13. Examples
13.1
13.2
13.3
13.4
13.5
Entry study – charting of new market
Prosperity research – reacts on market requirements without loosing information
value
Classical quantitative researches :
Discovering of level of mark knowledge at existent and potential customers,
penetration research, penetration of (our) product into the market,
research of purchase behaviour of consumers.
13.6
Equipment analysis of households (things of long term usage) work with specific
methodical appliance.
13.7
Consumable habits in relative wide view, but in scope of quantitative research –
examines U&A (Usage and Attitude)
Product research – research of product resonance on the market.
Price research –wide spectrum of relations and ambivalent influence of price
13.8
13.9
13.1 Entry study
Problem
At entering on a firm into a new market it is necessary to make a marketing
preliminary preparation, by which usually :
- the firm is deciding, whether to enter into the market, whether the market is interesting for
it,
- the firm decides on which bases characteristics will prepare its strategy.
Philosophy of approach :
The content of Entry study are only these basic information, which enable :
- to estimate the market capacity
- to formulate social, economics and legal ambience of the market for given commodity
- to assess competition ambience
- to warn of market specifics
The firm assigns an institution, that is acquainted well with given market, to a study which
will summarise facto-graphical material about given market. The questions are if it is
effective to deal with given market in detail.
Methodology
Resource is mostly collection of secondary data, source of information is statistical
annual, different special statistics, statistics of family budgets, information on internet, in
some cases experts interviewing.
Social ambience is especially based on information about :
- number of population
- age structure
- social structure, rate of city and country population
- split into agglomeration
-
family, household character
geographical data - height above sea level, mobility of population
ethnic and religious data
education
employment in general, employment of women
Economics data
- GDP (rough domestic product)
- GDP per person
- average income per person, household, average income
- differentiation graph
- structure of expenses
- household equipment
Legal ambience
- conditions for economics activity of firm, establishment
- commodity norms
- specific legal problems - example at mark goods extent and risks of piracy
Competition ambience (usually expert assessments of quantitative data)
- domestic firms and their production
- import and export
- main marks on the market
- prices, price relations
Logistics
- main logistics ways of suppliers
- main logistics ways of consumers
- prices, discounts, usual delivery conditions
Firms have usually their specific models for calculations of market capacity.
Comparison analysis
For entering into market, but also for strategy of entering and for propagation
conception is at some commodities used so called comparison analysis (or comparison
marketing).
In this case the thing is not only comparison of basic data , but also comparison of
ways of life and culture in large sense of meaning.
Its use in marketing can be large. Allow to choose suitable symbols, corresponding
with given culture.
Economics and effectiveness of research
Entry study uses especially secondary data, collects facts. Mostly uses openly
published data. Is not financially demanding.
Entry study is resource for next steps, is base for hypothesis, that are proving in further
process. Its effectiveness is that conclusions give real picture about basic parameters of
market, the firm wants to enter into.
Outputs, their reliability and interpretation
The basic outputs are tables, charts, sometimes commentary. Important is quotation of
information origin.
The data quality depends very often on quality of statistic materials, statistic level in
the given country. Notes to data reliability show reputation of research team and its abilities to
orient in statistical materials and information.
International firms have usually standard models for key questions. Individual
commodities deduce from data accessible in statistics.
13.2. Prosperity research
Problem
What is the total dynamics of the market, how is developing in scope of this dynamics
the followed commodity, eventually trade mark. Has insufficient development my mark only
or all my commodities or is it a total decrease of economy ? When I want to increase sale of
my mark, with what phenomenon I must fight ?
Philosophy
History : except dynamics has economical life also cyclic development.
Economists following market development say, that the development is not constant, but it
runs in sinusoids.
Classical names of economic development phases are :
- prosperity - boom
- recession
- crisis
- rejuvenation
In analysis of prosperity development became critical reversal on black Friday 1929,
when occurred total crash of economy. On base of this experience started economists to
deal with this problem more in detail. The most successful was a group of economists at
Harvard university, which published so called Harvard barometer.
The barometer analysed development of economics indicators and showed the time
succession of 3 categories of variables :
- financial market – stock market – price of shares
- stocks
- prices
Analysis showed that development of these variables has tendency to do a sinusoid, that
runs in certain time succession. Methodology developed in next years followed tendency
of individual variables in different phases : situation on stock market, stocks in shops,
situation in production companies and consumers´ attitudes.
Methodology
Gradually developed few methodologies for following of prosperity development and
methods for fast obtaining and providing of information :
5 methodological spheres :
Stock market
Dow and Jones from Wall Street Journal suggested an index of stock market
development :




Bonds – financial share market,
Industry,
Transport,
Utilities, … and average index.
In different countries created indexes around economical journals (England –
Financial Times, Germany – Frankfurter Algemeine Zeitung, Japan – Nikkei, …)
Index of the Czech stock market is analogous with Down-Jones and is elicited from
quoted markets.
Stock indexes are differently modified. Differences are also in frequencies how are
published (to moment of stock market closure, sometimes every minute – Financial Times).
Advantage is : operative
Disadvantage : follows according to Harvard barometer only one variable.
For classical marketing research are more interesting researches based on following of
stocks, production, price and consumer´s behaviour.
Data analysis (sale and stock) at sellers
After economic crisis started Nielsen A.C. deal with stocks. He came out of these that
stocks are at the beginning of a cycle. He said that crisis start with problems in the end phase
of cycle – sale of consumable goods. These problems hinder gradually also supplier activities
and proceed further to initial production. Crisis in whole economics culminates.
Decrease of demand (or its overestimation) causes increase of stocks. Gradually is
restricted purchase and hindrance of stock flow proceeds further to initial production. In this
phase culminates crisis.
Development in stocks averaged on sales organisations appeared as very followed
indicator.
He started in a shop with food – published food index – further Drugstore Index –
textile, hardware, Toys-Index, …
At present follows the index (at sellers) stocks, sales, prices, shop areas, changes in
marketability, effectiveness of exhibit areas at individual kinds of products, sales actions, sale
in individual kinds of shops.
The central Nielsen is connected with central computers in chosen shop organisations,
using bar code and can provide in short intervals (weekly) detail information.
Nielsen works today in some European countries, basic information provides also in
CZ.
Consumer test
At the beginning of second world war asked American government the professor
Katona to help with following of American market in view of possible unfavourable reactions
on war conditions.
Katona – economist and psychologist – is known with his analysis about consumer, he
characterised real and addictive purchase behaviour.
Real or original decision is usually for larger expenses, consumer collects
information, plans the purchase, creates economical conditions for it (adjusts his budget,
saves).
Addictive decision – short decision, consumer has some stereotype processes, which
replace collecting of information. It is typical for everyday expenses, impulsive purchase
(textile) etc.
He worked out a method, characterising consumer behaviour – known as consumer
index.
This index is still used in many countries in different modification. Known in for
example index of consumer climate – worked out at Erasmus University – expresses
development of attitudes to consumption.
Decision-makers test (managers)
proceeds from the assumption that the most important information about expected
development and future behaviour of economic subjects can provide the leading workers –
decision managers. IFO Institute in Munich worked out an original methodology based on
simple five grades verbal scale, which characterises last period and expected development in
sales, stocks, prices, investments, profit. The fulfilment of a questionnaire is based on
subjective evaluation, takes minimum time, in optimal case about 1 minute.
Data are fast collected and worked out (especially in internet era).
Results are published in from :
 prosperity balance
 prosperity mirror
After few years of following worked out the IFO institution correlation between
balance and expected development.
Advantages of prosperity test : very fast information, good information.
Applied in different modification in many countries.
Trend characterisation
uses different methods of trends´ development, follows sinusoid and predicates
probability of prosperity breaks.
Method “exponential smoothing” stress period immediately preceded.
Individual parts of expenses structure show different prosperity sensitivity :
Food is prosperity inert, have tendency to keep trend (typical for their development is
time-factor) and with only some delay react on acceleration or slowdown in increase of
incomes of population.
The income elasticity we estimate on the base of first difference. Typically prosperity
sensitive are expenses for textile, where the second difference is around value “2”.
The important prosperity information are data about financial behaviour of population
– development of savings, that have important prosperity sensitivity.
It is followed rate of savings (share of inserted means of incomes), development of
financial incomes of population etc., demand for foreign currency.
Economy and research effectiveness
Prosperity research is usually organised with these characteristic signs :
- it is regular, repetitive research with help of standard model, results in time are
comparable.
- Sources of information are maximal simple and are easily, fast and standard processing.
- Research is dome for large circle of users, therefore is price for one customer relative low.
The effectiveness is indisputable for firms, that offer larger portfolio of products and have
certain share on market.
Interpretation
Prediction value of all these methods is conditional. Usually are the methods
combined (for example trend characteristics, IFO test etc.).
Prosperity research is today an important category in market research.
Stated methods give partial – but valuable information about prosperity, from them are
deduced marketing data etc.
13.3 How the customers know trade marks
Problem
How famous is our mark ?
Philosophy
The knowledge of a trade mark is indicator, which usually correlates with situation on
the market. Its knowledge signalises, that enters actively into decision process of consumer.
Analysis show that exist quite solid correlation between knowledge and sales. The knowledge
also signalises how effective is propagation and informs about conditions of product
infiltration into the market. The mark knowledge is one of the primary assumptions of
product marketability.
Original forms of knowledge (according to Storch) were tested at advertising.
Knowledge of advertising was tested with help of three categories :
Recall unaided :
What advertising in press do you remember ? The result was that followed advertising
evoked attention that the respondent kept it actively in memory.
Recall aided :
What advertising on … (soft drinks, or other commodity) do you remember ? The
respondent is prompted an important association binding.
Recognition :
Have you seen this advertising ? In case that in the respondents memory left a mark, it
is possible with help of further advertising or other contact with the mark or product to
activate it easily.
Information about advertising research were used also for analysis of trade marks
knowledge. Usually only two stages are used :
Awareness unaided :
What kinds of ….. (soft drinks) do you know ?
Awareness aided :
What of these marks do you know ?
Awareness aided and unaided is mutually compared – is valid :
- Awareness aided is bigger or equal to awareness unaided. If some mark is stated at
respondent unaided, than its absence in awareness aided signalises a mistake.
- It is proved, that exist important correlation between knowledge and sales.
- The more approaches awareness unaided to awareness aided, the more active is
awareness.
Risks:
- Awareness unaided is relatively importantly determined by space (time) which has the
consumer for enumeration of mark he knows.
- Questioner can let (from carelessness, incorrectness) the respondent to look into
questionnaire, where he can read list of marks used in following question. Sometimes
gives in the requirement of respondent to fulfil retrospectively on the basis of listing in the
second question a certain mark also in first question.
-
Awareness aided can be understood prestigiously and respondent states that he knows
marks, that in fact does nor know or which mention him something. This problem is
sometimes solved by presentation of fictive marks in listing and discovering of mistake
coefficient.
13.4 How product penetrates customer
Problem
From company´s statistic and from conjuncture data we get general data about sales
and about its development. But when we want to use active marketing politics, we must know
who buys our products, how loyal is, in other words, how our product penetrates the
market.
Philosophy of approach
Market penetration is possible to formalise as process that starts with perceiving of
product (mark) existence, its first purchase, repeated purchase, dominant or subdominant
orientation on given product or mark, ways of change from mark to mark etc.
The aim of the penetration analysis is to find out sufficient amount of exact data.
Questions must be simple and clear, with simple and clear answer. It is a classical
quantitative research, that we try to not complicate with qualitative or open questions, even
if open complementary questions are not eliminated.
Criterion of sufficient exact data is possible to test with help of probability of mistake.
Methodology
We usually do the research by interviewing Face to face, with help of ensemble of
questioners. At U&A is sometimes used omnibus examination (is repeated and includes
commodity in whole width) or panel, especially when we work with help of journal.
Selective ensemble reaches about 1000 inquired.
Theoretically we should prefer accidental selection, but quote selection gives at good
questioner net good, sometimes even better results.
From spatial view we accentuate to be, in correspondence with total spreading of population,
uniformly fill in regions (districts, regions) agglomerations of different size.
Questionnaire
In questionnaire we use almost only direct questions, that have closed form. The
questions should be short and clear.
* Awareness aided According to theory of learning is high correlation between mark
knowledge (product) and purchase activity. Therefore information about mark (product)
knowledge is basic information about conditions of penetrating of product, or mark the
market.
* Awareness unaided (spontaneous) is higher level of preservation of a mark in memory,
mark is automatically mentioned.
* He (she) bought, tried : includes all respondents who at least once bought the product, or
tried it. (Increase of cognitive page of perception).
* Repeated purchase, frequency of purchase shows level of loyalty to the trade mark.
* Main mark (minor mark). Consumer has usually tendency to choose some mark as main,
but can have also some minor marks, which he chooses as additional. Relation between main
and minor mark characterises next side of the picture of loyalty to the mark.
* Stocks (stocks that has a family at home)
* Switch : analysis switch gives a picture about main ways of moving from mark to mark.
Switch is usually investigated from two points of view : initial mark – shows on which marks
will move demand from our mark – i.e. what marks are for given mark the most dangerous.
* Mapping – correlation (or graphic) characteristics of mark position among other marks
from view of dimensions, that are from view of marketing mark strategy the most important.
* Economy and efficiency
Penetration is one of basic information for conception marketing politics. It helps to
orient in segmentation, shows risk situation, allows to express hypothesis about loyalty
factors, competition relations between marks, about needs of marketing support. At products
with more important share on the market it is possible to consider the penetration analysis in
some time intervals (3-4 years) for effectively spent money.
* Outputs and their reliability and interpretation
The results of penetration research we usually get in charter form.
13.5 How the customer behaves at purchase
Followed categories are for example :
* Purchase frequency – this information is important for choice of target group. Purchase
rhythm is lengthen. We must not forget the regressive binding.
* Frequency of purchase of certain product
* Size (total volume) of 1 purchase. Particular accent is put on connection of purchase and
services (food, entertainment etc.). This category changes in time.
* Size of purchase of 1 commodity also increases, but with lesser intensity.
* Place of purchase – changes dynamically.
* Decision tree (process at decision about choice of mark, product)
* Preferential (motivation) factors do not belong to typical quantitative phenomenon.
13.6 Things of long-term usage
Problem
How is equipped a household with thing of long-term usage ?
Philosophy of approach
Further classical quantitative research is research of households´ facilities with thing
of long-term usage. This research is not only used for estimation of facilities with given
things or demands for them, but it is a base for analysis about demands for products, that
have complementary relation with given subject (washing machine and washing powders, fuel
and car, frozen products and microwave oven etc.)
Methodology
The base is interviewing, usually Face to face. It is a typically quantitative research, is
valid requirement for precise selection of respondents, which minimises mistakes. The
selective ensemble is 1000 and more respondents.
Questionnaire includes practically direct and open questions only.
At research of facilities we deal with these categories :
- Ownership of the thing and usage of the thing :
- leasing – the thing is in usage, but not in ownership
- usage of official products – especially cars – here is valid the same note like at
leasing. Unclear is ownership by tradesmen. Generation shifting – the thing is at
grandparents´ disposal, is different owner and user.
- Definition of family and definition of household : The habitation condition in the past
built here complicated ownership relations and consumer behaviour at habitation in common.
If a household is not defined properly, can be incorrect results. This aspect can take on
surprising dimensions in international comparison, when we compare utilities at cultures,
where a household is created by the whole family clan.
- Number of things on 1000 households and per mille of households equipped with the
thing. Both categories have predicate abilities. The first category respects multiply facilities
of some households, the second category states pro mille of households that are equipped with
at least one thing.
-
Multiply facilities and life cycle : household does replacement of facilities for technical
innovations, but older things does not cast out, but removes them lodges and cottages.
Average numbers about innovation activities are distorted.
Economy and efficiency
Facility research is effective when it has large ensemble of subscribers, pays for large
contractor's community (producer, marketing and advertisement agencies). Is used as
economic indicator and also is a part of national statistical publications. For individual firm is
recommend to find if the necessary research did any from research agencies.
- Outputs and their reliability and interpretation
The basic output are charts, that are usually classified – for example according to age,
things, number of facilities etc.
Other researches with quantitative nature are :
13.7 How the customer behaves at consumption U&A (Usage and Attitude)
* Frequency of consumption – how often is the product consumed or used
* What marks are consumed (usually are the nature of U&A)
* Who in the household consumes or uses it
* Situation conditions – in what situations is used , sometimes we talk about situation
competence, for what situations is the product suitable
* Factors of choice – how proceeds a decision process in a household, is it planned or is
actually chosen from disposable possibilities
* Experience with preparation of consumption - how emotionally is preparation affected
(attention on conclusions from quantitative research)
* Experience with consumption – how emotionally is consumption affected (attention on
conclusions from quantitative research)
* Preference of trade marks, their evaluation – other attitudes are at quantitative research
examined exceptionally, results are less valid.
13.8 Product research
Problem
How is our product perceived and evaluated, what chance has new product in
competition field ?
Philosophy of approach
One of marketing axioms says, that for marketing is determining how is the product
perceived, not how it is.
Therefore belongs in the research also a specific complex of processes and tests, which
discover expected resonance of the product on the market. The investigated persons are
mainly laymen (common consumers), not experts.
At the beginning were tested new ready products (or their packages etc.), gradually
was included also testing of designs of new products and tests of concepts of new products.
Therefore are into the phase of ideas and first devices about new product “pulled” possible
consumers. Not only creativity, technicians and designers are sufficient, but also it is
necessary to listen the voices and opinions of consumers.
New products
a) can fulfil spaces on the market – a part of tests in searching for these spaces – or
b) have to replace products, that are leaving the market, because also the most
successful products have their life cycle, so new products are continually
developed and freshen up the already existing products.
Methodology
We divide the product research on searching and testing of ideas for new products and
on testing of ready products :
- searching for ideas : in first step it is necessary to create from basic idea a concept idea.
- test of (ready) products : (or their parts – see further) which shall find out (expected)
resonance on the market. Sometimes is tested complete mix , its target is to verify
synergy and consistence among different elements of marketing mix. This test is often
performed by form of simultaneous test of the market and is so constructed, to provide
estimation of possible volume of sales of new product.
This means, a product (when introduced on the market) can change or modify, because is
always in movement, so it is essential to evaluate it, or revalue. Therefore are product tests
and market analysis, that are searching new spaces, never ending processes.
Searching for ideas, new conception thoughts
Ideas of concepts of new products come out from many sources. Occasionally can arise on
basis of an individual creative idea, but the most often sources of ideas are :
- search of special literature including licences, data about competitive products etc.
- critical responses on existing products, on their usage, including spaces in production
series
- artefacts – from different sources – from handymen, archaeologists etc.
- different types of group discussions – foe example brainstorming – or games, as with
common consumers, so with experts
- morphological methods – searching for nature, original purpose, product adaptation to
certain scope
- activities of development workers
From view of production firm come out new conception ides from these sources :
- fundamental technical discoveries, usually from development and research department
- formalised processes on impulse of firm to search new ideas
- products transfer from other markets to “our” market
- imitations and fakes
Fundamental technical discovery
Also a new product, coming out from fundamental technical discovery, must be tested
in scope of product test.
It is necessary to test the product and find out :
- what asset, advantage, benefit brings its usage to consumer
- how must be this asset presented to potential consumer
In scope of the test is important to find out its communication value, i.e. what says the
product itself and how is comprehensible to consumer.
One of used ways if research of “benefits and reasons”. The aim of this research is to
understand :
- to whom can the product bring the biggest benefit (what target group)
- to find out for consumer the most attractive benefits of product (drivery)
- the most motivated reasons for product purchase (reason why).
Even if this access can appear in initial phases of development as baselessly rational, it
represents key questions where the nature of intellectual conception of new product is
formed.
Formalised researches
The second way how many producers try to find out new ideas is process of
formalised researches. Some research agencies have in this sphere its know-how.
These researches usually include two types of analysis :
- description or market mapping with consequential analysis of current market situation, i.e.
creation of market picture and position of different marks in this picture with aim to find out
spaces on the market.
- If spaces are found, the next step is to determine why. The reason of space could be (and
often is) the fact, that the product type that could fulfil the space is totally uninteresting for
consumers.
These can be groups of products or concrete product, also sub elements – physical or
emotional elements, that could influence consumers decision.
Analysis proceed with quantitative methods (representative interviewing to find out
how many people have mentioned associations for colour etc.), but also methods of
qualitative research.
The initial phase of qualitative research of concepts of new products development is
brain storming. This can be done by consumers, so by working group from the firm.
In general, the consumers are not very good at creating of new ideas. But the
consumers usually have not tendency to preconception.
Special are (discussion) groups, that meet repeatedly. After first meeting of the group
analyses the producer, propagation or design department results of the discussion and uses
them for revision of stimulation materials. These presents again to the same group of people
to new evaluation – creates some type of feedback.
This process continuous for three or four meetings, usually in relatively short time.
It is necessary to mention : consumers, who were at the first meeting classical laymen,
are not any more at repeated meetings. They have more information.
Products transfer from other markets to “our” market
Thank to growing domination of multinational companies is the most usual source of
ideas – how to come with a new product on the market – to simply introduce already existing
product from a country on a market of a new country.
But the fact that a product is successful in one country is not guarantee that it will be
successful in other country.
Already existing product can be tested by usual processes, but often is useful to test
concept of this – new for given market – product. In this case tests the concept usually
prospective position of the product on the market, acceptability or comprehensibility of
product presentation etc.
Imitations
The way that is on the first sight ethically inadmissible, but has its practical form. The
producer´s effort to connect an imitation with anew product, modification etc. is an asset for
market variety.
A specific problem are fakes, that overstep ethical limits of mental ownership, but are
hardly apprehensible when does not exist precise law (licence) protection.
Concept testing and its processing
The concept testing is the critical phase of research process. Also this phase can be
done in qualitative, quantitative or both methods.
One of the most important thing especially at application of quantitative processes is
to set before starting of the test .
- key parameters
- way of use of HDP results
Example : when one of the targets is to reduce number of concepts, must be set clear
criterions to determine how this reduction will proceed.
Content of concept
The concept usually includes :
 Resources that characterise basic conditions for new
 Positioning of product that is dependent on source of idea, can proceeds from :
new technical idea – placement on the market from morphological access –
suitable product expression for certain idea, category.
Positioning expresses a basic idea, the priority is briefness. (For example on the
market where image plays a big role is more advantageous representation expressing
emotional picture of the product – funny, lively, family, etc.).
Concept reflects situation of development, if the product is in the phase of topic, then
concept characterises way for own development (forms spirit of the product). If the product is
closer to the end of the development, then is increasing the weight of positioning (marketing
activities).
Difficult is concept comparing in different phases of processing. Similarly can
distort the results of concept test formal side (quality of drawings, pictures, formulations).
Mark testing is very useful when expanding the mark.
Non-mark testing is usual for new usage that for expanding of existing series. In this
phase is not decided about kind of label, if the product place in the existing brand family or
create new sub brand.
The concept tests can be done without price marking and with price (in case it is
assigned). Influence of price is individual problem.
Winning concept
Further critical factor is to decide, what criterions should be determine for appraisal,
if the concept will be further developed.
Ideal sample of concept test shows which concepts from given complex are the best.
This is achieved by comparison of number of points reached in given research with
normative results from database from research agency or marketing company.
The most common criterions are :
 purchase intention,
 uniqueness. It is important for new products. Ability to differentiate products from
one firm from competition is very valued in marketing. Same as the importance
that a new product will require less support of advertising. Differentiation of a
product is the base of the whole skill of mark creating.
Risks – tested persons – or : Who should be the source of information ?
In initial phase of concept research is not suitable to use only individuals from key end
group, for which the product is set.
Reasons :
 testing of concept in end group only will limit information,
 it is recommended to test consistently representative sample of population.
Development of other elements of mix
From effective concept is long way to product, that it possible to put of shelf in a shop.
In further phases it is necessary to research the whole product, its colour, form,
package, (price, advertising etc.).
When we have the product ready – the ways of research divide :
- concentrating on own product, its resonance on the market - product test
- concentration on penetration of product on the market – simulated test markets
Researches in the sphere of “ready” product
* Product test
is classical process in scope of product research. It is performed :
- in studio, laboratory,
- in households of testing persons,
- at accidental encounter of product and testing person, for example at exhibitions.
Product test has many variations, is adaptable to concrete situation, uses different processes
and technical means. Is very tractable and adaptable for concrete target and provides with
information that are not detectable with other methods.
But its application has some limitations :
- overestimation of the product (following from quality of tested product, from character of
testing persons, etc.)
- reality versus test : differences, distance between testes and consumable situation
- differences in quality of tested product
- overestimation of (sensual) differentiate abilities of tested laymen
- expenses – it is relatively expensive test
Product test enables to test :
 the whole product as is offered in a shop
 part of the product – example : only sound of television
 the whole product including attendant services and information (how is the product
offered, what information are provided etc.)
 different variants of the product (in different colours, sizes, packages etc.)
Product test has specific rules :
 product must be present while testing,
 product test is a test of laymen,
 processes must respect this fact,
 to approach maximal the test situation to real consumable situation.
The most used tests :
Perception test and experience test
Perception test probes how the product influence the tested person.
Are tested new products and products on the market. Communicated characteristics of
the product (package, character) are confronted with results of experience test. Tested persons
must have experience with consumption (usage) of the product.
Results comparison of perception and experience tests give important information for
marketing.
Different techniques of product test enable to test different variants of product or its
parts only.
Elimination technique – eliminated attributes of a product can be substitute by others – by so
called substitution technique – and test in process steps, if and how these substituted attributes
influenced valuation of the product by testing persons.
Use : we find out influence of eliminated – or substituted – attributes on total evaluation of the
product :
 at one product differences of evaluation between individual steps
 also comparison of two (sometimes more) products at individual steps
 and the same at substituted attributes
Problems in application of elimination and substitution technique :
 integrated perception of people
 perception and implicit evaluation is influenced by order of eliminated attributes
* Simulated test markets
is the last phase before presentation of the product on the market, should test the
complete marketing mix.
The simplest and most enlarged mathematical solution of this problem is standard
Bass model. We meet this model in different variants, that try to express more difficult
relations.
Group that accept as the first the innovation is called innovators, for them is proving of
new product connected with prestige. The first phase is depending on product acceptability of
this group.
The next key group is called as early adopters. They buy the product that went through
the entering phase and lean on knowledge of its benefit.
The next phase of diffusion process is called as “early majority”. The product becomes
more popular. This phase is accompanied by producers´ and salespersons´ activities, brings
maximal volume of profit.
These leads to abrupt decrease of prices and increase of advertising and propagation
support, this retrospectively actuates to increase of diffusion rate.
The process is ended with so called “late adopters” and “laggards”.
Identification of individual groups is possible to obtain with help of attitudes and
behaviour analysis in analogue consumable spheres. With confrontation of these groups in
possible to get readiness for future product acceptation.
13.9 Price and its research
Problem
Is the price correctly positioned ? Is it not high on uselessly low ? What says the price about
product ?
Philosophy of approach
Price is very specific category, that have many often opposing aspects. Therefore are
questions for market research sometimes very difficult.
- the price must be assessed in scope of the whole marketing strategy. We assess product
placement on strategic markets, suitability of price for target group, efforts to assure
required market share, as part of firm´s design etc.
- the price is assessed from view of requirements for stability (guaranteed price at homedelivery services, fixed price in the shop, contractual price at services, from view of
season, discounts, actions, etc.)
- the price must be assessed in competition field of reference products and their marketing
strategies
- the price must be assessed as factor limiting demands, in the same conditions with
increasing price decreases demand (rational price perception)
- consumer assesses product on basis of price, has tendency to impute higher quality to
product with higher price (mirrored price perception)
- the price must be assessed from view of substitution relations – price influences not only
demand for given product, but also demand for substitution and complementary products,
prices of substitution products influence than also price. At some products is important
complementariness – prices of complementary products – for example additional devices,
spare parts etc. and the price of set
- product has its target group , this group has tendency to buy products of “its target level”,
refuses “too cheap” and “too expensive” from view of its social position, the demand is
often determinate by offer of shops, where this target group usually shops
- the price is assessed in context of price level development – inflation,
- market research does not deal with binding on expense or profit calculation. But its
importance at price creation is not reduced.
The price has ambivalent character and must be “adjusted” in consideration with given
situation (not too high or low price).
Marketing price conception can weaken seriously if we assess the price from one point of
view only.
The basic criterion of the price is benefit, that the product brings. The benefit can be
expressed with different ancillary criterions :
 Relation between price and perceived quality - the quality is in general level
hardly measured quantity, in marketing it is about haw the quality is perceived by
subject – cognitively and effectively. In correspondence with this is also the
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Simon´s conclusion, that the price is used as qualitative indicator, if the quality
evaluating is difficult for consumer.
Relation between price and trade mark. The part of design is also some price level.
With this is connected also “mark competence”. Deviations from this competence
have usually bad consequences for image of the trade mark. With this is connected
also individual direction for target group.
The price is assessed in context to its surrounding, i.e. inflation progress,
development of prices of competitive products and development of price level as
the whole.
The price must be also adapted to character of decision process. At common
consumable goods has the consumer easier decision schemes, he is more overcame with
impulsion motives and usually does not know exact price of the product. Other situation is at
so called real decision, that proceeds usually at products of investment character (according to
Katona). Consumers collect information, compare competition products from view of quality
and price.
The big role plays image of the product. At price evaluation work the purchaser more
with imagination than with exact parameters. Therefore we test the price from view of
perception of the target group.
By goods of investigation character at B2B is the recourse the product´s technical
parameters, but some role of mark image cannot be neglected.
Methodology
Econometric methods of price analysis is from view of marketing relatively separate
problem, for marketing are applicable only with big reservation.
In this sense we state some basic model characteristics :
Price flexibility comes out from presumption that with certain percentage change will change
also demand for certain percentage.
e = (ΔD/D) : (ΔP/P)
e
D
P
is flexibility (elasticity) – value that states how will change the demand in %
when the price changes about 1 %
demand – formulated in mass units
price – formulated as price for unit – in price analysis we sometimes work with
price index
Substitution effect
At estimating of price flexibility is important to know so called:
Slucki-Schulz theorem
e = -E ± S
the price flexibility is equal to income flexibility value with inverse polarity plus or minus
substitution effect. The less deviate the products the bigger is substitution effect and in
consequence also price flexibility has bigger absolute value.
Contrary – lowering of absolute value of price flexibility influences complementary
effect, e.g. in consumption is one product connected with other (for example car and fuel).
Optimal price
Optimal price defines so called :
Robinson-Amoros relation
P* = e/(1+e) . C´
P*
C´
e
optimal price
marginal expenses
price flexibility
This relation allows to estimate flexibility of presumptive profit. Where is strong
competition field and where affects invisible hand of market, there is necessary to consider
with responsive price flexibility.
Analysis of price flexibility
Finding out the price elasticity from time series is necessary to consider as
confirmatory method, results reliability depends on statistical material and assortment´
specifics.
In case of availability of relevant statistical information we perform estimation of
price elasticity and cross elasticity. We usually work with models of MAM group (Multiattribute-modelling) – price is followed as one of tested attributes.
At price testing is recommended, that MAM test precedes to specific price tests and
allows to find out intensity of price influence.
Subjects of price elasticity
expense aggregates
commodities
products and trade marks
complementary cross-elasticity
substitution cross-elasticity
Expense aggregates – for example food, habitation, hygiene etc. The price elasticity is
close to income elasticity with minus sign, because substitution relations between aggregates
are weak.
Commodities : price elasticity has logical value in sphere from –0,1 to circa –4 in
dependence on non-essentiality and on substitution or complementary relations.
Products and trade marks – marks competition is reason of important substitution
pressures, that increase absolute value of price elasticity - explanation we find in RobinsonAmoros relation.
Cross elasticity at products, where predominates complementariness, is in minus field,
but its deviation from zero is small.
Cross elasticity at products, where predominates substitution, is in plus field, deviation
from zero is usually low, but can reach also higher values, if the price is strong perceived.
Price curve and Veblen effect (Prestige effect)
American sociologist Veblen warned that at some products is strong tendency to buy products
in certain price level. This is valid especially for segments in higher groups, where social
group creates pressure on prestige consumption.
Graph 1 : combination of classical price elasticity and from certain price Veblen effect.
Demand is generally influenced by price elasticity, but from certain price is increased interest
of certain segment.
Graph 2 . Pure Veblen effect. Product is demanded mainly by certain segment, but is not
attractive until certain price. At lower price has not sufficient reliance or social symbolic.
Change of price proves not only immediately in connection with price change, but has
some character of subsiding. It is formulated as so called Carryover effect (see Simon,
Kotler).
The price influence can be divided into :
 immediate
 short-term (usually stated by elasticity)
 comeback : tendency to return to consumable habits (consumable habits have
longer validity – typical at smoking)
 dynamic – carryover effect – new price creates new consumable habits, first
purchase displays in some extension in repeated purchase, gets to change in trade
mark loyalty.
Carryover effect is formally expressed in three forms : (according to Simon, H. Price
management),
1. as additive
qt = at + λ qt-1
q
a
λ
amount of sold goods
constant
Carryover coefficient
2. as multi plicate
qt = at . q λt-1
λ
Carryover elasticity
3. with variable (decreasing) value
qt = (at + λ qt-1) rt
r
coefficient of reduction
For orientation some values (according to additive model), published by Simon
(rounded)
Commodity
Cosmetic
Pharmaceutics
Drinks
Cigarettes
Fuel
Coffee
Vegetal greases
Washing powder
λ
0,63
0,63
0,61
0,57
0,56
0,50
0,46
0,38
Some specific effects refers to certain situations. For example Guttenberg effect –
price reductions at sales causes different intensity in dependence with change extension.
Methodology of price tests (finding out by interviewing)
Marketing praxis does not provide with sufficiently quality statistical material, that
would enable a credible statistical evaluation of price influence. Therefore we consider the
results as tentative.
Therefore the market research uses methods of price tests, nature of which are
analysis of attitudes to price and corresponding attributes.
On one side restricts the price consumption – classical price elasticity – on the other
side is the purchaser importantly influenced at quality perception by product price, what can
cause seemingly paradox price influence, where dominate social-psychical aspects.
* The price has anticipation value in relation with quality : the consumer assumes that the
quality corresponds with price.
* The price is more stable element at solution of cognitive dissonance, for good picture of
perception must correspond the quality and the price.
Experiment McConnel 1968 : test group evaluated 3 beer (fictive) marks, with neutral
labels, differentiated only in price. After testing tests described the respondents qualities of
the beers. In the group of the most expensive beer predominated positive qualities, the
cheapest beer had deficit of positive qualities and marked predominance of negative qualities.
The other aspect is time display. Immediate result of price increase is over
dimensioned first reaction, dependent on extent of change and on behaviour of price
surrounding. In general it is valid also at price decrease (Guttenberg effect).
At price analysis we can use for example these methods :
 Estimation of price level, that is expected at products super premium, premium,
standard, cheap. Comparison with real price of product allows to assess, how will
be the product perceived.
 Price estimation of given product and competition products. Most of the
respondents do not know prices of individual products and the price figures
according to product perception, in which quality is evaluated.
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Qualified price comparison : respondent assesses what would be adequate price of
other products, if the price of initial product is defined on certain level.
Ambi test : product set allowing to consider the rate of price influence on quality
perception.
Ranking of quality and price of reference products.
Processes based on willingness of purchase at certain price relations.
Different cognitive programmes.
BPTO (Brand-price trade off)
Characterises preference of purchase at certain price relations. BPTO allows to
deduce the optimal price and also allows to simulate effect of different price
tactics.
It is very sophisticated method, its asset is charting of price relations effect of
relevant set of competition products.
* Test of acceptable price. Cumulated part of respondents, who accept some price, creates a
curve with marked price thresholds, that show the critical parts of price positioning of
product.
* Price sensitivity test.
Price tests are often performed with technique of shelf test, it means that tested
products including reference competition products are on shelf next to each other like in a
shop. Neither the tested person nor the interviewer does not know, which products are tested
and which are reference.
The other tool for these price tests is table with price scale, the tested person scours
from below (or from the top) the prices up to the limit, that answers critically the given
question.
Each of the mentioned methods of price testing show the price perception from
different views. Only with their comparison and synthetic evaluation is possible to
characterise the space for marketing price positioning.
Testing of acceptable (maximal acceptability) prices – price thresholds
Is a method, which originally issued from psychophysics (perception thresholds etc.)
and was further developed by prof. Stoetzl (Sorbona – Paris).
Respondents in correspondence with consumable logic (maximisation of effect for
disposable budget) want to have the lowest price. Therefore we formulate questioning for
price, that would still be maximal acceptable.
Respondent set the upper acceptable price on price scale.
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So called price thresholds, e.g. breaks, where come to marked decrease. Typical is
“Baťa effect” – the biggest price beaks are around price rounded (tens, hundreds).
We follow boldness of the break, e.g. share of those, who stop at this price. The
more marked is the price threshold, the bigger decrease of demand signalises.
We follow marked breaks, moving around the limit 50% of respondents : this limit
has importance from view of public opinion, if for most of the respondents is the
price acceptable, it is expected that this opinion will gradually predominate.
At standard common products we usually require acceptation at 2/3 of
respondents.
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At super premium products is usually required acceptation at 1/3 of respondents.
PST (Price sensitivity test)
With test scale tests the respondent 4 price levels of given brand :
Moving up the scale you can see there, at what price do you feel (test product, service) is
(accord. to Westendorp) :
 Becoming Expensive
 Become Expensive
 Becoming Reasonably Priced
 Def. Good value
Respondents have at disposal number of prices from the real lowest to the highest
(relative to given product).
At third and fourth product proceeds the respondent from the highest price, designates
again the price corresponding with given statement.
The Westendorp method has quite good predicate ability and is modified in different
ways.
In the ČR showed quite good distribution the statements :
 the product is unacceptable expensive
 the product is expensive
 the product is cheap
 the product has suspiciously low price
PST gives especially quantitative information, has some questions, which can be answered by
qualitative research only :
Table No. 13-1 : Information obtained by PST
Quantitative information
real price diverges relevantly from point
of optimal price (points F resp. E)
Qualitative problems
product is incorrectly priced positioned or
is perceived in discrepancy with price.
Necessary analysis of product perception.
Is correctly defined the target group ?
neutral, safe space is relatively narrow
limitation of neutral space is usually
defined by competition products and
intensity of their perception. What are the
competition aspects ? Bench comparison.
Neutral, safe space is relatively large
usually signalise social uncertainty,
product is inadequate social positioned
operational space is extensively open to
cheap prices
is the mark adequate protected against
imitation ? Is the product logistic good
worked out ?
operational space is relatively large
testifies about predominance of perception
evaluation over experiences, image is
diffusion, is the mark knowledge
sufficient ? Is the image formed well ?
curves in section of points A and B are
relatively steep
testifies about authoritative position of
competition. Which product or group of
products defines it ?
Also comparison with other tests answers number of questions and expresses
questions for qualitative research. Valuable is also comparison PST with perception of
position of super premium, premium, standard and cheap products.
At price positioning (especially at premium products) appears as useful respondents
categorisation into social segments.
Research in the price sphere is very useful for some products, because price
positioning can remarkably influence the total position of the product on the market.
Outputs and their credibility and interpretation
The result of price analysis – if performed properly, is not clear recommendation. It
shows that the problems of prices is very difficult, but also partial consultation with relations
influencing the price can have important asset for marketing decision.
Evaluation of perceived price, acceptable price (price thresholds) and PST are methods
of subjective price perception with requirement caeteris paribus.
Conclusions :
 price evaluating has a rational relation, characterised by price elasticity and
derived theorems. (Slucki-Schulz, Robinson-Amoros etc.)
 evaluation is influenced by selective choice of qualities (see Fishbein)
 the price evaluation influence mirror effect – insufficiency of cognitive criterions
replaces the purchaser with price, the price is signal of quality, or product utility
 evaluation is subconsciously pressed in certain way by emotional influences
 evaluation in influenced by schemas, consumer is at price evaluation influenced
by stereotypes
 price evaluation is usually difficult to insert into formal logic model, is often
influenced by intuitive conclusions.