Research, Demand &
Environment
Chapter 5
Class: June 1st
•
•
•
•
Sorzal: Group in-class exercise
Lecture and discussion: Marketing Research
Break
Article Discussion: Mismanagement of
Loyalty/Wal-Mart/How Global Brands
Compete/Video: Stealth Marketing
The Role of Marketing
Research
• What do we want information on?
• How can we use it?
• What are the advantages of research?
Marketing Research: the process of
planning, collecting, and analyzing data
relevant to a marketing decision.
Roles of Marketing Research
• Descriptive: gathering & presenting
factual statements
• Diagnostic: explaining data
• Predictive: attempting to estimate the
results of a planned marketing decision
Purposes of Research
• Planning
– Segmentation: what kinds of people buy our
products? Where do they live? How much do they
earn? How many are there?
– Demand estimation: Are the markets for our
products increasing or decreasing? Are there
promising markets that we have not yet reached?
– Environmental Assessment: Are the channels of
distribution for our product changing? What should
our Internet presence be?
Purposes of Research
• Problem Solving
– Product: What kind of packaging should we
use? What features do consumers value?
– Price: What price should we charge? Do
consumers view price as a cue for value or
quality?
– Place: What kinds of incentives should we
offer our distributors to push our products?
– Promotion: Which is the most effective
model to use in our advertising? How much
should we spend?
Purposes of Research
• Control
– What is our market share overall? By
customer type? Geographic area?
– Are customers satisfied with our products?
How is our record for customer service?
Do customer service levels vary by
market?
– What is our reputation in the community?
Difficulties with Research
• Take it seriously
• Make a decision like they would in “real
life”
• Honest answers
• Response rates
Are you on the A List?
The Marketing Research
Process
Define
Problem
Plan Design/
Primary Data
Prepare/
Present
Report
Follow Up
Specify
Sampling
Procedure
Analyze
Data
Collect
Data
Defining the Problem
• Conduct a situation analysis
• Use secondary data
– Internal company information; government;
trade & industry associations; market
research firms; commercial pubs; news
– Good: saves time & money; determine
direction; Bad: not on target;
quality/accuracy
• Look at symptoms of the problem
Areas to Consider for Problems
• Company analysis
– Sales & profits; internal information;
external information; library
• Product & Brand analysis
– How does the product match w/ c’s needs
and wants? How is it perceived? Brand
personality?
• Competitive analysis
– Identify options; perceptual maps
Some tools
• Simmons Study of Media and Markets
(SRMB) and Media Mark Research
(MMR) – reports on the usage of brand
in 800 categories
• VALS – used for segmenting consumers
Age Influences on Consumption
4-1
18-24
25-34
35-44
Products
Tequila
Scotch
Laptop/notebook
Doctor visits
156
44
94
74
174
66
115
88
115
98
124
91
57
143
139
107
64
119
98
110
5
137
15
135
Activities
Barbecuing
Aerobics
Cruise ship
Volunteer work
69
171
60
75
116
140
80
96
139
118
95
117
130
99
114
121
82
28
144
97
32
18
121
82
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research, Inc., 1997).
45-54 55-64
65+
Age Influences on Consumption
4-1 (II)
18-24
25-34
35-44
Shopping
Montgomery Ward
The Gap
Dominos Pizza
Marie Callenders
91
217
161
77
87
140
132
80
106
85
124
105
94
82
80
135
117
52
52
110
110
26
30
96
Media
Reader’s Digest
Rolling Stone
MTV
CNN
64
290
286
73
75
158
153
93
96
93
81
99
109
46
42
114
119
14
22
117
144
2
16
107
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research, Inc., 1997).
45-54 55-64
65+
4-2
Occupational Influences on
Consumption
Administration/
Managerial
Technical/
Clerical/
Sales
Precision/
Craft
Products
Domestic beer
Luggage
Cigarettes
Diet colas
Laptop/notebook
98
136
87
128
234
72
106
83
111
143
185
84
165
89
56
Activities
Sailing
Archery
Dining out
Lottery
299
91
147
105
67
82
118
101
105
239
98
131
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research, Inc., 1997).
4-2 (II)
Occupational Influences on
Consumption
Administration/
Managerial
Technical/
Clerical/
Sales
Precision/
Craft
Shopping
Wal-Mart
Ann Taylor
Olive Garden
Bonanza
94
245
123
53
102
131
122
100
1,009
33
77
109
Media
Playboy
Outside
Jazz radio
Country radio
85
193
189
96
96
94
126
109
230
58
66
126
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research Inc., 1997).
4-3
Education Level Influences on
Consumption
Graduated
College
Attended
College
Graduated
High
School
Did Not
Graduate
High School
Products
Champagne
Chewing Tobacco
Laptop/notebook
Heavy video rental
143
56
227
73
117
98
118
125
86
114
52
112
53
134
16
74
Activities
Tennis
Lottery
Hunting (with rifle)
Cook for fun
188
78
88
131
129
100
102
119
54
120
118
83
41
91
77
69
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research Inc., 1997).
4-3 (II)
Education Level Influences on
Consumption
Graduated Attended
College
College
Graduated
High
School
Did Not
Graduate
High School
Shopping
Venture
Banana Republic
Church’s Fried Chicken
TGI Friday’s
87
174
59
152
98
131
90
125
104
62
107
78
110
39
48
46
Media
National Enquirer
National Geographic
The Nashville Network
BRAVO
46
148
62
146
107
113
97
130
127
77
123
82
112
61
106
40
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research Inc., 1997).
12-5
VALS2 Lifestyle System
Actualizer
Principle
Fulfilled
Believer
Status
Abundant resources
Action
Achiever Experiencer
Striver
Maker
Struggler
Minimal resources
Source: SRI International.
Achiever
Striver
93
129
117
119
125
88
93
129
73
63
114
113
82
118
96
126
89
73
41
57
69
67
69
85
118
109
103
88
117
101
130
141
104
96
123
82
111
68
53
87
71
87
58
112
110
45
94
53
109
54
133
55
115
157
216
89
172
154
143
88
123
104
86
91
81
123
88
116
135
63
102
171
Struggler
Believer
125
155
217
120
171
141
238
155
114
293
145
161
Maker
Fulfilled
Barbecue outdoors
Do gardening
Do gourmet cooking
Drink coffee daily
Drink herbal tea
Drink domestic beer
Drink imported beer
Do activities with kids
Play team sports
Do cultural activities
Exercise
Do home repairs
Segment
Actualizer
* Figures under each segment
are the index for each segment
(100 = Base rate usage).
Experiencer
VALS2 Segment Activities 2nd Media
12-6
Use*
50
80
47
116
68
50
12
32
34
14
39
58
Source: SRI International.
Achiever
Striver
48
64
105
227
173
143
83
115
120
199
113
50
36
73
50
74
106
150
119
113
29
161
132
126
52
90
79
179
87
90
46
129
77
62
114
57
59
96
50
37
66
63
37
93
44
42
109
92
283
231
254
71
109
57
130
135
105
35
71
104
171
94
157
33
49
87
209
86
45
37
89
153
Struggler
Believer
190
109
92
255
274
58
56
83
533
161
96
35
Maker
Fulfilled
Do risky sports
Socialize weekly
Automotive magazines
Business magazines
Commentary magazines
Reader’s Digest
Fish and game magazines
Human-interest magazines
Literary magazines
Watch “Face the Nation”
Watch “L.A. Law”
Watch “McGyver”
Segment
Actualizer
* Figures under each segment
are the index for each segment
(100 = Base rate usage).
Experiencer
VALS2 Segment Activities 2nd Media
12-6 (II)
Use*
7
62
22
8
15
130
79
46
31
126
70
140
Source: SRI International.
Research Plan/Design
• Specifies research questions to be
answered, how & when the data is
gathered & analysis
• Primary data
– Good: answers specific question; data is
current; source is known; Bad: expensive;
quality declines if long interviews; response
issues
Research Methods
• Quantitative Measures (Surveys)
• Qualitative Measures
– (In-Depth,Focus Group)
• Which is better?
– One is words, one is numbers.
– One is confirmatory, one is exploratory.
– What does the research call for?
Qualitative Research
• In- depth interviews
• One on one
– Unstructured interviewing
• (core concept)
– Semi-structured interviewing
• Small number of questions
– Standard open-ended
– Key informant interview
Things to consider
• Role of interviewer is key!
• Motivate/Put at ease/No bias/Rehearse
• Pacing- according to respondent/ don’t
but in
• Opening = Establish the tone
• Middle game = protocol questions and
additional probing/ ask why?/ elaborate
• Wrap Up = sense of closure
• Questions: Broad and few
Focus Groups
• Subjects should be recruited with little
priming!
• Role of the moderator is make or break!
–
–
–
–
–
Training is crucial/Rehearse
Keep the group focused on subject at hand.
Understand what it is you’re measuring.
Tailor moderator style to the group.
Keep the discussion flowing.
Types of questions
•
•
•
•
•
Open-ended
Clear and easy to understand- no bias
Sequenced from easy to hard.
Ordered from least to most personal
Sessions should be recorded/ notes taken by
another individual out of view of group.
Surveys
• What are you measuring?
– Determine question content, scope, purpose
– Choose a response format
– Word the question to get at area of interest
Ordering and placement of questions crucial!
Opening questions
Sensitive questions (disclaimer)
Survey checklist
•
•
•
•
Start with easy questions.
Threatening, personal questions near end
When switching topics – transition
Avoid response tendency bias
Survey Question Issues
•
•
•
•
•
•
•
•
Specificity is the key.
What types of questions asked?
Question complexity (break it up).
Do you need screening questions?
Bias – no leading questions
Is the question necessary?
Are several questions needed?
Can the question be misunderstood?
– What kind of headache remedy do you use?
Open-Ended Response Format
• Unprobed:
– Unaided awareness: “List some competing
brands of toothpaste.
– Store choice: “What grocery store receives the
majority of your household’s purchases?
• Probed:
– “Can you think of anymore brands?
– “Are there anymore stores where you shop?
Closed-Ended Response Format
• Dichotomous: Only two choices
– Good for qualifying items, screening questions
• Multiple category: More than two choices
Closed-ended item that is nominally coded.
Who is your major wholesaler?
Affiliated Foods
Topco
Fleming Foods
Other
•
(1)
•
(2)
•
(3)
•
(4)
Measuring Attitude Components
Cognitive Component (Measuring Beliefs about Specific
Attributes Using the Semantic Differential Scale)
Diet Coke
Strong taste
——
——
——
—— —— —— —— Mild taste
Low priced
——
——
——
—— —— —— —— High priced
Caffeine free ——
——
——
—— —— —— —— High in caffeine
Distinctive in ——
taste
——
——
—— —— —— —— Similar in taste to
most
© The McGraw-Hill Companies, Inc., 1998
Measuring
Attitude
Components
Affective Component (Measuring Feelings about Specific
Attributes Using Likert Scales)
Strongly
Agree Agree
Neither
Agree
nor
Disagree Disagree
Strongly
Disagree
I like the taste of Diet Coke.
——
——
——
——
——
Diet Coke is overpriced.
——
——
——
——
——
Caffeine is bad for your health. ——
——
——
——
——
——
——
——
——
——
I like Diet Coke.
Measuring Attitude Components
Behavioral Component (Measuring Actions or Intended Actions)
The last soft drink I consumed was a ___________________.
I usually drink________________soft drinks.
What is the likelihood you will buy Diet Coke
the next time you purchase a soft drink?

Definitely will buy




Probably will buy
Might buy
Probably will not buy
Definitely will not buy
VALIDITY AND RELIABILITY OF
MEASUREMENTS
• Validity: Accuracy
– Conceptual Issue
– Face Validity
– Predictive Validity
• Reliability: Consistency
– Proportion of statistical error
– Test-Retest
– Inter-Item Correlation
• Increasing the number of questions (items) can increase
both the validity and reliability of a scale.
Types of Research:
Observation
• People watching people
– Mystery shoppers
– Focus groups
• People watching activities
– Audits; “The Science of Shopping”
• Machines watching people
– Traffic counters
– Passive people meters
Types of Research:
Other types
•
•
•
•
•
Projective techniques
Association tests
Experiments
Test marketing
Other techniques (response latency,
galvanic skin tests)
Research in Context
Purpose:
Data → Information → Insight → Inspiration
The Raw Stuff
What we gather.
Basis for describing:
•the marketplace,
•target consumer
and
•their behavior
Research in Context
Purpose:
Data → Information → Insight → Inspiration
•Analysis
•When data is analyzed, simplified and reported
•Charts
•Tables
•Graphs
Traditional
•T-tests, p-values
stopping place
Missing?
“The intuitive mind is a sacred gift and the
rational mind is a faithful servant. We have
created a society that honors the servant
and has forgotten the gift.”
- Albert Einstein
Research in Context
Purpose:
Data → Information → Insight → Inspiration
What It Is
•Not facts
•Obvious facts are already
known
•Patterns
•Implications
•Creative interpretation of
information
Desirable
Characteristics
•Simple/clear
•Actionable
•Managerial Relevance
Research in Context
Purpose:
Data → Information → Insight → Inspiration
Inspire what?
•Action!
Inspire Who?
•Creative
•Create an ad that
consumers will respond to.
•Consumers
•To respond to ad, and act
on it.
Get at the “Truth”
• Socially Desirable Responding
– “If he wants me to criticize…”
– “I’m not affected by advertising.”
• Political Correctness
– Moral high ground
• Don’t know why or what
– Don’t count on respondents to know.
• Hotel Gym:
– 70% “Very Important”
– 17% actually use ‘em.
Get at the “Truth”
• Don’t “ASK”
– “Most important characteristic of disability
insurance?”
– How can we get you to drink more milk?
• Who asked
• Watch body language (leaning forward;
eyes open & laughing)
• Where asked
– “Natural Habitat”
The Story of Porsche –
using qualitative techniques
• Porsche – 1986 over 30,000 sold; 1993 less than
4000 (model change, recession, price increase…) Is it
the 80s car???
• Research Part I (a) – Nonusers & thought bubbles
• Part I (b) More qualitative data – 1000 people
interviewed; 200 people had bad things to say.
Porsche continued…
• Research Part II: What is your dream car? Draw
your ultimate dream car. 8-10 year olds say….
• Sports car, red, Porsche, check out the detail….
Porsche continued…
• Research Part III: Luxury car owners – “Draw the way
you feel about your car”
• BMW, Mercedes, Infiniti and Lexus:
– In driveways
– Outside looking in
– Hood ornaments
– Airbags
– Luxurious leather seats
– Hifi systems
– Enjoyment- owning and being cocooned.
Porsche – The final story
•
•
•
•
Rarely drew the car
Visceral
POV: Drivers seat
Winding road
– Trees
– Sun
• Insight
– “Love of the experience of
driving”
– But had a negative, serious
image to overcome
The Story of Cuervo Gold
• Qualitative/objective
– Rated tequila and Cuervo
– Mapped: “Good drinks”, “Fun times”, “Real
people”
• Created over 30 campaigns
– Tested quantitatively in malls at 10 am
– Who is in the mall at 10 am?
• Could not get all three
Problem??
• Ignored the subjective
• In focus groups:
–
–
–
–
–
Laughter
Sideways glances
Bury faces
Stories
“Imagine a party where they were answering the
door to arriving guests each of whom was toting a
6 pack of beer. Imagine one guest arrives carrying
a bottle of Cuervo. What does that signify?”
The Story of New Coke
• 1950s
– Pepsi defined Coke
– Started the Pepsi Generation
• 1975
– Sugar crisis
• Pepsi Challenge
– Coke’s response: “The Real Thing”, “Coke is
it”
• Initial research problem/question
– Why are we hemorrhaging market share?
Focus Groups
• “Why aren’t you
drinking as much
Coke as you
used to?”
• “But I’m drinking as much
as I need. I drink it when
I’m thirsty, and I drink it
when it’s hot. I drink it
when I’m eating a
hamburger.”
Focus Groups
• “What would
it take for you
to drink
more..”
• “Nothing.”
Open-ended questions
• “What do you think
of Coke?”
• And yet we still lose
market share….
• “Coke is a part of
my life. It’s the one
that understands
my feelings. It’s the
one that’s been
around for a long
time.”
New Coke: The Research
• “…We ourselves had fallen for Pepsi’s point–
that taste was the only thing that mattered.”
- Sergio Zyman
• New Formulas
– Blind taste tests
– New formulations against Pepsi, Old Coke
More Research
• “What would you do
if we gave you a
product that tasted
better than Pepsi,
but still was Coke.”
• “I would buy it.”
• “Would you like
that?”
• “Sure I would like
it.”
New Coke Launch
• Introduced w/ great
fanfare in 1985.
• Such a huge
success that…
– Coca-Cola Classic
reintroduced 77 days
later.
• Where’d they go
wrong?
“The Question”
• “If we took away Coca-Cola and gave you New
Coke, would you accept it?”
• Instead, understood out later:
– “Well, yeah, we do like the taste [of New Coke] but
we just remembered that’s not the only reason we
buy Coke. We buy Coke for the totality of the
product and that includes the fact that it’s old and
familiar and we feel comfortable with it.”
• Did they know this ahead of time?
YES!
• Remember…
– “Coke is a part of my life. It’s the one that
understands my feelings. It’s the one that’s
been around for a long time.”
Wrong (narrow) focus
• “Shoppers don’t buy blind.”
– Blind Taste Tests
– Bought Pepsi’s Line
• How would Pepsi have done if the taste tests weren’t blind?
– Coke’s poor problem definition
• Bought into the conventional wisdom
Collect Data & Report
• Use field service firm for collection
• Report includes: objectives, explanation
of research design, summary of major
findings, conclusions with
recommendations
The Impact of the Internet
• Use it for data collection, focus groups,
chat rooms, web clicks
• Makes it easier & faster; shift response
for customer needs; follow up studies
easier and slashes labor & time
intensive activities
• Improve participation and
personalization
Forecasting Demand
• Market demand – total volume that
would be bought by a defined customer
group in a defined geographical area in
a defined time period in a defined
marketing environment under a defined
marketing program.
• Company Demand
• Sales Forecast
Estimating Demand
• Forecasting
– Survey of buying intention, composite of
sales force opinions, expert opinions, past
sales analysis, market test method
External Environment
External Environment
is not controllable
Social
Change
Ever-Changing
Marketplace
Demographics
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Environmental
Scanning
Technology