The Market Research Process:
New Product Development
Patterns of Entrepreneurship
Analytical Tools
New Product Development Process
Business Strategy
Idea generation
Idea screening and evaluation
Business analysis
The first part of this
presentation
concentrates on Idea
Screening and
Evaluation and
Product/Service
Development
Product/service development
Product/service testing
Market entry
Market Research Process
Define problem
and research
objectives
Develop research
plan
Analyze Information
Present Findings
Collect Information
Scoping Out Research Plan
Function
Define Problem
and Research
Objectives
Develop
Research Plan
Collect Info
Analyze Info
Questions to
Answer
-What is overall
objective of
research?
-What info is
needed to make
decision?
-How can I best
ascertain the
demand for my
proposed business
idea?
-What is the most
efficient plan for
gathering needed
info?
-What are the costs?
-Is the value of the
additional info
greater than the cost
of the research?
-What research
approach is best?
 Observational
 Focus Group
 Survey
Research
 Experimental
Research
-Sample size
considerations
-Use of secondary
data
-What are the best
ways to analyze to
obtain actionable
business
recommendations?
-How can I
segment my sample
to understand
micro-segments of
my potential
customer base?
-What, if any,
statistically
significant
differences occur
between segments?
Research Tool Kit
•
Primary Research: Investigating the
“original source” of data,
interviewing customers/prospects
– Focus groups: gathering of 6-10
pre-selected respondents to discuss
product or service; candid
discussions encouraged; sample is
too small to be projected; objective
is exploratory
– Survey Research: Usually
randomly selected (with
parameters) sample to project to
larger population in question;
survey can contain open-ended and
closed-ended questions; objective
to learn perceptions, satisfaction
levels, etc.
•
Primary Research: Continued
– Experimental Research:Most
scientifically valid; If you can
develop a version of your
product/service, select different
groups of subjects, control for
external variables and note
differences. Comparable to a
“test run” before product/service
enters market.
Secondary Research Resources
•
•
Secondary Research: Investigating
research findings already written
Sources - Government Publications
– Statistical Abstract of US
(demographics, economics and
social data)
– County and City Data Book
(relevant stats broken down by
county and city)
– U.S. Industrial Outlook
(projections of industrial activity
by industry including production,
sales, shipments, etc.)
– Other government publications
like Census of Population, Federal
Reserve Bulletin, Survey of
Current Business
•
More Sources - Periodicals
– Standard and Poor’s Industry
Surveys (provide updated stats and
analyses of industries)
– Moody’s Manuals (financial data
and names of executives)
– Marketing journals like Journal of
Marketing, Journal of Marketing
Research, Journal of Consumer
Research
– Trade Magazines including Direct,
BrandWeek, Sales and Marketing
Management
– Business Magazines like Harvard
Business Review and The
Economist
Secondary Research Resources
•
Quantitative Sources - Commercial
Data
– A.C Nielsen Company Data (Data
on products sold in retail,
supermarket scanner, television
and others)
– MRCA Information Services (Data
on weekly family purchases of
consumer products)
– Simmons Market Research Bureau
(Annual reports covering verticals
by demographics and brand
preferences)
•
Research Houses
– Sell data to subscribers useful to
construct models for forecasting
demand
– Audit Bureau of Circulation
– Arbitron
– Audits and Surveys
– Dun and Bradstreet
– National Family Opinion
– Standard Rate and Data Service
Statistical Tools
•
•
•
•
Unlikely you will use most of these techniques; list presented below for your
general knowledge
Other modules on Wiley web site (companion site) offer interactive exercises
Statistical tools:
Multiple Regression: Estimating “best fitting” equation showing how value of
dependent variable varies with changing values in number of independent
variables
– Example: Estimate how unit sales are influenced by ad expenditures, price and
competitors moves
•
Discriminant Analysis: Classifying persons into two or more categories
– Example: Reveal variables that discriminate between loyal and non-loyal customers
•
Conjoint Analysis: Ranking of preferences for different offers to identify
relative importance of attributes to customers
– Example: Identify most important attributes (price, warranty, service and brand)
and tradeoffs involved for end-users of a laptop computer manufacturer
Statistical Tools (Cont’d)
•
Cluster Analysis: Separate data into specified number of mutually exclusive
groups such that groups are homogeneous on chosen factors
– Example: Create five different types of technology consumers based upon
purchasing behavior and recency of purchase relative to product release date;
categories may be “earlier adopters,” or “laggards” etc.
•
Multidimensional Scaling: Produce “perceptual maps” of competitive
products or brands to measure how they stack up among each other
– Example: Find out how a particular brand is perceived versus other brands on
“trust,” “reliability,” and “quality”
Assessing Market Demand
•
•
•
Forecasting demand crucial for determining potential of new business idea
Market demand function depends on external factors like industry marketing
expenditures, demographics or economic conditions
Market potential is the limit approached by market demand as industry
marketing expenditures are maximized for a given economic environment
(prosperity, recession)
– Note: Market potential is conditional to its economic environment
•
•
Total market potential is the maximum amount of sales available to all firms in
an industry during a given period.
Q = nqp where:
Q = total market potential
n = number of buyers for product under
given assumptions q = quantity purchased by average buyer
p = price of an average unit
n is often difficult to estimate; one technique is to start with population and
sequentially remove segments outside of product’s market
Assessing Market Demand (Cont’d)
•
Another method for calculating total market potential: chain-ratio
– Multiplying base number by several adjusting percentages
– Example: TMP for hair shampoo for dry hair for men
Population x .5 (percentage of males) x personal discretionary income per capita x
average percentage of discretionary income spent on personal products for men x
average percentage of amount spent on personal products that is spent on hair
shampoo x expected percentage of amount spent on shampoo that will be spent on
shampoo for dry hair
– Some of the above data are available in the secondary sources listed in an earlier
slide
•
Sum of competitors’ sales
– Industry trade association will often collect and publish total industry sales
– More expensive option if needed: data research house like A.C. Nielsen
New Product Development Process
Business Strategy
Idea generation
Idea screening and evaluation
Business analysis
Product/service development
Product/service testing
Market entry
The second part of
this presentation
concentrates on
Market Entry,
including the 4 Ps.
Expansion Strategies
Expansion opportunities – there are four basic strategies:
Sell more existing products to existing customers (market penetration)
Sell existing products to new customers (market development)
Sell new products to existing customers (product development)
Sell new products to new customers (diversification)
Types of Marketing Options by Four P’s
Marketing plan should propose projections for 4 Ps: Product, Place, Price and
Promotion. The entrepreneur must determine which of the following is most
appropriate for proposed business venture.
Product
Distribution
Features
Types of channels/ List price
middlemen
Promotion blend
Advertising
Media
Timing
Quality
Store/distributor
location
Credit terms
Personal selling
Training
Motivation
Allocation
Packaging
Storage
Discounts
Sales promotion
Branding
Transportation and Selection and
logistics
allowances
Services
Service levels
Guarantees
Price
Flexibility
Promotion
Publicity
ALTERNATIVE MARKETING CHANNELS
Manufacturers / producers
Agents / brokers
Wholesalers /distributors
Retailers
Retailers
Consumers and organizational end-users
Marketing plan should specify where in supply chain business is marketing.
Which of the above is the customer?
Channel design decisions and decision criteria
Design stages
Identification
of channel
alternatives
Evaluation and
selection of
channel(s) to
be used
Selection
of channel
participants
Decision criteria
Intensity of distribution
Access to end-user
Prevailing distribution practices
Necessary activities
and functions
Revenue-cost analysis
Time horizon for development
Control considerations
Legal constraints
Channel availability
Market coverage
Capability
Intermediary’s needs
Functionsprovided
Availability
PROMOTION MIX TOOLS
Advertising
Personal selling
Print ads
Broadcast ads
Billboard ads
Packaging logos
and information
In-person sales
presentations
Telemarketing
Sales promotion
Games, contests
Free samples
Trade shows
Couponing
Trading stamps
Price promotion
Signs and displays
The
promotion
mix
Publicity
Print media
news stories
Broadcast media
news stories
Annual reports
Speeches by
employees
PROMOTION TOOL’S STRENGTHS AND
WEAKNESSES
Criteria
Cost per
Audience
member
Sales
Advertising promotion Publicity
Personal
selling
Low
Low
Very
low
Very
high
Confined to
target markets
Poor
to good
Good
Moderate
Very
good
Deliver a
Complicated
message
Poor
to good
Poor
Poor to
good
Very
good
None
None
Low to
moderate
Very
good
Low
Low
High
Moderate
to high
Interchange
with audiences
Credibility
ADVANTAGES AND DISADVANTAGES
OF MAJOR ADVERTISING MEDIA
Media
Advantages
Reaches large audiences
Has visual and audio capabilities
Provides great flexibility
in getting attention
Short lead time needed
to place ad
Magazines Reach of issues is high for demographic and geographic segments
and
High-quality production
journals
Ad lasts as long as magazines or
journal is kept
Issues are often read by
more than one person
Credibility of magazine
or journal can benefit ad
Relatively inexpensive
Outdoor
advertising Many repeat exposures
Television
Disadvantages
Not easy to reach specific markets
Total cost is high relative to other
media
Requires production
specialists
Short exposure time
Must place ad well in advance of
Publication
Provide limited flexibility in
gaining attention
Provide incomplete
control over
location of ad in
issue
Only very limited message possible
Cannot reach well-defined target
markets
ADVANTAGES AND DISADVANTAGES OF
MAJOR MEDIA (continued)
Media
Advantages
Audio capability
Low cost relative to costs of the
other media
Short lead time needed
to place ad
Can reach demographic
and geographic segments
Reaches large audiences
Reaches audiences in cars
News- Reach large audiences
papers Can reach segments by locale
Short lead time needed to
place ad
Credibility of newspaper
can benefit ad
Direct Provides great flexibility in reaching target market segments
mail
No clutter from competing ads
Easy to personalize copy
and layout
Radio
Disadvantages
No visual capability
Short exposure time
Provides little
flexibility in gaining
attention
May be relatively expensive
Provide little flexibility
for use of creativity
Limited reproduction quality
(e.g., little or no use of color)
Short life carries over to ad
Easily thrown away
as "junk mail"
Obtaining appropriate mailing
lists can be expensive