethnographic research, observational research, survey research and experimental research. Discuss each of these.

CASE STUDY 1 - MANAGING MARKETING INFORMATION TO GAIN CUSTOMER INSIGHT How can any marketer get inside your mind to understand how you actually make purchase decisions? Structured questionnaire surveys may have a role for collecting large scale factual data, but they have major weaknesses when it comes to understanding individuals' attitudes. Qualitative approaches, such as focus groups can get closer to the truth, but participants often still find themselves inhibited from telling the full story. Many marketing managers, especially those without large research budgets, inevitably end up relying on their own personal experiences to understand how consumers behave. This may be easy for target markets which are in the 20-40 age range (the age of typical marketers), but how do you get inside the mind of teenagers, or elderly people? Ethnographic approaches are becoming increasingly popular among marketers as a means of getting closer to the truth about consumer behaviour. Ethnographic research is nothing new, having been used by anthropologists in their study of the rituals of tribal people. Marketers have been relatively recent converts to the techniques of ethnography. The advertising agency BMP DDB has taken on board the techniques of ethnography in its "Project Keyhole" in a manner which is reminiscent of anthropologists' practice of living with tribes in order to understand them. Its consumer researchers live with a family for several days in order to record their every move. The project is designed to meet the needs of client companies who are looking for more than the data gathered using traditional quantitative and qualitative research techniques. Participants record their views and actions on a digital video camera, in the presence of a researcher who stays with them from 8am until 10pm for a few days. A normal project would last four or five days and the client may be invited along for part of the time. Participants are paid 100 for their troubles. What did they do with the direct mail when it came through the letter box? Did they use the coupon offer which it contained? Who drinks the fresh orange juice in the house? How long do they spend cooking dinner? How do they actually cook the ready-prepared meals they bought earlier? Does the family eat together? These are examples of the vital information that sponsoring companies hope to get hold of in order to position their products more effectively. According to the company, the advantage of this method over conventional research is that it picks up inconsistencies between what people say they do and what they actually do. Following them throughout the day allows the researcher to see why a person's habits might change according to random factors such as their mood, the time of day or the weather. Crucially it reveals the quirks in our behaviour that marketers are desperate to gain an insight into. For example, a person's store-card data might tell you that they buy bread and margarine, but it doesn't tell whether they eat the bread fresh, or toast it first before putting margarine on it. In 1998, the magazine Marketing put this novel research method to the test with a guinea pig family called the Jones's. It then compared the results of this approach with more traditional methods of profiling customers. In short, established systems such as CACI, Claritas and Experian might say one thing about the buying behaviour of a family, using lifestyle and electoral roll data, but did they bear any relation to reality? The information that the researcher gathered in a short space of time told a lot about the Jones family. By contrast, the database information about the Joneses, although detailed and often accurate, could not capture the quirks and details that make up the personality of the family. For example, it transpired that the Joneses had a keener than average eye on value for money. Although information on them from the four database companies correctly suggested that they enjoy luxuries like good food and foreign holidays, it didn't say anything about the real life factors that influence their purchasing decisions. The most noticeable of these was that although they like good food, Mrs Jones mixed her shopping between the supermarket and a local discount store which sells cut-price brands. This means that she only bought at Tesco or Sainsbury's what she could not get cheaper elsewhere. She showed the researcher a can of branded plum tomatoes which she got for 10p at the discount store as an example, explaining that it would have cost 26p in the supermarket. Mrs Jones prided herself on being able to hunt down bargains like this and occasionally rewarded herself by buying "something luxurious", such as smoked salmon from Marks & Spencer. The freezer had an important role to play as it allowed Mrs Jones to buy things she sees on special offer even if she doesn't need them immediately. Mrs Jones's eye for an offer made her a keen scrutiniser of direct mail. She checked mailings for 'catches' in the small print and for any special offers. She collected mailers worth chasing up on a clip on the fridge door, along with vouchers collected from magazines. Mrs Jones's financial nous means that she managed the family's money. Not surprisingly, these details did not come out in database information. Of the commercial databases, CACI's People UK and Lifecycle UK databases seemed to be most at variance with the reality of the Jones' life. They got their ages wrong, incorrectly surmized that they took business flights and incorrectly attributed Mr Jones with being computer literate. Nobody in the household read the FT or the Independent as predicted - they read the Daily Mail instead. Some of the other points made by CACI were right, but were felt to be very generalized and could apply to anybody. Claritas seemed to be much closer to reality. The Jones' predicted jobs were about right and the database was correct in stating that they had credit and store cards. They managed to say that the Joneses liked antiques, perhaps learnt as a result of them occasionally buying Homes and Antiques magazine. They similarly were correct in stating that they like gardening, DIY, foreign travel and eating out. The database had predicted that the family would be most likely to own a Ford or Renault car. In fact, Mrs Jones owned a Ford, while Mr Jones had a company Renault. Required: A. Primary data consist of information gathered for the special research plan which consist of Ethnographic research, observational research, survey research and experimental research. Discuss each of these. (25 marks) B. Marketers can obtain needed information from internal data, competitive marketing intelligence, and marketing research. Compare and contrast each of these. (25 marks) [50 marks] CASE STUDY 2 - PRICING STRATEGIES What's happening in the PC industry illustrates that while pricing is an important issue for companies operating in the global markets, it may be especially important for those in the Asian markets since many Asian firms have traditionally held low cost positions. Because pricing is a dynamic process, companies must design a pricing structure that covers all their products and a variety of constantly changing conditions (such as changes that occur as the product progresses through the stages of the product life cycle). Two primary strategies (market-skimming and market-penetration pricing) are common pricing strategies adopted by marketers. The marketer wishing to explore pricing strategy options will find a wealth of alternatives from which to choose. The first major option will be pricing with respect to the product mix. Numerous forms of product-mix pricing strategies are examined within the context of the competitive environment. Examples include product-line pricing, optional-product pricing, captive-product pricing, by-product pricing, and product-bundle pricing. The average marketer does not use all of these methods, however, by studying the options available, the marketer enhances his or her ability to be creative with respect to pricing within the context of the product mix. Sometimes, however, the firm must make adjustments in their pricing process and strategy. These adjustments are made to account for differences in consumer segments and changing situations. Adjustments can occur through discounts and allowances or by the desire to segment markets by price. Additionally, price has a psychological aspect that allows for adjustments just as geographical, promotional, and international relationships can alter pricing methods and strategies. Reactions to price changes must be carefully studied. The reactions come from the firm, the consumer, the distribution channel, and competition. Response must be carefully measured and be appropriate if marketing success is to be achieved. To sum up, pricing does not occur within a vacuum. Once a price has been made (or adjusted) other components of the environment are affected. Indeed, Marketers do have to consider company, consumer, and competitor responses when planning pricing strategies. In concluding, public policy will be an issue to be discussed when developing sound pricing strategy and policy. Required: 1. Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. There are FIVE (5) product mix pricing strategies. Briefly explain each of them. (25 marks) 2. Explain the factors involved in setting international pricing (25 marks) [50 marks]