Market Research and Advertising
Kent Wolfe
December 4th, 2002
Why Market Research?
“It is easier to sell something people want
than it is to sell something that is easy
to produce”
Market Research
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Exposed to market research each and every
day (TV & Radio programming, cell phone
packages, beverage products, shelf space,
restaurant location).
Used to determine customer perceptions,
attitudes and preferences (i.e., Georgia
Grown, war with Iraq, package or container
size)
Who uses what, when, how much, and what
are they willing to pay
Questions Market Research Can
Answer
Age
Average Expenditures
Environmental analysis
Race
Financing needs
Pricing
Income
Payment methods
How to effectively communicate
Gender
Current usage
Perceptions
Occupation
When is it purchased
Attitudes
Household size
Where do customers shop
Preferences
Primary competitors
Trends
Unmet needs
Other Market Research Uses
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Produce manager survey
Aquaculture
Pelletized Poultry
Peanut shelling facility
Marketing cooperative
Needs assessment
Rabbit market analysis
Clam market analysis
Pricing Suggestion
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Research suggests rounding prices to
the nearest Os.
Consumers don’t distinguish between a
price of $1.50 and $1.59.
However, they do perceive a price
difference between $1.59 and $1.60
How Consumers Found Out About
The Farmers Markets They Patron
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Source
Roadside Signs
Newspapers
Passing by
Word of mouth
Flyers
Magazines
Television
Radio
Internet
Percentage
50%
49%
49%
42%
15%
1%
1%
1%
0.3%
Promotional Technique Effectiveness Ratings
Promotional Technique
In-store displays
In-store signs
in-store feature advertising
price reductions
In-store demonstrations/taste tests
Packaging
Free standing displays
Waterfall displays
Newspaper inserts
Coupons
Individual product stickers
Cross Merchandising
television advertising
Providing educational material
Shelf talkers
Produce manager bulletin with marketing ideas,
information and recipes
Radio advertising
Mean Ratings
4.52
4.20
4.04
3.99
3.91
3.85
3.83
3.61
3.55
3.52
3.49
3.42
3.38
3.32
3.30
3.30
2.88
Additional Market Research Uses
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Market research guides your
communication with current and
potential customers
Market research helps you identify
opportunities in the marketplace.
Market research minimizes the risk of
doing business.
Types of Market Research
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Focus groups
Taste tests
in-depth interviews
Surveys - mail, telephone and intercept
New Agribusiness Opportunities – First
Step is Target Market Identification
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Target Market – A segment of the population
that is most likely to use your product or
service.
Usually described using demographic
variables like, Gender, Income, Race, Age
Used to:
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Determine market potential
Develop product packaging
Choose marketing channels
Develop marketing mix and advertising strategy
Target Market Examples
Demographic US Pop.
Hot Sauce
Enthusiasts
Pork
Frozen
Consumers* Pizza
Consumers
Gender
Male
50%
80%
43%
8.9%
Female
50%
20%
57%
90.8%
35.5
29
55
47
$34,076
$60,000
$31,000
$43,641
23.6%
78%
<10%
26%
2.65
1.45
2.65
2.47
Age
Income
Education –
College grad.
Household Size
Market Segmentation
Product
Age Group
Consumption %
30-39
44%
60+
50%
Gin
60+
50-59
29%
29%
Tequila
20-29
52%
Vodka
Bourbon
Micro Brewery
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Micro brewed consumers consume an average of $250
worth of beer annually.
Younger people were more likely to have tried a
microbrew. Thirty-six percent of beer drinkers
between the ages of 25 and 34 had tried a microbrew.
In contrast, 27% of beer drinkers between the ages 34
through 45 and 20% of those 45 and older had tried
microbrews.
The appeal of micro brewed beer was strongest among
White beer drinkers were almost twice as likely as
black Americans to try a microbrew.
Market Segmentation
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A 1995 National Pork Producers Council
study identified five very different pork
consumer segments and they are as
follows:
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Main Street Today
Quality Carnivores
Good N’ Plenty Guys
Apathetic Eaters
Politically Correct Eaters
Main Street Today Segment
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Main Street Today
Largest segment of the population
Consist of strong pork supporters.
Very price sensitive- cost conscious shoppers.
Purchasing decisions are price based rather than product
preference.
•
•
•
•
•
•
•
•
Women (57%)
Middle aged - (20%) being 50-59 years of age
Lowest income $31,000 median household income
Least educated – less than 10% have college degrees
Blue collar occupations
19% widowed/divorced (more than the other five segments)
Average household size
Most non-white group (29% are African American or Hispanic)
Quality Carnivores Segment
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Quality Carnivores
Generally males
Prefer family and fine dining restaurants
Not concerned with nutrition
Indulge in food and prefer premium cuts of meat
•Males (77%)
•On average 36 years old
•Not primary shopper
•High incomes ($48,500 household incomes)
•Have some college (62%) or a college degree (26%)
•Married (66%)
•On average is non-white
•Smaller households
Good N’ Plenty Guys Segment
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Good N’ Plenty Guys
frequent fast food and take-out restaurants
meat lovers
second most responsive to pork behind the Main Street Today
segment.
•Mainly male
•Young (49% of the segment is under 35 years of age)
•$38,000 median household income
•45% have some college
•Employed- split between blue and white color
•61% were married
•Have large households 47% have 4+ family members
•Primarily non-white
Market Analysis
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Two groups were identified
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Local Market
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Local Market - area residents
Metro Atlanta ethnic markets
Interviewed 232 potential customers residing
within 60 miles of Toccoa
71 people (232) indicated they did not eat fish
69% of area residents are fish consumers
Ethnic Markets
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Visited 8 ethnic markets in Metro Atlanta
Local Market Customer Base
Product
Shrimp
No. Customers
Likelihood to Buy (30 miles)
31.7%
23,658
Striped bass
30.4%
22,688
Flounder
29.2%
21,793
Perch
27.9%
20,822
Large mouth bass 23.6%
17,613
Eel
Tilapia
9,254
9,072
12.4%
13.0%
Likelihood to Visit a Pick Your Own
100%
80%
17%
60%
23%
36%
26%
29%
40%
30%
60%
45%
20%
20%
31%
39%
29%
30%
19%
Very Likely
Somewhat Likely
C
i ty
L.
M
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i ty
S.
To
w
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M
.T
ow
n
L.
To
w
n
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R
ur
a
Fa
rm
0%
Market Potential
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Market Potential – the maximum sales
opportunities achieved by all sellers in
the market.
Sets the upper limit on consumption
units
Estimating Market Potential
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MP=NxQ; where
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MP= Market Potential
N= number of buyers
Q= average number purchased by each buyer
Estimating Market Potential
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Information needed to estimate market
potential
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Market Area - US, State, County, city
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Roadside stands 10-20 mile draw
School field trips – 45 miles or 45 minutes
Demographic composition of the specified area
Number of people in area with similar
characteristics
Consumption or usage levels
Estimating Market Share
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A market area and the target market
within that area will support a certain
level of sales
A companies portion of these total sales
is referred to as its market share
Estimating market share is not easy but
essential
Three Steps to Estimating
Market Share
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Estimate the total market potential
Identify each of your competitors and
estimate their market share
Decide or estimate what you think your
market share might be or what portion
of the market you intend to capture
Example Market Share Calculation
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Market share for new hot sauce to be
marketed locally
A supermarket visit identified 10 sauce
competitors
Market share data is not available,
assume each product captures and
equal share of the market (10%)
Example Market Share CalculationCon’t.
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New product will mean there are 11
competing products
Assuming equal market share, you can
assume to capture roughly 9.1% of the
market
Does 9.1% of the market generate
enough sales to make your business
feasible?
Estimated Retail Sales
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The potential retail sales for a specific retail operation can be
estimated by using a standard formula:
ES= P x EXP x (ADI/MDI) x MS where
ES= Estimated Sales
P= Trade Area population
EXP= Average expenditures for retail outlet category
ADI = Area Estimated Average Household Disposable
Income
MDI = Georgia Average Household Disposable Income
MS= Estimated Market Share
Estimated Retail Sales Example
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50% of Americans consume beer
Thirty-six percent of microbrew drinkers are 25 -34, 27% are 34 - 45
and 20% are 45 and older.
Microbrew consumers have average incomes of $54,000
Microbrew consumers spend between $250 annually on these products
Microbrewery Market Area Demographic Information
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50,000 residents
15% are 25-34
16% are 34-45
29% are 45+
25% have incomes over $54,000
Income Information
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Area Estimated Av.e Household Disposable In.=$67,000
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Georgia Average Household Disposable Income =$30,240
Trade Area Sales Estimate
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ES= P x EXP x (ADI/MDI) x MS
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P= 50,000 x 50% (percentage of beer drinkers) =25,000
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25,000 x 15% = 3,750
25,000 x 16% = 4,000
25,000 x 29% = 7,250
15,000
37% of area residents have incomes over 50K
15,000 *37% = 5,550
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EXP=$250
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(ADI/MDI)=($67,000/$30,240)
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MS = Estimated Market Share = 10%
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ES= 5,550 x $250 x ($67,000/30,240) x 10% = $307,416
Demographic and Population
Sources
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Sources for Demographic Information:
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Chamber of Commerce
University (www.agecon.uga.edu/~caed/)
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www.georgia.stats.uga.edu
US Census Bureau (WWW.CENSUS.GOV)
Easy Demographics (WWW.EASYDEMOGRAPHICS.COM)
Easy Demographic Data
(WWW.EASIDEMOGRAPHICS.COM)
Miles
20
Population:
82,683
Households:
31,974
White Population: 77,003
Black Population:
4,881
Asian Population:
623
Hispanic Population: 719
Median Age:
37.0
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Med. HH Inc.($): $29,572
Av. HH Inc. ($): $40,855
15
59,644
22,806
56,126
2,901
473
518
36.7
$30226
$41,877
10
36,409
13,773
34,497
1,506
307
275
36.4
$32,214
$43,165
Consumption and Usage
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Sources for information on Consumption
and usage:
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USDA – per capita food consumption
estimates
Trade Associations
Commodity Groups (e.g. Nation Pork
Producers Association)
University Research
Marketing
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There is no “silver bullet” or formula for
success
Marketing is more like an art than a
science
What is Marketing?
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“Marketing is the process of planning
and executing the conception, pricing,
promotion, and distribution of ideas,
goods, and services to create
exchanges that satisfy individual and
organizational objectives.”
-American Marketing Association
What Exactly Does That Mean?
Marketing is...
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All the actions you & your employees
take that promote the sale of your
products.
Building good relationships with your
customers.
What Exactly Does That Mean?

The Company Name
Company Goals
 Location
 Pricing
 Packaging
 Promotional Activities
 Advertising
 Sales Techniques
 Business Cards
 Employee Uniforms

The Goal of Marketing

To present your products/services to
the market in a way that makes them
more attractive than the
products/services of
your competitors.
Advertising/Promotion
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Advertising – Delivers information
Promotion – Involves generating
consumer response
Publicity – inexpensive or free
advertising
Types of Advertising
Newspaper

Broad mkt coverage
 Immediate
 Short lead time
 Flexible ad size
 Visibility of product
 Color
 Use of coupons
People believe what they
read!
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Advantages
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Disadvantages
Inconsistent reproduction
 One day life span
 Limited demographics
 “Lost in the Crowd”
Lack of movement & sound
Radio
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Advantages
Demographic selection
 High frequency
 Immediate
Sound reinforcement
 Quick flexibility
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Disadvantages
Restrictive message length
 Need for repetition
 Short recall factor
 Cluttered placement
Television
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Advantages
Use of sight, sound,
motion, & color
 Mass coverage
 Immediate
Demographic selection
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Disadvantages
Short exposure
Expensive production
 Expensive to air
Cluttered placement
Viewing time drops as
income increases
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Direct Mail
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Advantages
Demographic selection
 Unlimited message length
 Consistent reproduction
 Direct response by order or
coupon
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Disadvantages
Expensive
Difficult to obtain “pure”
mailing lists
 Long lead time
Negative reaction to junk
mail
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Outdoor
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Advantages
Reaches large audience
 Long-term exposure
 Color & graphics
Forms include billboards,
posters, illuminated signs,
moving vehicle signs,
bench ads
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Disadvantages
Limited message length
Expensive to produce &
place
Difficult to obtain the best
locations
Legal restrictions for use
Examples of Advertising
Costs and Exposure
Media
Company
Cost
Exposure
Radio
WSKX-FM
Savannah
$14.00 30 Sec
Spot; 6-10 am
676,481 persons
Newspaper
Metropolitan
Newspaper
$52.50 per sq. 250,000 persons
In. per week in on Sunday
Travel section
Television
ABC Savannah
$15 - $120 for
a 15 Sec.
Rotating spot
Outdoor
Lamar Bill board
$500-7,500 per Dependent on
month
location
Direct Mail
Your business
1.68/Contact
Dependant on
Time- slot
Limited to mailing
list
Signage is important
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Information that should be included on your
sign:
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Location
Business hours
Special Promotions
Seasonal Products
Other attractions
Sign should reflect the stands personality
Signage Is Important
Words Read At Various
Speeds
Number of Words at Speed
Distance
(ft)
Letter
Width
(inches)
Letter
Height
(inches)
30
(mph)
40
(mph)
50
(mph)
60
(mph)
d
1 ¾
4
2
1
0
100
¾
3 ½
8
5
4
3
200
1d
7
15
11
8
6
300
2 3/16
11
22
16
13
10
14
30
22
17
14
17 ½
38
28
22
18
50
400
2f
500
3 ½
Source: Should I Grow Fruits and Vegetables? Roadside Stands,” Loyd, Renee, M. and Daniel S.
Tilley. Oklahoma State University Extension Service, Facts, No. 186.
Packaging Counts – Specialty
Food Expert
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Have a beautiful product, including jar and
label
Use expensive beautiful glass
Go to trade shows to show product as well as
find out what the competition is doing
Make your product presentation count90%of the purchases of these niche products
is based on product presentation.
Packaging
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First Line of Promotion is Product Packaging and is
your silent salesperson
Evaluate your target market and create a package
that is consistent with their expectations- i,e. single
jar or 3-pack,
Packaging should reflect a product’s desired
personality (Tennessee Toe Jam)
Packaging Considerations (size, plastic glass, dressy)
Selling a 8 oz. Jar of Jelly for $6.95, it needs to be
packaged accordingly
Packaging Examples
Hot Sauce Packaging Examples
$6.29 (5 oz)
$6.95 (5 oz)
$7.59 (4 oz)
Jams and Jelly Packaging Examples
$4.50 (16 oz)
$5.25 (10 oz)
$5.00 (9.9 oz)
Know Your Target Market
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Where and when does my target
market look for information
What is the most effective means of
reaching my target market ? i.e.,
television, radio, print material, etc..
What type of packaging are they
expecting
“Adding Value to Georgia’s Agricultural Economy
Through Research and Extension”
www.agecon.uga.edu/~caed/
College of Agricultural & Environmental Sciences