5. Market research

What is market research

Systematic gathering and interpretation of information about individuals 9r

Common uses of market research

- Forecast sales

- Refine product concepts

- Develop product strategy

- Understand the competition

- Market segmentation

- Understand consumers

- Pretest advertising

- Make price changes

- Understand perceptions

Marketing information system

- Inputs

- MDSS processing

- Outputs

- Information for marketing decisions

Market research process

- Define marketing problem and research objectives

- Determine whether secondary research is available

- Determine whether primary research is needed, the scope of work, and how the research will be sourced

- Design the research plan

- Collect the data

- Analyse the data

- Report the findings

- Make the decision

Secondary information sources

Sources that already exist and were not developed for the particular problem at hand

Primary information sources

Sources that are generated for the particular problem being studied

Internal sources of info within the organisation

- Past marketing plans

- Sales call reports

- Transaction information

- Reverse engineering or benchmarking reports

- Web site visitation information

Internal secondary data sources

- Information specialists may help

- Intranets share information well

- Obtaining information in a usable format may be a problem

- Other departments aren't always willing to share information

External secondary data sources

- Trade associations

- General business publications

- Trade publications

- Academic publications

- Corporate reports

- Government publications and census

- Internet discussion groups

Sources of Primary Data

- Informal

- Qualitative

- Observation (focus groups)

- Surveys

- Panels

- Experiments

- Models and simulations

Quantitative Research

Descriptive, scientific

Qualitative research

Pheomenological, Exploratory, Clinical

Primary research

- Observations research

- Ethnographic research often conducted by trained anthropologists

- Virtual shopping

- Netnography

Surveys

Questionnaires are administered as a form of quantitative research. Descriptive or scientific

Key issues in survey design

- Sampling considerations

- Sampling method: probability samples are preferred

Convenience samples may be used

- Non-response bias can also damage the validity of results

- Type of survey to be used

Panels

Set of customers who are enlisted to give responses to questions or to provide data repeatedly over time.

Main benefit is ability to observe changes in behaviour caused by changes in marketing variables or other factors in marketplace

Market potential

Maximum sales of a product category reasonably attainable under given set of conditions within specified period of time

Market forecast

Amount of sales of a product category expected to be achieved under set of conditions within specified period of time

Market potential basic calculations

- Determine potential buyers or users of products

- Determine the number of customers in each group of buyers as identified in step one

- Estimate the potential purchasing / usage rate

Estimating sales potential

- Multiply market potential by projectted market share

- Consider the relationship of the brand development index (BDI) to the category development index (CDI)

Why create forecasts?

- Helps to anticipate growth

- Aids in production planning

- Important for budgeting

- Used in scenario planning

Methods of forecasting

These methods rely on pure opinion

- Naïve extrapolation

- Sales force

- Executive opinion

- Delphi method

Naive extrapolation

Current sales + X%

Sales force

Compilation of sales force forecasts

Executive opinion

Manager, internal or external expert opinion

Delphi method

Jury of experts

Forecasting methods using customer data

- Market testing

- Market surveys

Market testing

Focus groups, interviews, etc. provide information to form forecast

Market surveys

Purchase intention survey questions are used to determine sales forecast

Forecasting methods using past sales data

- Moving average

- Exponential smoothing

- Extrapolation

Exponential smoothing

Combines current period sales with current period forecast

Extrapolation

Simple regression analysis or analyzing slope of line and extending to future

Association and causal forecasting methods

Develop statistical models relating market factors to sales.

- Correlation

- Regression analysis

- Leading indicators

- Econometric models

Neuromarketing

Studies how people respond to stimuli by measuring biometrics such as heart rate, brain waves, eye movement patterns

Methods of neuromarketing

- Functional magnetic resonance

- Electroencephalography