Market Research and Advertising

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Market Research and Advertising

• Home-Based/Micro Business Workshop
• Kent Wolfe
• September 3rd, 2002

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First Step Market Research

• WHY?
• It is easier to sell something people want than
  it is to sell something that is easy to produce

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Market Research

• Exposed to market research each and every day (TV
  Radio programming, cell phone packages,
  beverage products, shelf space, restaurant
  location).
• Used to determine customer perceptions, attitudes
  and preferences (i.e., Georgia Grown, war with
  Iraq, package or container size)
• Who uses what, when, how much, and what are they
  willing to pay

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Questions Market Research Can Answer
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Types of Market Research

• Focus groups
• Taste tests
• in-depth interviews
• Surveys - mail, telephone and intercept

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Focus Groups

• Six to nine users.
• Discuss issues and concerns about product or
  service.
• Focus groups often bring out users' spontaneous
  reactions and ideas
• Let you observe some group dynamics and
  organizational issues
• The group typically lasts about two hours
• Run by a moderator who maintains the group's
  focus.
• First step in market research.
• Powerful tool in system development, you
  shouldn't use them as your only source of
  usability data

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In-depth Interviews

• An in-depth interview is a conversation with an
  individual conducted by trained staff that
  usually collects specific information about one
  person
• Provide a history of behavior. When conducted
  more than once or when conducted with someone who
  has been in the community for a long time,
  interviews can show if any change has occurred
  over time.
• Highlight individual versus group concerns.
  Topics that may not arise in a group situation
  can be addressed in individual interviews.
• Reveal divergent experiences and outlier
  attitudes. Groups often do not allow you to see
  that experiences may vary person to person.
• Provide a shortcut to community norms.
  Interviewing key community leaders (bartenders,
  favorite teachers, police officers, sex club
  managers) can give a fast overview of a community
  and its needs and concerns.
• Develop other research tools. Results from an
  interview can be used to generate focus group
  questions or help form questions for a
  survey.In-depth interviews can be different from
  focus groups in several ways
• Easier. It is often easier to speak to one person
  and keep her attention than to address a group.
  You can also avoid major scheduling hassles with
  only one person.
• More detailed. In an interview you have a chance
  to follow-up on questions and probe for meaning.

Source Good Questions, Better Answers
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Surveys - mail, telephone and intercept

• a method of gathering information from a sample
  of individuals
• Mail - low in cost, problems with low response
  rate, most effective when directed at particular
  groups
• Telephone - efficient for collecting large
  amounts of data quickly and when the length of
  the survey is limited.
• In-person - more expensive, necessary when
  complex information is to be collected.

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Telephone Survey Example- Fish

• 53 eat fish once a week or more often
• Roughly 19 purchase fresh fish weekly
• The households eat roughly 4.0 pounds of fresh
  fish per month
• Aided awareness of all species except tilapia was
  high (gt80 and 44, respectively)
• One-quarter to one-third of respondents would be
  likely to purchase the various species (large
  mouth bass, perch, striped bass, prawn, and
  flounder) excluding tilapia and eel which was
  significantly lower (12).
• Sixty percent or more of the respondents have
  eaten the various species (large mouth bass,
  perch, striped bass, prawn, and flounder), again
  excluding eel and tilapia where the number is
  significantly lower (20 and 34, respectively).
• 42 would purchase live, unprocessed fish from a
  local fish market
• Respondents would travel approximately 27 miles
  to a local fish farm

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Center Examples of Research Results

• Aquaculture people would drive 30 miles to
  purchase fresh water shrimp from pond bank
• Trail riders take 8 trips annually
• Georgians consume 2.1 pounds of honey every year
• Specialty food buyers are generally older and
  affluent
• Sod producers are very interested in pelletized
  poultry litter as a fertilizer/soil builder

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Additional Market Research Uses

• Market research guides your communication with
  current and potential customers
• Market research helps you identify opportunities
  in the marketplace.
• Market research minimizes the risk of doing
  business.

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New Agribusiness Opportunities First Step is ID
Target Market

• Target Market A segment of the population that
  is most likely to use your product or service.
• Usually described using demographic variables
  like, Gender, Income, Race, Age
• Used to
• Determine market potential
• Develop product packaging
• Choose marketing channels
• Develop marketing mix and advertising strategy

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Who is your Target Market?
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Target Market Examples
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Market Potential

• Market Potential the maximum sales
  opportunities achieved by all sellers in the
  market.
• Sets the upper limit on consumption units

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Estimating Market Potential

• MPNxQ where
• MP Market Potential
• N number of buyers (Target Market)
• Q average number purchased by each buyer

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Market Segmentation

• A 1995 National Pork Producers Council study
  identified five very different pork consumer
  segments and they are as follows
• Main Street Today
• Quality Carnivores
• Good N Plenty Guys
• Apathetic Eaters
• Politically Correct Eaters

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Market Segmentation
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Main Street Today Segment

• Main Street Today
• Largest segment of the population
• Consist of strong pork supporters.
• Very price sensitive- cost conscious shoppers.
• Purchasing decisions are price based rather than
  product preference.
• Women (57)
• Middle aged - (20) being 50-59 years of age
• Lowest income 31,000 median household income
• Least educated less than 10 have college
  degrees
• Blue collar occupations
• 19 widowed/divorced (more than the other
  five segments)
• Average household size
• Most non-white group (29 are African
  American or Hispanic)

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Quality Carnivores Segment

• Quality Carnivores
• Generally males
• Prefer family and fine dining restaurants
• Not concerned with nutrition
• Indulge in food and prefer premium cuts of meat
• Males (77)
• On average 36 years old
• Not primary shopper
• High incomes (48,500 household incomes)
• Have some college (62) or a college degree
  (26)
• Married (66)
• On average is non-white
• Smaller households

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Good N Plenty Guys Segment

• Good N Plenty Guys
• frequent fast food and take-out restaurants
• meat lovers
• second most responsive to pork behind the Main
  Street Today segment.
• Mainly male
• Young (49 of the segment is under 35 years of
  age)
• 38,000 median household income
• 45 have some college
• Employed- split between blue and white color
• 61 were married
• Have large households 47 have 4 family members
• Primarily non-white

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Market Potential

• Market Potential the maximum sales
  opportunities achieved by all sellers in the
  market.
• Sets the upper limit on consumption units

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Estimating Market Potential

• MPNxQ where
• MP Market Potential
• N number of buyers
• Q average number purchased by each buyer

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Estimating Market Potential

• Information needed to estimate market potential
• Market Area - US, State, County, city
• Roadside stands 10-20 mile draw
• School field trips 45 miles or 45 minutes
• Demographic composition of the specified area
• Number of people in area with similar
  characteristics
• Consumption or usage levels

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Estimating Market Share

• A market area and the target market within that
  area will support a certain level of sales
• A companies portion of these total sales is
  referred to as its market share
• Estimating market share is not easy but essential

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Three Steps to Estimating Market Share

• Estimate the total market potential
• Identify each of your competitors and estimate
  their market share
• Decide or estimate what you think your market
  share might be or what portion of the market you
  intend to capture

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Example Market Share Calculation

• Market share for new hot sauce to be marketed
  locally
• A supermarket visit identified 10 sauce
  competitors
• Market share data is not available, assume each
  product captures and equal share of the market
  (10)

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Example Market Share Calculation- Cont.

• New product will mean there are 11 competing
  products
• Assuming equal market share, you can assume to
  capture roughly 9.1 of the market
• Does 9.1 of the market generate enough sales to
  make your business feasible?

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Estimated Retail Sales

• The potential retail sales for a specific retail
  operation can be estimated by using a standard
  formula
• ES P x EXP x (ADI/MDI) x MS where
• ES Estimated Sales
• P Trade Area population
• EXP Average expenditures for retail outlet
  category
• ADI Area Estimated Average Household Disposable
  Income
• MDI Georgia Average Household Disposable Income
• MS Estimated Market Share

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Estimated Retail Sales Example

• 50 of Americans consume beer
• Thirty-six percent of microbrew drinkers are 25
  -34, 27 are 34 - 45 and 20 are 45 and older.
• Microbrew consumers have average incomes of
  54,000
• Microbrew consumers spend between 250 annually
  on these products
• Microbrewery Market Area Demographic Information
• 50,000 residents
• 15 are 25-34
• 16 are 34-45
• 29 are 45
• 25 have incomes over 54,000

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Income Information

• Area Estimated Av.e Household Disposable
  In.67,000
• Georgia Average Household Disposable Income
  30,240

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Trade Area Sales Estimate

• ES P x EXP x (ADI/MDI) x MS
• P 50,000 x 50 (percentage of beer drinkers)
  25,000
• 25,000 x 15 3,750
• 25,000 x 16 4,000
• 25,000 x 29 7,250
• 15,000
• 37 of area residents have incomes over 50K
• 15,000 37 5,550
• EXP250
• (ADI/MDI)(67,000/30,240)
• MS Estimated Market Share 10
• ES 5,550 x 250 x (67,000/30,240) x 10
  307,416

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Estimated Retail Sales(market potential)

• The potential retail sales for a specific retail
  operation can be estimated by using a standard
  formula
• ES P x EXP x (ADI/MDI) x MS where
• ES Estimated Sales
• P Trade Area population
• EXP Average expenditures for retail outlet
  category
• ADI Area Estimated Average Household Disposable
  Income
• MDI Georgia Average Household Disposable Income
• MS Estimated Market Share

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Micro Brewery

• Micro brewed consumers consume an average of 250
  worth of beer annually. 
• Younger people were more likely to have tried a
  microbrew. Thirty-six percent of beer drinkers
  between the ages of 25 and 34 had tried a
  microbrew.
• In contrast, 27 of beer drinkers between the
  ages 34 through 45 and 20 of those 45 and older
  had tried microbrews. 
• The appeal of micro brewed beer was strongest
  among White beer drinkers were almost twice as
  likely as black Americans to try a microbrew.

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Estimated Retail Sales Example

• Specialty food shoppers spend between 500 and
  1,000
• Condiments constitute 12 of specialty food
  purchases or a 128 annually per specialty food
  shopper
• Area Estimated Average Household Disposable
  Income/Georgia Average Household Disposable
  Income (67,000/30,240)
• MS Estimated Market Share 10
• ES 83,616 x 128 x (67,000/30,240) x 10
  2,371,332

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Easy Demographic Data (WWW.EASIDEMOGRAPHICS.COM)

• Miles 20 15 10
• Population 82,683 59,644 36,409
• Households 31,974 22,806 13,773
• White Population 77,003 56,126 34,497
• Black Population 4,881 2,901 1,506
• Asian Population 623 473
  307
• Hispanic Population 719 518 275
• Median Age 37.0 36.7
  36.4
• Med. HH Inc.() 29,572 30226 32,214
• Av. HH Inc. () 40,855 41,877 43,165

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Demographic and Population Sources

• Sources for Demographic Information
• Chamber of Commerce
• University (www.agecon.uga.edu/caed/)
• www.georgia.stats.uga.edu
• US Census Bureau (WWW.CENSUS.GOV)
• Easy Demographics (WWW.EASIDEMOGRAPHICS.COM)

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Consumption and Usage Data Sources

• Sources for information on Consumption and usage
• USDA per capita food consumption estimates
• Trade Associations
• Commodity Groups (e.g. Nation Pork Producers
  Association)
• University Research

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Marketing

• There is no silver bullet or formula for
  success
• Marketing is more like an art than a science

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What Exactly Does That Mean?

• The Company Name
• Company Goals
• Location
• Pricing
• Packaging
• Promotional Activities
• Advertising
• Sales Techniques
• Business Cards
• Employee Uniforms

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The Goal of Marketing

• To present your products/services to the market
  in a way that makes them more attractive than the
  products/services of
• your competitors.

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Packaging Counts Important Aspect of Marketing

• Have a beautiful product, including jar and label
• Use expensive beautiful glass
• Go to trade shows to show product as well as find
  out what the competition is doing
• Make your product presentation count-90of the
  purchases of these niche products is based on
  product presentation.

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Packaging

• First Line of Promotion is Product Packaging and
  is your silent salesperson
• Evaluate your target market and create a package
  that is consistent with their expectations- i,e.
  single jar or 3-pack,
• Packaging should reflect a products desired
  personality (Tennessee Toe Jam)
• Packaging Considerations (size, plastic glass,
  dressy)
• Selling a 8 oz. Jar of Jelly for 6.95, it needs
  to be packaged accordingly

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Packaging Examples
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Hot Sauce Packaging Examples
6.95 (5 oz)
6.29 (5 oz)
7.59 (4 oz)
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Jams and Jelly Packaging Examples
4.50 (16 oz)
5.25 (10 oz)
5.00 (9.9 oz)
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Examples of Advertising Costs and Exposure
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Additional Marketing Events

• Public Relations - getting local, trade or
  national press write-ups about new products, or
  other company news.
• Sponsorship - contributing towards the cost of an
  event or publication and getting your name and
  logo featured prominently in return.
• Corporate hospitality - treating existing
  customers or prime prospects to a 'jolly' in the
  hope they will think kindly of you in future.
• Conferences - speaking at conferences raises your
  profile considerably and provides a networking
  opportunity. In addition, it provides the
  opportunity to obtain a comprehensive attendee
  list, which may identifying likely new customers
  and potential competitors.
• Exhibitions Go where people are shopping for
  new products, trade fairs. It is possible to pick
  up quite a bit of new business and a considerable
  number of new leads as people wander up to your
  stand.

mailerhttp//www.bcentral.co.uk/marketing/basics/
DirectMail.asp
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Routes to reach the customer

• After defining the sales pitch, it's time to
  decide the best way of communicating your message
  to your chosen target customer group.
• How to communicate your message.
• First define the market area, local, regional,
  national and/or international.
• Determine the most effective means of
  communicating with your target market , keep
  your budget in mind. There a many marketing
  channels to reach customers, i.e., TV, radio,
  print media, online, direct mail, bill boards and
  poster campaigns. The combination you choose is
  called the marketing mix.

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Key Attributes of a Good Customer Proposition

• KISS Keep It Simple Stupid - don't expect
  customers to work hard to understand the material
  
• Be Concise - deliver your message in as few words
  as possible
• Clarity - deliver a single message that doesn't
  confuse
• Consistency - make sure everyone in your team
  delivers the same message
• Message - above all focus on benefits not
  features
• mailerhttp//www.bcentral.co.uk/marketing/basics/
  DirectMail.asp

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Direct Mail

• Advantages
• Demographic selection
• Unlimited message length
• Consistent reproduction
• Direct response by order or coupon

• Disadvantages
• Expensive
• Difficult to obtain pure mailing lists
• Long lead time
• Negative reaction to junk mail

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Direct mail marketing guide

• Use direct mail marketing to get your message
  straight to the right consumer in the right
  market. With this concise guide to direct mail.
• Direct mail marketing can provide a tailored
  offering directly to your target market and
  group. However it only gives the best results
  when it's planned and implemented with care and
  dedication.

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Designing Direct Mail Material

• Direct Mailing Responses
• Grab Their Attention - make them open it
• Create Interest - make them read it
• Create Desire - make them care about it
• Get Action - make them do something about it
• mailerhttp//www.bcentral.co.uk/marketing/basics/
  DirectMail.asp

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Newspaper

• Advantages
• Broad mkt coverage
• Immediate
• Short lead time
• Flexible ad size
• Visibility of product
• Color
• Use of coupons
• People believe what they read!

• Disadvantages
• Inconsistent reproduction
• One day life span
• Limited demographics
• Lost in the Crowd
• Lack of movement sound

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Radio

• Advantages
• Demographic selection
• High frequency
• Immediate
• Sound reinforcement
• Quick flexibility

• Disadvantages
• Restrictive message length
• Need for repetition
• Short recall factor
• Cluttered placement

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Television

• Advantages
• Use of sight, sound, motion, color
• Mass coverage
• Immediate
• Demographic selection

• Disadvantages
• Short exposure
• Expensive production
• Expensive to air
• Cluttered placement
• Viewing time drops as income increases

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Outdoor

• Advantages
• Reaches large audience
• Long-term exposure
• Color graphics
• Forms include billboards, posters, illuminated
  signs, moving vehicle signs, bench ads

• Disadvantages
• Limited message length
• Expensive to produce place
• Difficult to obtain the best locations
• Legal restrictions for use

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Conclusion

• Understand both your customer and your product to
  help focus your efforts
• Before you begin your marketing efforts you
  should consider what you are selling and exactly
  who you are marketing to.
• When it comes to your customers, remember that
  only a proportion of the population is likely to
  purchase any product or service, so the more
  accurately you pitch your sales and marketing
  efforts to this group, the less your efforts will
  be wasted. As a result, targeting and
  segmentation are designed to use the right sales
  message for each potential purchaser.
• What ever you do, make sure you get 'the biggest
  bang for your buck.