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