FMD 451

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FMD 451
Target Market Research
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Market Research

• What is marketing research?
• The marketing research process
• Six stages

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What is Marketing Research?

• Marketing research is the systematic and
  objective identification, collection, analysis,
  and dissemination of information, undertaken to
  improve decision making related to identifying
  and solving problems in marketing.
• American Marketing Association

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Identifying your market?

• Identifying Your Market
• Step One Identifying Why a Customer Would Want
  to Buy Your Product/Service
• Step Two Segment Your Overall Market
• Step Three Research Your Market

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Types Of Markets

• A market is simply any group of actual or
  potential buyers of a product. There are three
  major types of markets.
• 1. The consumer market. Individuals and
  households who buy goods for their own use or
  benefit are part of the consumer market. Drug and
  grocery items are the most common types of
  consumer products.
• 2. The industrial market. Individuals, groups
  or organizations that purchase your product or
  service for direct use in producing other
  products or for use in their day-to-day
  operations.
• 3. The reseller market. Middlemen or
  intermediaries, such as wholesalers and
  retailers, who buy finished goods and resell them
  for a profit.

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Why would a consumer buy your product?

• What does your product have to offer?
• What are the features of your product and its
  benefits?example is anti-lock brakes they are
  features on a car, but the benefit to the
  consumer is safety.
• This will help you narrow down your key target
  market!
• In one column, list the features of your
  product/service. In the other, list the benefits
  each feature yields to the buyer.
• Features Benefits
• 1. 1.
• 2. 2.
• 3. 3.
• 4. 4.

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Segment your Market

• Market segmentation is the process of breaking
  down a larger target market into smaller segments
  with specific characteristics.
• Segmentation will help you customize a
  product/service or other parts of a marketing
  mix, such as advertising, to reach and meet the
  specific needs of a narrowly defined customer
  group.

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Segmenting your market!

• Geographic Where do your customers live? What
  state or region-climate concerns?
• Demographic What is their age, race, religion,
  gender, income level, family size, occupations,
  education, and marital status?
• PsychographicsWhat are their attitudes, beliefs,
  and emotions? What is their lifestyle, family
  stage, hobbies, status seeking, and
  entertainment. Example Do they see themselves as
  avante garde, high tech, socially responsible,
  ect?
• Buying Behaviors Why does your customer buy?
  Price, brand, loyalty, how frequently, what time
  of the year, ect.

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Example of Customer Profile

• Career Option's Sample Customer Profile
• Professionals in Transition Segment
• Gender
• 30 Female 70 Male
• Age
• 10 26-30 30 31-40 30 41-55 30 56-64
• Income
• 25 30-40K 25 40-50K 50 50-75K
• Marital Status
• 80 Married 20 Single
• Level Of Education
• 60 Bachelor's degree 40 Master's degree
• Occupations
• 10 Health Care 20 Financial
• 30 Marketing/Advertising 40 Hi-Tech Fields
• Job Sought
• 70 Same Field 30 New Field
• Most Important Benefits
• 1. Assistance in finding work quickly.

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Choose the Target Market you will sell to!

• After identifying and defining the possible
  segments within your target market, you must face
  the critical question of whether it would be
  profitable and feasible for you to pursue each
  identified segment, or choose one or two.
• Brand new companies should choose one or two!

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Find out what is important to your
customer?Create a survey!

• High Medium Low Not At All
• Price
• Quality
• Brand Name
• Variety of services
• Salespeople
• Customer Service
• Special Offers
• Promotional Campaign
• Packaging
• Convenience of Use
• Convenience of Purchase
• Location
• Guarantees
• Store/Office Decor
• Payment Terms

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Market Segmentation

• Segment potential buyers into similar groups.
• Buying habits
• Ability to pay-Price
• What is the size of the market

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Checklist!

• Identifying Your Market
• ___ Determine why a customer would want to buy
  your product/service.
• ___ Identify your products'/services' benefits
  and features.
• ___ Decide which segmentation criteria will best
  segment your target market geographic,
  demographic, psychographic or behavioral.
• ___ Segment your market.
• ___ Divide larger target market segments into
  smaller segments.
• ___ Decide if it would be profitable and feasible
  for you to pursue each segment.

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Two Types of Marketing Research

• Problem Identification Research
• Market Potential, Market Share, Brand image,
  Forecasting, Business Trend
• Problem-Solving Research
• Segmentation Research
• Product Research
• Promotion Research
• Distribution Research

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Examples of Marketing Research Projects

• concept test evaluates new product or
  advertising ideas
• copy test tests advertising content
• price responsiveness studies tests how customers
  will respond to various price levels
• market-share analysis
• segmentation studies
• customer satisfaction studies monitor how
  customers feel about products and service

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Marketing research process
1. Define the Problem
2. Developing an Approach to the Problem
3. Formulating a Research Design
4. Doing Field Work or Collecting Data
5. Preparing and Analyzing Data
6. Preparing and Presenting the Report
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1. Define the Problem

• Defining a problem
• Understanding the purpose of the study
• Understanding the background issues
• E.g. the company growth rate is low.
• Discuss with decision makers, interviews with
  industry experts, analysis of secondary data,
  conducting focus groups analysis.

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Example Subaru of America

• Management problem What can Subaru do to expand
  its share of the automobile market?
• To conduct market research need to define the
  problems more precisely
• Q.1 What needs do buyers of passengers cars,
  station wagons, and SUV seek to satisfy?
• Q.2 How well do existing automobile product
  offerings meet these needs?

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2. Developing an Approach to the Problem

• Formulating an analytical framework and models,
  research questions.
• Determine a hypothesis an educated guess
• The hypothesis provides a research problem for
  the investigators which can be tested
  scientifically.

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Define the Research Objective

• Pg. 253-What information do you want to learn?
• Prior to developing specific survey questions and
  the sampling frame.
• What needs to be accomplished by conducting the
  survey?
• Need to be measurable
• Objectives assess support level for a ballot
  measure vs. gather opinions about current and
  potential services.

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Define the Research Objective

• Good market research objectives are focused and
  specific. They include
• An action verb-what you want to do
• A type of finding
• Sample verbs identify, define, describe,
  generate, evaluate, select, test, measure,
  prioritize, monitor, track.
• Sample findings usage, problem, reactions,
  perceptions, ideas, size, growth, trends,
  competition, awareness, satisfaction, preferences.

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3. Formulating a Research Design

• A framework or blueprint for conducting the
  marketing research
• Details procedures needed to obtain the required
  information.
• Conducting exploratory research, precisely
  defining the variables, designing appropriate
  scales to measure them.
• How to obtain the data survey or experiment
• Design questionnaire

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4. Doing Field Work or Collecting Data

• Field work involves personal, telephone, mail, or
  electronic interviewing
• Proper selection, training, supervision, and
  evaluation of the field force are essential

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5. Preparing and Analyzing Data

• Data Processing
• Editing, coding, transcribing of collected data.
• Analyze using different statistical techniques
• Interpreted the results, find conclusions related
  to the marketing research questions
• 6. Preparing and presenting the report.

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Source of information

• First, select sources of information
• Secondary data
• information already collected for another purpose
• If use secondary datadesigning the
  questionnaire, planning the sample, and
  collecting data are done for you. But make sure
  they are done right!
• Primary data
• information collected for the specific purpose at
  hand

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Source of information

• Sources of secondary data- pg. 255
• internal sources
• balance sheets, sales figures, customer DB
• government publications
• Statistics, bureau of Economic analysis, bureau
  of labor statistics, census bureau
• periodicals and books
• WWD, California Apparel news, Journal of consumer
  research, Advertising age
• Trade associations-FBI, Cotton inc., National
  Retail federation, Fashion Group international
• internet

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Pros and Cons of Secondary Data

• Advantages of secondary data
• low cost
• less effort expended process
• less time consuming
• some information can be obtained only from
  secondary data

• Disadvantages of secondary data
• collected for some other purpose
• may not be very accurate
• may be outdated

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Primary Data

• Primary data collection process
• Data collection methods
• surveys
• qualitative researchpersonal interviews focus
  groups
• observation
• Experiment
• Design study materials (e.g., questionnaire
  design)
• Sampling
• Data collection

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Survey

• Survey
• Data collection by asking people questions
• personal interview
• telephone survey
• mail survey
• Internet survey
• Advantages
• large size data, flexibility
• Disadvantages
• errors in questionnaire, expensive, response error

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Personal Interview

• Survey (cont.)
• Personal interview
• Advantages
• flexible, more information
• Disadvantages
• expensive, time-consuming, interviewer bias
• e.g., shopping mall intercept a convenient,
  low-cost method
• but lacks representativeness

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Telephone Survey

• Survey (cont.)
• Telephone survey
• Advantages
• quickness, cost efficiency
• Disadvantages
• limited amount of information, limited
  accessibility of people, have to remember
  response options

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Mail Survey

• Survey (cont.)
• Mail survey
• Advantages
• low cost
• Disadvantages
• low response rate
• less control

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Internet Survey

• Survey (cont.)
• Internet survey
• Advantages
• low costmuch lower even than mail
• Disadvantages
• low response ratelarge response bias
• Data reliabilitydifficult to verify if personal
  information is true

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Qualitative Research

• Qualitative research
• Types
• individual depth interview
• focus group interview
• Advantages
• resulting data have more depth and richness of
  context
• Disadvantages
• results not necessarily representative of
  population
• Hard to quantify the results

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Focus Group Interview

• Qualitative research (cont.)
• Focus group interview
• Loosely structured group discussion led by
  interviewer
• The discussion is observed or videotaped
• Best for preliminary research
• Individual depth interview similar interview
  with a single person
• Difficult to understand without seeing it, so we
  have a video.

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Focus Groups

• Group discussion and focus group
• Postal research questionnaires
• Diary panels - sources of continuous data
• In-home scanning - hand-held light pen to scan
  barcodes
• Telephone research
• Observation
• home audit
• direct observation
• In-store testing

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Observational Method

• Observational method
• Types
• personal observation
• mechanical observation (e.g., scanner data)
• Advantages
• can have high degree of accuracy, short period of
  time for data collection
• Disadvantages
• unaware of motives, attitudes, or decision
  processes

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Experiment

• Experiment
• Tests the effects of variables in a controlled
  situation
• Example test of two different versions of
  advertisements in two different cities
• Advantages
• control
• Disadvantages
• unrealistic settings (laboratory experiments)
• Expensive (real experiments)

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Questionnaire

• Questionnaire design
• Wording
• simple, direct, unbiasedno leading questions
• written with respondents in mind
• Order
• first question should create interest if possible
• difficult or personal questions should be asked
  last
• Format
• open-ended questions
• closed-end questions

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Developing the Questionnaire

• General rules
• Keep the order of questions logical, with smooth
  transitions.
• Move from general to specific.
• Make sure respondents understand the wording.
• Be conversational.
• Avoid monotony.
• Include exhaustive and non-overlapping response
  categories.

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Questionnaire

• Open- vs. close-ended questions
• (asked of Americans) What do you think is the
  most important problem facing this country
  today?
• 1) the energy shortage 2) quality of public
  schools
• 3) economy 4) war on terrorism
• --- 70 endorsed war on terrorism

• Same question in open-ended format
• How can we get out of Iraq?

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Your questions should address

• Attitude measurement
• cognitive component (know/believe about an
  act/object)
• affective component (feel about an act/object)
• cognitive component (behave towards an object or
  act

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Types of Questions

• Pg. 257
• Likert scale
• strongly agree
• agree
• neither agree nor disagree
• disagree
• strongly disagree

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Pre-Testing the Questionnaire

• Estimate the length of the questionnaire.
• Ensure that words, phrases, and subjects are
  easily understood by the respondents.
• Ensure that answer categories match with what the
  respondents have to say.
• Ensure that the questionnaire achieves the
  research objectives.

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Sample selection

• Survey and questionnaire design
• Choosing a sample
• Samples need to be as representative as possible,
  ideally randomly chosen from the population of
  interest
• Sample size must be large enough to have
  confidence in the resultsdepends on situation
• Poorly chosen samples lead to biased results

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Reported daily TV consumption in hours
Low frequency alternatives Up to ½ ½
to 1 1 to 1½ 1½ to 2 2 to
2½ More than 2½ High Frequency
alternatives Up to 2½ 2½ to 3 3 to
3½ 3½ to 4 4 to 4½ More than
4½ Schwarz et al. (1985)
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Reported daily TV consumption in hours
Low frequency alternatives Up to ½
7.4 ½ to 1 17.7 1 to 1½ 26.5 1½ to
2 14.7 2 to 2½ 17.7 More than
2½ 16.2 High Frequency alternatives Up
to 2½ 62.5 2½ to 3 23.4 3 to 3½
7.8 3½ to 4 4.7 4 to 4½ 1.6 More
than 4½ 0 Schwarz et al. (1985)
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Sample

• Sampling
• A sample is a subset of the population selected
  to represent the population as a whole
• Samples should be representative of the
  population
• Sample size
• larger sample gives more reliable results
• small samples are OK when they represent the
  population
• (US presidential election poll sample size of
  1,000)

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Sampling

• Sampling (cont.) Sampling procedure
• random sampling
• every member of the population has a known
  probability of being included
• convenience sampling
• the researcher selects easiest population members
  from which to obtain information
• lacks the representativeness of the population
• (e.g.) shopping mall intercept

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Data Processing

• When conducting the survey with volunteers
• Record all responses on paper.
• Keypunch responses into computer for data
  processing.
• Software packages to use for keypunching Excel,
  SPSS, or SNAP.
• Each column is a variable and each row is a
  respondent.

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Data Processing
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Data Analysis

• Statistical software packages to use SPSS, SAS,
  STATA, or SNAP.
• Statistical techniques mean, mode, median, cross
  tabulation, correlation, factor analysis, and
  regression analysis.
• Mean-Average- mean is the usual average, so
• (13 18 13 14 13 16 14 21 13) 9
  15
• Median-The middle value- There are nine numbers
  in the list, so the middle one will be the (9
  1) 2 10 2 5th number
• 13, 13, 13, 13, 14, 14, 16, 18, 21
• So the median is 14.
• Mode- The number repeated most often1

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Prepare and Present the Final Research Report

• Findings are presented, often by research
  objective, in a clear and concise way.
• The need for a good report cannot be overstated.
• Use Graphical charts to highlight the most
  important findings!
• How do your findings influence your business and
  objectives?!
• This must be well written or results will not be
  taken seriously!