Week 5 – February 9, 2004

Market Research (Review)

Why People Buy

Product Life Cycle

FM20611 – Marketing II

February 9, 2004 FM20611 – Marketing II 2

Basics of Market Research

• Collect– Gather from sources

• Analyze– Statistics

• Interpret– Theorize

• Systematic– Consistent

– Random

• Relevant!

Collect, analyze, and interpret in a systematic manner data relevant to a particular marketing

question

February 9, 2004 FM20611 – Marketing II 3

Primary Data

• Original information (usually)

• Collected for a specific study

• Can be very expensive

February 9, 2004 FM20611 – Marketing II 4

Survey Methods: Telephone Study• Most popular method• Expensive

– People– Computers– Tolls

• Very fast and accurate (+- 3%)• Missing: Unlisted phone numbers

– May be an important part of market

• TV overnights – nightly polls

February 9, 2004 FM20611 – Marketing II 5

Survey Methods: Personal Survey

• In person, at location – often at a mall

• Can be least expensive– Do it yourself

• Very focused – single location

• Bias problems– People can be suspicious– Answer what they think you want to hear– Make up answers

February 9, 2004 FM20611 – Marketing II 6

Survey Methods: Focus Groups• Gather small representative group to ask detailed questions

• Log session – get to know better

• Usually compensate participants

• Sponsor is frequently not known

• Observers hidden behind one-way mirror

February 9, 2004 FM20611 – Marketing II 7

Survey Methods: Mail Survey• Much slower

– 10 days to get 80% of those who respond

• Single-digit % response rate typical– Most people throw away– Payment doesn’t help– Selfish reasons increase response rates

• e.g. after-stay hospital survey

• Questions must be worded very carefully• Anonymous and non-threatening

February 9, 2004 FM20611 – Marketing II 8

Sample

• Representative number of people from a specific universe

• Everyone has equal chance of selection – (i.e. it must be random to be useful)

• Can be surprisingly small and still be useful

February 9, 2004 FM20611 – Marketing II 9

Other Sources of Primary Data• Customer check-out

– Supermarket discount cards– Radio Shack

• In-store observation– Successful buyers always on floor

• Post-sale survey forms– Warranty forms– Packed with delivery

• Crutchfield

• Negative form “why didn’t you buy”• Newsletter “feedback” forms

February 9, 2004 FM20611 – Marketing II 10

Secondary Data

Already existing or published data gathered by someone else or for another purpose

February 9, 2004 FM20611 – Marketing II 11

Secondary Sources: Census Bureau

• Part of U.S. Dept of Commerce

• Population Census (every 10 years)– Constitutional requirement

• Apportionment

– Short or long form– Info by locale

• Website: http://www.census.gov/

February 9, 2004 FM20611 – Marketing II 12

Business Census• Every 5 years ending in “2” & “7”• NAICS (North American Industry Classification

System– As of 2002

• SIC (Standard Industrial Classification)– Old System– 233-Women’s & Juniors’ Outerwear Mfg– 234-Women’s & Children’s Undergarments– 236-Girls & Infants Outerwear– 562-Womens RTW Retailers

• One business may fall into multiple categories

February 9, 2004 FM20611 – Marketing II 13

Prospect/Mailing Lists

• zapdata.com – prospect lists, mailing lists

• infousa.com – mailing lists

February 9, 2004 FM20611 – Marketing II 14

Other Sources of Secondary Data

• Trade Associations

• Local Planning Authority– Zoning

• Online Search

February 9, 2004 FM20611 – Marketing II 15

Test MarketingSmall batch of product produced specifically to test

sales, advertising, pricing, and dealer/customer reaction in a typical setting

• Arrangement with retailers– Guaranteed profit

• “Slotting fees”

• Peoria, Illinois, Marion, Indiana– Demographics mirror entire country

• Downside of Test Marketing– Competitors learn of product

• May try to spoil test

February 9, 2004 FM20611 – Marketing II 16

Prototypes

• Hand-built samples of product

• Solicit early opinions

• Take orders at trade shows

February 9, 2004 FM20611 – Marketing II 17

Consumer Behavior (i.e. Why People Buy)

• Maslow’s Hierarchy of Needs (Loosely)

February 9, 2004 FM20611 – Marketing II 18

Meeting Needs• Basic Drives:

– Hunger– Thirst– Sex

– Shelter– Protection– Gainful Employment

• Reward Motives– Comfort– Ease– Pleasure

• Ego Motives– Self-image– Status– Fitness– Education

– Ownership– Imitation– Power

– Something new– Ecology considerations

February 9, 2004 FM20611 – Marketing II 19

Consumer Attitudes

• Formed by– Past personal experiences– Information from others

• Close friends

• Opinion leaders– Sports

– Celebrities

– Reviews

– Experts

February 9, 2004 FM20611 – Marketing II 20

Consumer Attitudes II• Strongly Held

– Avoid conflicting information• Competitors

– Related to• Ego• Value System/Religion• Family

• Weakly Held– Little ego relationship to item– Changed more easily

February 9, 2004 FM20611 – Marketing II 21

Attitude Revisited

• ABC Model– Affect

• How a consumer feels about a product

– Behavior• An intention to do something (buy)

– Cognition• Beliefs a consumer has about a product

February 9, 2004 FM20611 – Marketing II 22

Attitude Hierarchies• The Standard Learning Hierarchy

Beliefs Affect Behavior

Beliefs AffectBehavior

BeliefsAffect Behavior

• The Experiential Hierarchy

• The Low-Involvement Hierarchy

February 9, 2004 FM20611 – Marketing II 23

Consumer Problems“All selling is problem solving”

• Small Problems– More likely for consumer to identify with personally

• Antiperspirants• Cleaning

• Large Problems– Harder for people to relate– “Happens to other people”– Slowly increasing

• Insurance Ads• “I’ve fallen and I can’t get up”

February 9, 2004 FM20611 – Marketing II 24

Consumer Decisions: Expensive Items

• Decision usually made at home

• Consult with partner

• More complex– Time consuming– Several visits– Take-home materials/brochures– Decision-oriented website

February 9, 2004 FM20611 – Marketing II 25

Consumer Decisions:Regular Purchases

• Decision made at shelf– Or at coupons

• Without much thought

• No other materials

• Informational website

February 9, 2004 FM20611 – Marketing II 26

Consumer Decisions: Impulse Purchases

• Decision made at point of sale

• Influenced by– Display– Price– Convenience– Novelty

February 9, 2004 FM20611 – Marketing II 27

Product Adoption Stages• Awareness

– Can’t buy what you don’t know about

• Interest– Seek more information

• Evaluation– Weigh pros & cons– Consider effectiveness

• Fulfill a need?• Solve a problem?

February 9, 2004 FM20611 – Marketing II 28

Product Adoption - continued

• Trial– Buy if inexpensive– Try if expensive

• May not buy if can’t try

• Decision– Return– Purchase

February 9, 2004 FM20611 – Marketing II 29

Product Adoption - continued

• Confirmation– Consumer usually supports decision by not

paying attention to negatives– Reminders on packaging and even product

• 800 numbers

• Website

• Hangtags

• Labels

February 9, 2004 FM20611 – Marketing II 30

Product Life-Cycle

February 9, 2004 FM20611 – Marketing II 31

BCG Matrix

February 9, 2004 FM20611 – Marketing II 32

Next Class

• Feb 16th:– Midterm Review– Midterm