FMD 451

Target Market Research

Market Research

What is marketing research? The marketing research process

Six stages

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

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

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.

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.

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.

Segmenting your market!

1. Geographic: Where do your customers live? What state or region-climate concerns?

2. Demographic: What is their age, race, religion, gender, income level, family size, occupations, education, and marital status?

3. Psychographics:What 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?

4. Buying Behaviors: Why does your customer buy? Price, brand, loyalty, how frequently, what time of the year, ect.

Example of Customer ProfileCareer Option's Sample Customer Profile:Professionals in Transition SegmentGender:

30% Female 70% MaleAge: 10% 26-30 30% 31-40 30% 41-55 30% 56-64Income: 25% 30-40K 25% 40-50K 50% 50-75KMarital Status:

80% Married 20% SingleLevel Of Education: 60% Bachelor's degree 40% Master's degreeOccupations: 10% Health Care 20% Financial 30% Marketing/Advertising 40% Hi-Tech FieldsJob Sought: 70% Same Field 30% New FieldMost Important Benefits:1. Assistance in finding work quickly.2. Want a better job.3. Want equal salary or increase.4. Stability.Psychographic Summary: This segment closely associates work with self-esteem. They feel pressure because most

have families and comfortable lifestyles to maintain. They are not interested in forging new careers but want stability.

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!

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

Market Segmentation

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

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.

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

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

1. Define the Problem1. Define the Problem

2. Developing an Approach to the Problem2. Developing an Approach to the Problem

3. Formulating a Research Design3. Formulating a Research Design

4. Doing Field Work or Collecting Data4. Doing Field Work or Collecting Data

5. Preparing and Analyzing Data5. Preparing and Analyzing Data

6. Preparing and Presenting the Report6. Preparing and Presenting the Report

Marketing research process

1. Define the Problem

1. Defining a problem Understanding the purpose of the study Understanding the background issues E.g. the company growth rate is low.

2. Discuss with decision makers, interviews with industry experts, analysis of secondary data, conducting focus groups analysis.

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 preciselyQ.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?

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.

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.

Define the Research Objective Good market research objectives are focused

and specific. They include:1. An action verb-what you want to do2. 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.

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

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

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.

First, select sources of information: Secondary data

information already collected for another purpose If use secondary data—designing 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

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

Source of information

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

Pros and Cons of Secondary Data

Primary data collection process Data collection methods

surveys qualitative research—personal interviews & focus

groups observation Experiment

Design study materials (e.g., questionnaire design) Sampling Data collection

Primary Data

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

Survey

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

Personal Interview

Survey (cont.) Telephone survey

Advantages quickness, cost efficiency

Disadvantages limited amount of information, limited

accessibility of people, have to remember response options

Telephone Survey

Survey (cont.) Mail survey

Advantages low cost

Disadvantages low response rate less control

Mail Survey

Survey (cont.) Internet survey

Advantages low cost—much lower even than mail

Disadvantages low response rate—large response

bias Data reliability—difficult to verify if

personal information is true

Internet Survey

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

Qualitative Research

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.

Focus Group Interview

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

Focus Groups

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

Observational Method

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)

Experiment

Questionnaire design Wording

simple, direct, unbiased—no 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

Questionnaire

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.

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?

Questionnaire

•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

Your questions should address:

Types of Questions

Pg. 257 Likert scale

strongly agree agree neither agree nor disagree disagree strongly disagree

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.

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 results—depends on situation

Poorly chosen samples lead to biased results

Sample selection

Reported daily TV consumption in hours

Low frequency alternatives Up to ½ ½ to 11 to 1½1½ to 22 to 2½More than 2½

High Frequency alternatives Up to 2½2½ to 33 to 3½ 3½ to 4 4 to 4½ More than 4½

Schwarz et al. (1985)

Reported daily TV consumption in hours

Low frequency alternatives %Up to ½ 7.4 ½ to 1 17.71 to 1½ 26.51½ to 2 14.72 to 2½ 17.7More than 2½ 16.2

High Frequency alternatives %Up to 2½ 62.52½ to 3 23.43 to 3½ 7.83½ to 4 4.74 to 4½ 1.6More than 4½ 0

Schwarz et al. (1985)

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)

Sample

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

Sampling

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.

Data Processing

Data Processing

0 0 1 2 0 2 0 5 60 0 2 4 0 3 2 5 20 0 3 5 0 5 2 6 20 0 4 3 1 1 3 2 10 0 5 3 0 5 5 3 20 0 6 2 0 5 5 3 30 0 7 5 0 4 6 0 30 0 8 5 0 4 2 0 20 0 9 2 1 1 0 5 50 1 0 1 0 4 0 2 20 1 2 0 0 0 1 0 50 1 3 2 0 0 2 5 50 1 4 2 0 5 1 6 60 1 5 5 0 3 2 6 0

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, 21So the median is 14.

Mode- The number repeated most often=1

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!