FMD 451
Target Market Research
Market Research
What is marketing research? The marketing research process
Six stages
What is Marketing Research?
Marketing research is the systematic and objective identification, collection, analysis, and dissemination of information, undertaken to improve decision making related to identifying and solving problems in marketing.
American Marketing Association
Identifying your market?
Identifying Your Market Step One: Identifying Why a Customer
Would Want to Buy Your Product/Service Step Two: Segment Your Overall Market Step Three: Research Your Market
Types Of Markets
A market is simply any group of actual or potential buyers of a product. There are three major types of markets.
1. The consumer market. Individuals and households who buy goods for their own use or benefit are part of the consumer market. Drug and grocery items are the most common types of consumer products.
2. The industrial market. Individuals, groups or organizations that purchase your product or service for direct use in producing other products or for use in their day-to-day operations.
3. The reseller market. Middlemen or intermediaries, such as wholesalers and retailers, who buy finished goods and resell them for a profit.
Why would a consumer buy your product? What does your product have to offer? What are the features of your product and its benefits?example: is
anti-lock brakes; they are features on a car, but the benefit to the consumer is safety.
This will help you narrow down your key target market! In one column, list the features of your product/service. In the other,
list the benefits each feature yields to the buyer. Features: Benefits: 1. 1. 2. 2. 3. 3. 4. 4.
Segment your Market
Market segmentation is the process of breaking down a larger target market into smaller segments with specific characteristics.
Segmentation will help you customize a product/service or other parts of a marketing mix, such as advertising, to reach and meet the specific needs of a narrowly defined customer group.
Segmenting your market!
1. Geographic: Where do your customers live? What state or region-climate concerns?
2. Demographic: What is their age, race, religion, gender, income level, family size, occupations, education, and marital status?
3. Psychographics:What are their attitudes, beliefs, and emotions? What is their lifestyle, family stage, hobbies, status seeking, and entertainment. Example: Do they see themselves as avante garde, high tech, socially responsible, ect?
4. Buying Behaviors: Why does your customer buy? Price, brand, loyalty, how frequently, what time of the year, ect.
Example of Customer ProfileCareer Option's Sample Customer Profile:Professionals in Transition SegmentGender:
30% Female 70% MaleAge: 10% 26-30 30% 31-40 30% 41-55 30% 56-64Income: 25% 30-40K 25% 40-50K 50% 50-75KMarital Status:
80% Married 20% SingleLevel Of Education: 60% Bachelor's degree 40% Master's degreeOccupations: 10% Health Care 20% Financial 30% Marketing/Advertising 40% Hi-Tech FieldsJob Sought: 70% Same Field 30% New FieldMost Important Benefits:1. Assistance in finding work quickly.2. Want a better job.3. Want equal salary or increase.4. Stability.Psychographic Summary: This segment closely associates work with self-esteem. They feel pressure because most
have families and comfortable lifestyles to maintain. They are not interested in forging new careers but want stability.
Choose the Target Market you will sell to!
After identifying and defining the possible segments within your target market, you must face the critical question of whether it would be profitable and feasible for you to pursue each identified segment, or choose one or two.
Brand new companies should choose one or two!
Find out what is important to your
customer?Create a survey!High Medium Low Not At All
Price Quality Brand Name Variety of services Salespeople Customer Service Special Offers Promotional Campaign Packaging Convenience of Use Convenience of Purchase Location Guarantees Store/Office Decor Payment Terms
Market Segmentation
Segment potential buyers into similar groups. Buying habits Ability to pay-Price What is the size of the market
Checklist! Identifying Your Market
___ Determine why a customer would want to buy your product/service.
___ Identify your products'/services' benefits and features.
___ Decide which segmentation criteria will best segment your target market: geographic, demographic, psychographic or behavioral.
___ Segment your market. ___ Divide larger target market segments into smaller segments. ___ Decide if it would be profitable and feasible for you to pursue each
segment.
Two Types of Marketing Research
Problem Identification Research Market Potential, Market Share, Brand image,
Forecasting, Business Trend Problem-Solving Research
Segmentation Research Product Research Promotion Research Distribution Research
Examples of Marketing Research Projects
• concept test: evaluates new product or advertising ideas
• copy test: tests advertising content
• price responsiveness studies: tests how customers will respond to various price levels
• market-share analysis
• segmentation studies
• customer satisfaction studies: monitor how customers feel about products and service
1. Define the Problem1. Define the Problem
2. Developing an Approach to the Problem2. Developing an Approach to the Problem
3. Formulating a Research Design3. Formulating a Research Design
4. Doing Field Work or Collecting Data4. Doing Field Work or Collecting Data
5. Preparing and Analyzing Data5. Preparing and Analyzing Data
6. Preparing and Presenting the Report6. Preparing and Presenting the Report
Marketing research process
1. Define the Problem
1. Defining a problem Understanding the purpose of the study Understanding the background issues E.g. the company growth rate is low.
2. Discuss with decision makers, interviews with industry experts, analysis of secondary data, conducting focus groups analysis.
Example: Subaru of America
Management problem: What can Subaru do to expand its share of the automobile market?
To conduct market research – need to define the problems more preciselyQ.1 What needs do buyers of passengers cars,
station wagons, and SUV seek to satisfy?Q.2 How well do existing automobile product
offerings meet these needs?
2. Developing an Approach to the Problem
Formulating an analytical framework and models, research questions.
Determine a hypothesis: an educated guess The hypothesis provides a research problem for
the investigators which can be tested scientifically.
Define the Research Objective
Pg. 253-What information do you want to learn?
Prior to developing specific survey questions and the sampling frame.
What needs to be accomplished by conducting the survey?
Need to be measurable Objectives: assess support level for a ballot
measure vs. gather opinions about current and potential services.
Define the Research Objective Good market research objectives are focused
and specific. They include:1. An action verb-what you want to do2. A type of finding Sample verbs: identify, define, describe,
generate, evaluate, select, test, measure, prioritize, monitor, track.
Sample findings: usage, problem, reactions, perceptions, ideas, size, growth, trends, competition, awareness, satisfaction, preferences.
3. Formulating a Research Design A framework or blueprint for conducting the
marketing research Details procedures needed to obtain the required
information. Conducting exploratory research, precisely defining
the variables, designing appropriate scales to measure them.
How to obtain the data: survey or experiment Design questionnaire
4. Doing Field Work or Collecting Data
Field work involves personal, telephone, mail, or electronic interviewing
Proper selection, training, supervision, and evaluation of the field force are essential
5. Preparing and Analyzing Data
Data Processing Editing, coding, transcribing of collected data. Analyze using different statistical techniques Interpreted the results, find conclusions
related to the marketing research questions
6. Preparing and presenting the report.
First, select sources of information: Secondary data
information already collected for another purpose If use secondary data—designing the
questionnaire, planning the sample, and collecting data are done for you. But make sure they are done right!
Primary data information collected for the specific purpose at
hand
Source of information
Sources of secondary data- pg. 255 internal sources
balance sheets, sales figures, customer DB government publications
Statistics, bureau of Economic analysis, bureau of labor statistics, census bureau
periodicals and books WWD, California Apparel news, Journal of
consumer research, Advertising age Trade associations-FBI, Cotton inc., National Retail
federation, Fashion Group international internet
Source of information
Advantages of secondary data low cost less effort expended
process less time consuming some information can
be obtained only from secondary data
Disadvantages of secondary data collected for some
other purpose may not be very
accurate may be outdated
Pros and Cons of Secondary Data
Primary data collection process Data collection methods
surveys qualitative research—personal interviews & focus
groups observation Experiment
Design study materials (e.g., questionnaire design) Sampling Data collection
Primary Data
Survey Data collection by asking people questions
personal interview telephone survey mail survey Internet survey
Advantages large size data, flexibility
Disadvantages errors in questionnaire, expensive, response error
Survey
Survey (cont.) Personal interview
Advantages flexible, more information
Disadvantages expensive, time-consuming, interviewer bias
e.g., “shopping mall intercept”: a convenient, low-cost method but lacks representativeness
Personal Interview
Survey (cont.) Telephone survey
Advantages quickness, cost efficiency
Disadvantages limited amount of information, limited
accessibility of people, have to remember response options
Telephone Survey
Survey (cont.) Mail survey
Advantages low cost
Disadvantages low response rate less control
Mail Survey
Survey (cont.) Internet survey
Advantages low cost—much lower even than mail
Disadvantages low response rate—large response
bias Data reliability—difficult to verify if
personal information is true
Internet Survey
Qualitative research Types
individual depth interview focus group interview
Advantages resulting data have more depth and richness of context
Disadvantages results not necessarily representative of population Hard to quantify the results
Qualitative Research
Qualitative research (cont.) Focus group interview
Loosely structured group discussion led by interviewer The discussion is observed or videotaped Best for preliminary research Individual depth interview: similar interview with a single
person Difficult to understand without seeing it, so we have a
video.
Focus Group Interview
Group discussion and focus group Postal research questionnaires Diary panels - sources of continuous data In-home scanning - hand-held light pen to scan barcodes Telephone research Observation
home audit direct observation
In-store testing
Focus Groups
Observational method Types
personal observation mechanical observation (e.g., scanner data)
Advantages can have high degree of accuracy, short period of
time for data collection Disadvantages
unaware of motives, attitudes, or decision processes
Observational Method
Experiment Tests the effects of variables in a controlled situation Example: test of two different versions of advertisements
in two different cities Advantages
control Disadvantages
unrealistic settings (laboratory experiments) Expensive (real experiments)
Experiment
Questionnaire design Wording
simple, direct, unbiased—no leading questions written with respondents in mind
Order first question should create interest if possible difficult or personal questions should be asked last
Format open-ended questions closed-end questions
Questionnaire
Developing the Questionnaire
General rules: Keep the order of questions logical, with smooth
transitions. Move from general to specific. Make sure respondents understand the wording. Be conversational. Avoid monotony. Include exhaustive and non-overlapping response
categories.
Open- vs. close-ended questions (asked of Americans) “What do you think is the most
important problem facing this country today?” 1) the energy shortage 2) quality of public schools 3) economy 4) war on terrorism
--- 70% endorsed “war on terrorism”
• Same question in open-ended format How can we get out of Iraq?
Questionnaire
•Attitude measurement•cognitive component (know/believe about an act/object)
•affective component (feel about an act/object)
•cognitive component (behave towards an object or act
Your questions should address:
Types of Questions
Pg. 257 Likert scale
strongly agree agree neither agree nor disagree disagree strongly disagree
Pre-Testing the Questionnaire
Estimate the length of the questionnaire. Ensure that words, phrases, and subjects are
easily understood by the respondents. Ensure that answer categories match with
what the respondents have to say. Ensure that the questionnaire achieves the
research objectives.
Survey and questionnaire design Choosing a sample:
Samples need to be as representative as possible, ideally randomly chosen from the population of interest
Sample size must be large enough to have confidence in the results—depends on situation
Poorly chosen samples lead to biased results
Sample selection
Reported daily TV consumption in hours
Low frequency alternatives Up to ½ ½ to 11 to 1½1½ to 22 to 2½More than 2½
High Frequency alternatives Up to 2½2½ to 33 to 3½ 3½ to 4 4 to 4½ More than 4½
Schwarz et al. (1985)
Reported daily TV consumption in hours
Low frequency alternatives %Up to ½ 7.4 ½ to 1 17.71 to 1½ 26.51½ to 2 14.72 to 2½ 17.7More than 2½ 16.2
High Frequency alternatives %Up to 2½ 62.52½ to 3 23.43 to 3½ 7.83½ to 4 4.74 to 4½ 1.6More than 4½ 0
Schwarz et al. (1985)
Sampling A sample is a subset of the population selected to
represent the population as a whole Samples should be representative of the population Sample size
larger sample gives more reliable results small samples are OK when they represent the
population (US presidential election poll: sample size of 1,000)
Sample
Sampling (cont.): Sampling procedure random sampling
every member of the population has a known probability of being included
convenience sampling the researcher selects easiest population members from
which to obtain information lacks the representativeness of the population (e.g.) shopping mall intercept
Sampling
When conducting the survey with volunteers: Record all responses on paper. Keypunch responses into computer for data processing. Software packages to use for keypunching: Excel, SPSS, or
SNAP. Each column is a variable and each row is a respondent.
Data Processing
Data Processing
0 0 1 2 0 2 0 5 60 0 2 4 0 3 2 5 20 0 3 5 0 5 2 6 20 0 4 3 1 1 3 2 10 0 5 3 0 5 5 3 20 0 6 2 0 5 5 3 30 0 7 5 0 4 6 0 30 0 8 5 0 4 2 0 20 0 9 2 1 1 0 5 50 1 0 1 0 4 0 2 20 1 2 0 0 0 1 0 50 1 3 2 0 0 2 5 50 1 4 2 0 5 1 6 60 1 5 5 0 3 2 6 0
Data Analysis
Statistical software packages to use: SPSS, SAS, STATA, or SNAP.
Statistical techniques: mean, mode, median, cross tabulation, correlation, factor analysis, and regression analysis.
Mean-Average- mean is the usual average, so: (13 + 18 + 13 + 14 + 13 + 16 + 14 + 21 + 13) ÷ 9 = 15 Median-The middle value- There are nine numbers in the list, so the middle
one will be the (9 + 1) ÷ 2 = 10 ÷ 2 = 5th number:13, 13, 13, 13, 14, 14, 16, 18, 21So the median is 14.
Mode- The number repeated most often=1
Prepare and Present the Final Research Report
• Findings are presented, often by research objective, in a clear and concise way.
• The need for a good report cannot be overstated. • Use Graphical charts to highlight the most important
findings!• How do your findings influence your business and
objectives?!
• This must be well written or results will not be taken seriously!