Understanding Markets and Market Research Fundamentals

General Course Information and Assessment Strategy

• Instructor Introduction: The first portion of the market research paper is taught by Leah. The broader instructional team includes Damien, who has extensive industry experience with major firms and a quantitative focus, and Matthew, who specializes in data analytics and text mining techniques.

• Course Difficulty: Students often find this paper challenging due to the inclusion of quantitative and statistical components.

• Assistance and Engagement: Students are encouraged to get involved early, ask questions, and reach out via email. Lectures are recorded and posted on Aotearoa.

• Assessment Breakdown:     * MindTap Quizzes ($10\%$): There are weekly quizzes based on the textbook chapters. Students receive $1\%$ toward their final grade for every quiz where they score over $70\%$. The first quiz covering chapters $1$ and $2$ is due on Friday at $12:00\,PM$. Subsequent quizzes are due on Mondays before the first lecture to ensure students have read the material.     * Computer Labs ($20\%$): There are three labs in total. The first lab is a practice session and does not count toward the grade. The following two labs are worth $10\%$ each.     * Written Assignments ($20\%$): Two short written assignments are required, each worth $10\%$.     * Final Examination ($50\%$): The final exam constitutes half of the total course marks.

• Required Resources: Students must purchase the online e-book to access MindTap. Free access is provided for the first two weeks.

Case Study: The New Coke Marketing Research Failure (1985)

• Historical Context: In $1985$, Coca-Cola was facing declining market share while Pepsi was gaining momentum. Coke decided to change its formula and taste to compete directly with Pepsi.

• Research Investment: Coke spent $\$4,000,000$ on market research, which included surveys, taste tests, and focus groups.

• Research Findings: Surveys and taste tests were largely positive, suggesting people preferred the new formula. However, focus groups revealed that $10\%$ to $15\%$ of participants would stop drinking Coke if the formula was changed.

• The Error: Management prioritized the positive survey data and ignored the focus group warnings. They launched "New Coke" during the brand's centennial celebrations.

• Public Reaction: There was a massive public uproar, including threats of lawsuits and demands for the return of "The Real Thing."

• Outcome: Coca-Cola withdrew the product after only $10$ weeks and relaunched the original formula as "Coca-Cola Classic."

• Core Mistakes Identified:     * Problem Definition: They wrongly assumed the problem was taste rather than brand positioning.     * Flawed Methodology: Taste tests involve small sips, which do not accurately reflect how a consumer feels after drinking several full bottles over a week.     * Holistic Brand Image: They failed to understand that consumer loyalty was tied to the history, packaging, and messaging of the brand, not just the physical product.

Defining Market Research and the Marketing Concept

• The Marketing Concept: This is a consumer-focused approach that contrasts with product or marketing orientations. It focuses on meeting consumer wants and needs by understanding them through research.

• Definition of Market Research: The function that links the consumer, customer, and public to the marketer through information. It is used to identify and define opportunities and problems, generate and refine actions, and monitor performance.

• Scientific Nature: Market research must be scientific, meaning it is systematically gathered, objective (free from judgment), and impersonal (without an agenda).

• Utility: It moves businesses away from risky, intuitive decision-making toward systematic, data-based decision-making.

Categories and Types of Research

• Basic vs. Applied Research:     * Basic (Pure) Research: Aims to solve large theoretical questions (e.g., identifying if consumers rely on specific information in low-involvement situations).     * Applied Research: Aimed at informing specific decisions for a decision-maker (e.g., determining if a price should be increased in response to a competitor).

• Primary vs. Secondary Research:     * Primary Research: Data gathered directly by the researcher for a specific purpose (e.g., a new survey).     * Secondary Research: Information that already exists and was gathered for another purpose (e.g., company reports, social media scraping, academic research).

• Qualitative vs. Quantitative Research:     * Qualitative: Focuses on "why" questions and is exploratory (e.g., interviews and focus groups).     * Quantitative: Uses numbers and scales (e.g., a survey asking for a rating on a scale of $1$ to $7$).     * Mixed Methods: Often, researchers use qualitative interviews to find out why people like a product and quantitative surveys to find out what percentage (e.g., $70\%\text{ vs. }30\%$) of the population prefers it.

Market Research and the Four Ps

• Product Research: Involves new product development, design, packaging, and branding. Example: Bliss Probiotics, developed by Professor John Tack, used focus groups and surveys with doctors, parents, and chemists to determine the best commercial path.

• Place (Distribution) Research: Focuses on store layout, retail behavior, and online analytics. Example: McDonald's used sales demand analysis and pilot testing in high-density urban areas before rolling out their breakfast menu in NZ in $2016$.

• Promotional Research: Analyzes the return on investment ($ROI$) of marketing communications. Example: The Ministry of Health's Depression Campaign (with Don Kuehne). Market research tracked that $94\%$ of people could name a symptom of depression by the end of the campaign, and it monitored the number of calls to the depression helpline.

• Price Research: Used to set launch prices or adjust prices relative to competitors. Example: Netflix utilized secondary data on competitor offerings and subscriber behavior to develop their three-tiered pricing system (standard with ads, standard, and premium).     * Factorial Design: A specific experimental survey technique where variables like price, profile, and messaging are manipulated to see what people are willing to pay.

Consumer Behavior and Segmentation

• Segmentation: Grouping consumers based on demographics or psychographics.

• New Zealand Consumer Lifestyle Study: A departmental study running since $1979$, repeated every $5$ years.

• Study Scale: The most recent wave in December collected data from over $1,000$ people using a $600$-question survey administered by Dynata.

• Segment Example: "Traditional Family Values":     * Characteristics: predominantly male, often retired, New Zealand European.     * Politics/Wealth: Conservative, right-leaning, high income or significant retired assets.     * Lifestyle: Active in communities and leisure (concerts, galleries), impulsive but disciplined spenders.

Strategic Decision Framework for Research

• When to Conduct Market Research: According to the textbook, businesses must answer four questions:     1. Is there sufficient time to design and execute research?     2. Is the information already available via secondary data?     3. Is the decision of considerable strategic or tactical importance?     4. Does the value of the research exceed the cost?

• The Knowledge Pyramid: Data is processed into Information, which becomes Knowledge. Knowledge is applied as Wisdom, which leads to Insight. Insight provides a competitive advantage.

Trends and Careers in Market Research

• Emerging Trends:     * Technology: GPS tracking and social media data mining.     * Privacy: Growing concerns regarding how information is used.     * Neuromarketing: Using brain scans to see responses to information.     * AI: Utilizing artificial intelligence for faster sorting of secondary data.     * Database Management: A shift toward constant information gathering rather than one-off surveys.

• Career Opportunities:     * Global firms like AC Nielsen.     * In-house teams for multinationals (Procter & Gamble, Coca-Cola).     * Advertising agencies and private consultancies.

• Required Skills for Graduates: A background in business, marketing, or psychology; numeracy and statistical skills (SPSS); curiosity; and excellent organizational/time-management abilities.