Application of Market Research

7/31/2019 Application of Market Research

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Marketing Research:Applications


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Assessing Market Potential: Sales Forecasting

Defining market demand

Demand can be measured at several levels

Product-item Sales

Product-form Sales

Product-line Sales

Company Sales

Industry Sales

National Sales

Product Levels

Individual Customer Sale

Sales by territory

Sales by Country

Global Sales

Space Levels

Short-range Sales

Medium-range Sales

Long-range Sales

Time Levels

Levels of Market Demand


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Application of MR

Marketing research activities can be

divided into four main strategic categories: Market Analysis

Identifying and evaluating opportunities

Competitive Analysis

Market Segmentation Analyzing market segments and selecting targetmarkets

Marketing Strategy Design

Planning and implementing a marketing mix

Analyzing Marketing Performance


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Describing a market

Penetrated Market

Current number of users of a product or a

service and the sales volume generated by

them.

Potential market

Those people who have an interest in buying

the product or the service

Available Market

Those people in the potential market havingan ability to use the product/service.

Served or Target Market

The market that the firm can effectively

compete in

Source of

Information

:

Secondary

data

Sample Survey


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Predicting Future Demand

In choosing the appropriate forecasting method, the

analyst must consider the following:

The data that can be used: The accuracy, currency,

representativeness, representativeness and extensiveness of

data must be assessed before choosing a technique. The Technique: The analyst must have adequate knowledge

about the technique and its limitations; he/she must be

comfortable with it.

Cost: Greater accuracy involves greater cost. Cost Vs. level of

accuracy demanded must be assessed before choosing thetechnique

Time horizon: The method or technique must be the most

appropriate for the period of time in question.


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Approaches to Sales Forecasting

Basic approaches to sales forecasting include:

Stage 1. Environmental forecast about consumer

spending, consumer saving, interest rate. Inflation,

employment, investment etc.;

Stage 2. Use the above data along with industry and

environmental trends to forecast sales and profits to

be earned by the industry. Often, this is not possible.

I those cases, this stage is skipped.

Stage 3. Develop a company sales forecast using the

data in 2 above and assuming a given market share.


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Forecasting Sales of established products/services

Two approaches with variants

Questioning people to generate primary data

Surveys of buyer intentions

Sales-force opinion

Expert opinion

Analyzing historical data with Secondary data

Time dependent approaches

time-series analysis,moving average,exponential smoothing,

statistical demand analysis etc. Mathematical and statistical models

linear programming, transportation algorithm, assignment

models, PERT/CPM Network models, Decision Tree

analysis, Inventory models, Markov Process, Queuing,

Simulation etc.


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Segmentation Research I

Segment

refers to a unique group of customers or potential customers

who share some common characteristics that differentiate them

from others.

Segmenting and choosing the optimum market is called targetmarketing and is a vital marketing skill.

Segmentation of the consumer market may be based on:

demographic variables

geographic variables geodemographic variables

psychographic variables

behavior patterns


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Segmentation Research II

Geographic segments:

Based on consumers geographic location including streets,

towns, cities, provinces, countries, regions, continents,

trading and/or political blocks, such as AFTA, NAFTA,

ASEAN etc. Demographic segments:

based on variables such as age, sex, level of education,

marital status, family lifecycle, job type and level of income

etc. Geodemographic segments:

based on variables such as house-type and locations, for

example, people who live in high-rise apartment complex


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Segmentation Research III

Psychographic segments

developed on the basis of the psychological profile of

people and includes variables such as attitude, lifestyle

and personalities of people.

Behavioral segments

based on behavior pattern of people such as

consumption behavior such as heavy user, medium user,

light user etc. and on the basis of other benefit enjoyed.


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Segmentation in Industrial, organizational and

Business-to Business Market.

Different variables that may be used in

these markets include:

Customer type

Type of product or service, standard industrial

classification code may be used

Customer location Size

In terms of sales, number of staff etc.


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Product Research

Has three roles:

Idea Generation

Includes alternative specifications for product concepts

utilizing end user analysis or problem analysis.

Screening: Evaluating new-product ideas

Refers to initial screening of consumer reactions to new

product concepts. Not effective for products that are

radically innovative and for products that require

significant changes in the consumption pattern. Consumer product/market testing

involves testing the product in the market


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PRODUCT RESEARCH

Identification of new product, application, process and technology

Development of product, process and technology

Improvements in the existing product and process

Scale up studies to take up development work from lab scale to commercial scale

Cost effective measures either by suggesting alternative route or process of

manufacturing of a particular product

Rendering technical help in preparation of product, application and safety data

sheet for capturing market

Providing opinion report on the existing product as well as process

Product differentiation etc.


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STAGE I: Idea Generation

Focus groups and direct observation provide insights for productdevelopment.

Secondary data, Group discussion, Brainstorming [ on a givenproblem]

Problem Inventory Analysis -->Examining Customer complaints

Attribute based customer surveys Involves listing all the product attributes and then

systematically modify one or more of them to see what wouldimprove the product.

Morphological Analysis

Involves identification of the relevant dimensions of theproduct under study and enumeration of relevant variableswith each dimension identified.

Imitation, Acquisition, licensing


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STAGE II: Screening

Purposes of concept testing:

Determine customer attitude towards

the product concept or idea.

Measure customers reaction

towards the products attributes, e.g..

packaging, color, size, etc..

Predict the trial rate of the intended

product

Determine whether the productconcept warrants further

development and provide guidance

on how the concept might be

improved or re-defined.

Data collection

methods include:

Focus group discussion

Survey Research

Not very easy

Questions are to be

formulated

carefully to captureand effectively

communicate the

spark of an idea.

Demonstration


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Typical Questions in Concept Testing

QUESTION ITEM TYPICAL QUESTIONS

Uniqueness of theconcept

Inyour opinion, howdifferent is this product compared toother existing products in the market?

Product attribute Whatdo you particularly like about the shape of thisproduct?

User Wouldyou be more likely to buy this product for yourselfor as a gift for someone else?

Price/ValueReaction

Whichof the statements shown in this card best describeshowyou feel about the product? (Showcards withcomments expressing reactions).

Place of PurchaseWherewould you shop for the product?Frequency ofpurchase

Howoften would you buy this product?

Overall impressionFromwhat you have learnt about the product, whichword/phrases [showsome words/phrases]best describesyour reaction to this product


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STAGE III: Product/Market Testing I

Product and market testing provides a more detailed

assessment of a new product's chances for success.

Includes technical testing, preference and satisfaction

testing, simulated test markets and test markets to evaluate

potential success/failure and define important marketing

elements.

Uncovers product shortcomings

evaluate commercial products

evaluate alternative formulations

uncover the appeal of the product to various market segments

gain ideas for other elements of the marketing program


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Product/Market Testing II

Technical Testing on a prototype provides

information on product shelf life, product wear/tear

rates, problems regarding use/consumption,

potential defects, maintenance schedule

Preference and satisfaction testing

reserved for the final version of the product

Simulated test marketing [laboratory test markets]

provides insights to potential marketresponse/market share

Popular models include ASSESSOR, BASES,

DESIGNOR, and LITMUS


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Approaches to measure performance

of the test product

Three Approaches:

Testing against a standard product

Test Product --> brand leader

Horse Racing Alternative Several test products are developed for testing against

one another to determine which one attains the

highest level of consumer acceptance.

Testing against a historical standard Test product --> Performance of a successful product

which may not be involved in the test. A seldom used

technique.


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Product/Market Testing III:

Test Marketing Objective:

To obtain reasonable prediction for performance of a new

product;

To understand the contributing factors underlying a

particular performance;

To provide management with the opportunity to pre-test

alternative marketing strategies.

Only those products, which have shown a good chanceof success in the earlier concept and product

development test, are subjected to test marketing.


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Typical information gathered

and major design issues in test marketing

Awareness level;

Purchase and repurchaserate;

Users experience with theproduct;

Users perception of theproduct;

Users profile andlifestyles;

Reasons for not usingproducts;

Market share.

Design Issues:

The number of test markets to

be chosen;

at least three

involves cost-benefit analysis

The criteria used for selecting

test markets;

a normal and not over-tested

market

The length of the test.

six to 12 months


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Price Research I

Generally undertaken for exploring pricingapproaches for new products or services before

they are launched. Involves

showing different sets of brands in the same

product category to respondents at different

prices and asking them which one they would

buy;

presenting different prices for a product/service

to respondents and asking them if they would

buy the product/service. The responses are then

used to construct a so-called buy-response

curve.


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Price Research II

Pricing research may also be conducted using consumer

panels. Data obtained may be analyzed using regression

analysis. Regression analysis can help in sorting out

effects of price Vs other variables on quantities sold.

Sample survey may also be used in price research.However, this should be used with care since obtaining a

response curve using survey may be subject to error and

bias.

Other pricing research techniques include: Laboratory experiments,

simulated test markets

using standard test market


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Promotion Research

Objective: To develop advertising appeals.

Types of research generally undertaken include:

Psychological or motivational studies

Generally used within the framework of individual interviews.

Involves talking with people in depth about what a product orservice may mean to them, what feelings are evoked by it, and

discover what it symbolizes to them.

Sociological studies

Focus group studies may be undertaken to generate ideas.

Anthropological studies

A small number of people may be observed to understand how

a product fits into their lives and what keep them interested in

a particular brand.


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V e r b a l R e s p o n s e

P h y s i o lo g i c a l R e s p o n s e

B e h a v i o r a l R e s p o n s e

P r e - t e s t

R e c o g n i t i o n

R e c a l l

T r ip l e A s s o c i a t io n

P o s t - t e s t

M E S S A G E R E S E A R C H

C i rc u l a t io n R e s e a r c h

R e a d e r s h ip R e s e a r c h

N e w s p a p e r a s a M e d iu m

T e l e p h o n e In t e r v ie w

A u d i m e te r D e v i c e

P e o p l e M e t e r

D i a ry M e th o d

T e l e v is io n a s a M e d i u m

R a d i o , C in e m a , In te r n e t

M E D IA R E S E A R C H

A D V E R T IS IN G R E S E A R C H


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Message Research: Pre-test

Pre-test refers to the test of an ad-message before releasingthe advertisement. Test techniques commonly used are:

Verbal responses involving

Consumer jury method

Portfolio test Qualitative research

On-the air-test and Theater persuasion test

Physiological responses involving

Galvanic skin responses

Pupil dilation responses and

Eye movement tracking

Behavioral responses involving

In-store persuasion


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Pre-test II

Consumer jury method: Uses 50 to 100 customers as

jurors who are asked to rank the test advertisements in

order of interest, preference or ability to influence the

purchase of the product.

Portfolio test:A sample of consumers are asked to lookthrough a portfolio of 6 - 8 print advertisements within

an allotted period of time. The portfolio is then taken

away and the respondents are asked to recall the

specifics of the ads shown. Recalls are generallyunaided. The effectiveness of the test is measured by

attributes such as ability to recall the contents, claim of

credibility in the advertisement, general reaction, etc.


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Pre-test II

Qualitative Research: The two most widely used

methods are Focus group discussions and depth

interviews. Commonly used during the development

stage of the advertisement. On-the-air test:The test advertisement is broadcast in a

small number of test markets and selected respondents

are interviewed by telephone on the following day to

ascertain various aspects of the ad message.


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Pre-test III

Theater persuasion test:Involves a test group of targetcustomers who are invited to a small theater to view pilot

episodes of some new TV programs. But before the show starts,

they are presented with a list of product brands (including the

brand shown on the test ad) and asked to indicate theirpreferred brand. It is announced that a lucky draw will be held

and each winner will be awarded their preferred brand. The

TV program is then shown including the test ad. At the end of

the show, the viewers are once again asked to indicate their

preferred brand followed by a second lucky draw.

Brand preferences both before and after the show are then

computed and compared.


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Pre-test - IV

Galvanic Skin Responses, pupil dilation response and eye-movement tracking method make use of different types of

mechanical devices are not very popular methods.

In-store persuasion:Involves intercepting a quota sample ofshoppers [Sample X] in a retail store who are shown a stack of print

advertisements including the test ad and are given a coupon booklet with

discounts for several products including the product in the test ad. These

shoppers are given sufficient time to look through these ads. Intercept

Sample X shoppers as they leave the shop and record if they have

purchased the product carried in the test ad. Calculate the purchase

incidence. Repeat the same treatment to another Quota sample of shoppers [Sample

Y] who are not shown the stack of ads. Calculate the purchase incidence

and determine if they are significantly different from that of Sample X.


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Post-test

Most of the pre-testing techniques are applicable to post testing.Additional ones are briefly described below:

Recognition Test:Measures the incidence and intensity of readingan advertisement.Normally involves interview with 100 to 150

qualified readers of a given issue of a magazine or periodical that

carried the advertisement. Specific questions are then asked to see ifthey can remember the ad, its contents and the extent to which they

remembered.

Recall: Respondents are not shown an advertisement in full in

advance but asked what he/she can remember about the ad. Triple Association Test:Used for assessing respondents abilities

to associate the product category, the brand, and the copy theme. Two

of these three are read or shown to a respondent who is asked to

mention the third.


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Media Research I

Focuses on six aspects:

1. Media distribution

Refers to circulation of newspaper/magazine/periodicals or

the number of TV/Radio ownership and Internet

subscription.

2. Media audience

Number of people exposed to the ad medium in question.

3. ExposureNumber of people actually noting the advertisement;

generally less than media audience.


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Media Research II

Focuses on six aspects...

4. Perception

Number of people having conscious awareness and perception of

the advertisement in question. In print advertisements, perception

is affected by factors such as size, color, position and language ofthe media. Typically, perception is less than exposure.

5. Communication

Number of people who comprehend specific things about and

aspects of the advertisement. Communication lags perception.6. Purchase

Number of people purchasing the product after seeing the

advertisement.


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Newspaper as Ad Medium

Major types of information needed are;

Circulation

Generally available from secondary sources in

the form of audited circulation figures. Readership

Data on readership is generally unknown and

need to be gathered through sample surveys.

Often problematic because identifying the reader isnot always easy.


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Television as a Medium I

Objective is to determine the TV audience. Programs

watched by more people are preferred by advertisers.Methods of measurement include:

Determining the Program rating

Respondents are provided with a roster of TV programs shown duringthe past three days and are asked a series of questions to ascertain the

programs (i) they generally watch, and (ii) the programs they have

actually watched on each of the three days in question.

Telephone interviewing

Also known as coincidental telephone interview, this method involves

telephone interview with a sample of respondents during the broadcasting

hour.


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Television as a Medium II

Using audimeter device

Developed by A.C. Nielson Company, this is the most sophisticated

method of TV audience measurement. A technical device called

audimeter is attached to each of the TV sets of a panel of pre-

selected households. The device automatically records the time

when the TV set is switched on (and off), the channel watched,

duration of watching; and instantly transmits the data to a central

computer for processing. However, an audimeter does not record

who in the household is/are watching.

Using people meter

A technical device that like audimeter, which is activated (and

deactivated) by each household member pressing a button when he

or she watches the program (stops watching it).


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Television as a Medium III

Diary Method

A specially designed diary is given to a panel of

households to record the television viewing behavior of

the viewer

Number of radio listeners may be measured in the

same way as TV audience is measured. Simplest way

to measure cinema audience is through sample survey.

Internet users may also be identified using Internet-

based surveys.

Radio/Cinema/Internet as media

Application of Market Research

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