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Developing and Developing and Using CB Using CB Information Information

Dr. Abdullah SultanDr. Abdullah Sultan

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Why do we need this Why do we need this information?information?

Understand the consumerUnderstand the consumer ““Fit” our products to the needs (and desires) Fit” our products to the needs (and desires)

of the consumerof the consumer Develop better marketing strategiesDevelop better marketing strategies Protect consumersProtect consumers Make better purchasesMake better purchases

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Who Conducts Consumer Who Conducts Consumer Research?Research?

• In-House Marketing Research Departments• External Marketing Research Firms• Advertising Agencies• Syndicated Data Services• Retailers• Research Foundations/Trade Groups• Government• Consumer Organizations• Academics & Research Centers

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Two Types of Consumer Two Types of Consumer Research: Primary vs. Secondary Research: Primary vs. Secondary DataData

• Primary• Collected specifically for current purpose• Could be internal or external

• Experiments (lab studies)

• Quasi-experiments (test markets, coupon studies)• Non-experimental (focus groups, observations, projective

techniques)

• Secondary• Collected for some other purpose

• External (census, Gallup, etc.)• Internal (company records, data)

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General Rule of Thumb:General Rule of Thumb:

Collect secondary data first, then turn to primary Collect secondary data first, then turn to primary data, why?data, why?

Advantages of secondary data: Advantages of secondary data: Time savings, Low costsTime savings, Low costs

Disadvantages of secondary data: Disadvantages of secondary data: May be out of dateMay be out of date Definitions or categories might not be what you’re looking Definitions or categories might not be what you’re looking

forfor Might not be specific enough for your projectMight not be specific enough for your project

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Focus GroupFocus Group

Focus Group – A form of in-depth Focus Group – A form of in-depth

interview involving 6 to 12 consumersinterview involving 6 to 12 consumers

led by a moderator who led by a moderator who

asks participants to discussasks participants to discuss

a product, concept or other a product, concept or other

marketing stimulusmarketing stimulus

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Observational ResearchObservational Research

A technique in which A technique in which researchers observe researchers observe how consumers behave how consumers behave in real-world in real-world surroundingssurroundings

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ExperimentsExperiments

Consumers randomly assigned Consumers randomly assigned to receive different “treatments”; to receive different “treatments”; e.g., shown different brand e.g., shown different brand namesnames

Treatment is called Treatment is called “independent variable”; e.g., in a “independent variable”; e.g., in a test experiment, only the type of test experiment, only the type of detergents is varied (whether it detergents is varied (whether it is biodegradable) -> infer its is biodegradable) -> infer its effectivenesseffectiveness

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Test Market (Field Test Market (Field Experiment)Experiment)

Studies the effectiveness of Studies the effectiveness of

one or more elements of the one or more elements of the

marketing mix evaluating marketing mix evaluating

sales of the product in an sales of the product in an

actual market (e.g., a specific actual market (e.g., a specific

city).city).

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Commonly used Test Commonly used Test MarketsMarkets

How do experiments differ from field experiments? In field experiments, researchers conduct

tests in the real world and observe the actual results.

In experiments, researchers control the test so that different groups of people can be compared on the basis of a key differentiated factor(s).

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Why don’t we just ask Why don’t we just ask people?people?

People don’t know why they do what they doPeople don’t know why they do what they do

People don’t want to tell you why they do People don’t want to tell you why they do what they dowhat they do

Sometimes asking them changes their Sometimes asking them changes their behaviorbehavior

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When Developing ProductsWhen Developing Products

LOTS of questions to be answered!LOTS of questions to be answered! Consumers’ ideasConsumers’ ideas AttributesAttributes NamesNames PackagingPackaging DistributionDistribution Promotions – marketing communicationsPromotions – marketing communications Pricing Pricing

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Consumer Behavior Research Consumer Behavior Research and The 4 P’s:and The 4 P’s:

Key Research Questions:Key Research Questions:

How does the company design How does the company design productsproducts, ,

promotionspromotions, , pricesprices, and distribution (, and distribution (placeplace) to ) to

satisfy the customer’s needs and wants?satisfy the customer’s needs and wants?

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Questions to Pose When Questions to Pose When Developing A New ProductDeveloping A New Product

What ideas do consumers have for new products?What ideas do consumers have for new products? What attributes can be What attributes can be

added to or changed inadded to or changed inan existing offering?an existing offering?

What should our offeringWhat should our offeringbe called?be called?

What should our package What should our package and logo look like?and logo look like?

What About GuaranteesWhat About Guarantees /warranties?/warranties?

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Making Promotion DecisionsMaking Promotion Decisions

What are advertising What are advertising objectives?objectives?

What should advertising look What should advertising look like?like?

Where should advertising be Where should advertising be placed?placed?

When should we advertise?When should we advertise? Has advertising been effective?Has advertising been effective?

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Making Pricing DecisionsMaking Pricing Decisions

What price should be charged?What price should be charged?

How sensitive are consumers How sensitive are consumers

to price and price changes?to price and price changes?

When should certain price When should certain price

tactics be used?tactics be used?

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Making Distribution Making Distribution DecisionsDecisions

Where are target customers Where are target customers likely to shop?likely to shop?

How should stores be How should stores be designed?designed?

Imagine you’re a marketing manager for Burger King. You need consumer research to support future decisions about menu items and promotions. Which research tool(s) would you use to uncover the answers to the following questions – and why?

Do Burger King customers prefer the chain’s French fries over those of McDonald’s?

Which Burger King sandwich is the most popular in Kuwait? Do coupons increase sales of the discounted menu items? Would Burger King sell more burgers if it added cheese without

raising the price? Which media vehicles do Burger King customers prefer? What condiments, if any, do take-out customers add to Burger

King burgers eaten at home? What new side dishes should Burger King introduce?

Practical ScenariosPractical Scenarios

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Consumer Research & Consumer Research & Ethical Issues Ethical Issues

PositivePositive Better consumption experiencesBetter consumption experiences Better customer relationshipsBetter customer relationships

NegativeNegative Higher marketing costs – passed on Higher marketing costs – passed on Invasion of privacyInvasion of privacy Deceptive research policiesDeceptive research policies

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Correlation and CausationCorrelation and Causation

Correlation = relationship between two Correlation = relationship between two variablesvariables

Causation = one variable producing an effect Causation = one variable producing an effect in another variablein another variable

Correlation ≠ CausationCorrelation ≠ Causation

Washington State University - kreWashington State University - kre 2222

Washington State University - kreWashington State University - kre 2323

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3 Factors Necessary for 3 Factors Necessary for Causation:Causation:

1) Correlation

2) Temporal antecedence

3) No third factor driving both

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3 Factors Necessary for 3 Factors Necessary for CausationCausation

1)1) Correlation – Correlation – Storks and babies in same Storks and babies in same househouse

2)2) Temporal antecedenceTemporal antecedence

3)3) No third factor driving bothNo third factor driving both

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3 Factors Necessary for 3 Factors Necessary for CausationCausation

1)1) Correlation – Correlation –

Storks and babies in same houseStorks and babies in same house

1)1) Temporal antecedence Temporal antecedence Storks BabiesStorks Babies

2)2) No third factor driving bothNo third factor driving both

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3 Factors Necessary for 3 Factors Necessary for CausationCausation

1)1) Correlation – Correlation – Storks and babies in same houseStorks and babies in same house

2)2) Temporal antecedence Temporal antecedence StorksStorks BabiesBabies

3)3) No third factor driving bothNo third factor driving bothHouses with pregnant women, warmerHouses with pregnant women, warmer

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3 Factors Necessary for 3 Factors Necessary for Causation:Causation:

1)1) Correlation Correlation

more mosques / more crime (r = .85)more mosques / more crime (r = .85)

2)2) Temporal antecedenceTemporal antecedence

3)3) No third factor driving bothNo third factor driving both

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3 Factors Necessary for 3 Factors Necessary for Causation:Causation:

1)1) Correlation Correlation more mosques / more crime (r = .85)more mosques / more crime (r = .85)

2)2) Temporal antecedenceTemporal antecedenceone doesn’t precede the otherone doesn’t precede the other

3)3) No third factor driving bothNo third factor driving bothlarge cities have more mosques and more crime/ small large cities have more mosques and more crime/ small cities have fewer mosques and less crimecities have fewer mosques and less crime

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Spurious CorrelationSpurious Correlation

Spurious = artificial, fake

Danger of data mining

Lots of things are correlated, but not really related