Marketing Research and Marketing Analytics

Marketing Research and Marketing AnalyticsSapna PopliProfessor of MarketingSession 1-2What do we know about MR and MA ?Effectivenessis the capability of producing a desired result. When something is deemed effective, it means it has an intended or expected outcome, or produces the desired impact. its doing the right thing. Efficiency is The comparison of what is actuallyproducedor performed with what can be achieved with the sameconsumptionofresources(money, time,labor, etc.).Itis an importantfactorin determination ofproductivity. its doing things right

2Can you help Dr. Anand?Can you help DrCan you help Dr. Anand

Workings for Dr. AnandMarketing Research1. What is MR?DefinitionMR is the systematic and objective identification, collection, analysis, dissemination and use of information for the purpose of improving decision making related to the identification and solution of problems and opportunities in marketing

Market ResearchSpecifies the information necessary to address these issuesManages and implements the data collection processAnalyzes the resultsCommunicates the findings and their implicationsHelps managers use this information to make decisions

6ExploratoryConclusiveDescriptiveExperimentalNature of ResearchSampling SurveyProduct Test, Matched PanelQuantitativeQualitativeMethod of Information CollectionPanelTrackingMystery ShoppingObservationEthnographyCombinations of these methods are used frequently to address different research objectives6Ethnography is a long term investigation of a group (often a culture) that is based on immersion and, optimally, participation in that group. Ethnography provides a detailed exploration of group activity and may include literature about and/or by the group. It is an approach which employs multiple methodologies to arrive at a theoretically comprehensive understanding of a group or culture. 7CustomizedSyndicatedType of ServicesI Cube (Internet in India), TGI (Target Group Index)ProductPriceMarketing Mix being researchedPackFMCGFinanceSector being researchedIndustrialMediaHealthcareAutomotiveSocialMarket Research can be classified in various ways7TGI will be the largest single source database offered in India till date, combining products, brands, media, demographics and lifestyles. I Cube: series of syndicated studies on the Internet market is one of the most exhaustive reports available on the Indian Internet Market. ISPs, content provider, portals, investors & venture capitalists, potential internet kiosks and even marketing companies wishing to adopt the new media as a vehicle to reach out to their buyers. Information areas like Internet usage amongst households, businesses, Broadband status of the Indian market, content preferences, cross media consumption, etc 2. Why do organisations need it?Assists in making business decisions & diagnose specific marketing problems & questionsWho is my consumer? Consumers dreams & aspirations?their lifestyle?Explicit needs and latent needs? therefore, need gaps to be tapped?Sources of influence?Relevance / credibility of the offering? Effectiveness of marketing tools?Who are my competitors? National / InternationalOrganised / unorganisedOther potential competitor categories? E.g.Juices for Colaand many more

Merging roles: Marketers are becoming more research savvy and researchers also participate in marketing decision making

Role of Marketing Research in Decision MakingControllableMarketingProductPricingPromotionDistributionVariablesMARKETING

RESEARCHMarketing

Decision

MakingProviding

InformationAssessing

Information

NeedsMarketing Managers Market Segmentation

Performance & ControlTarget Market Selection

Marketing Programs

Uncontrollable

Environmental

FactorsEconomyTechnologyLaws & RegulationsSocial & Cultural FactorsPolitical FactorsConsumersEmployeesShareholdersSuppliersCustomer Groups3. Who conducts MR?Suppliers of MR

Team comprised of Researchers, Field executives, Analysts

InternalExternalFull ServiceLimited ServiceSyndicatedStandardizedCustomizedInternetField ServicesCoding & Data EntryAnalytical ServicesData AnalysisBranded Products & ServicesWithin the firm: HUL, P&G, Coca Cola, GMExternal suppliers of market researchagencies like Neilsen, IMRB International, TNSCareers in Marketing ResearchCareer opportunities are available with marketing research firms (e.g., Nielsen, IMRB, TNS, Research International, Synovate)Careers in business and non-business firms and agencies with in-house marketing research departments (e.g., P&G, Coca-Cola, HUL, Nestle, GSK, Samsung, Whirlpool, Government departments)Advertising agencies (e.g., Ogilvy & Mather, J. Walter Thompson, Contract, Mudra) Positions: VP of marketing research, research director/assistant director, project manager, field work director, statistician/data processing specialist, senior/junior analyst, and supervisor4. Where is it conducted?Depending on the research design & methodology, research may be conductedas personal face to face interviewsAt the respondents homeAt the respondents officeOutside: on the street-side / shopping complexes / malls / restaurants / office complexes

at a hall / venue in a central location where respondents are invited

on the phone

online, through the internet

via mail, through mailer surveys

The processthe way13

3. Research Design Formulation: Methodology, Questionnaire Preparation & SamplingField Briefing + Mock Interviews Face to Face4. Fieldwork Data Collection5. Data Preparation & Analysis

1. Problem Definition: Brief received from the Client

2. Develop Approach to Problem: Creating a proposal6. Report Preparation & PresentationMR PROCES Briefing - Research to Field

ExamplesAssess the brand performance for a new variant of chips : i.e. to gauge Brand awareness / saliencyAdvertising awarenessBrand image / perception Disposition towards the brand trial, usage & future intention to purchase

Identify the market for microwave ovens so that I can position my brand accordingly: i.e. a usage & attitude studyExplore Indian cooking habitsAttitudes towards health, fitness, nutritionAttitudes towards cookingmicrowaves vs. gas stoveLifestyle of families in metros: working? Have a cook? How free time spent? Leisure activities undertakenOther white goods owned?Demographics: education, occupation, age, SEC, marital status, stage in the life cycle

EXAMPLE: Launching a schoolAn education company wants to launch premium schools in select small cities of North India - Amritsar, Patiala, Meerut etc. It had 2 options:School M: a new, modern, technology-savvy school with state of the art facilities focusing on talent development and nurturing the potential of each studentSchool D: to be launched as a tie-up with a renowned convent education institution. Focus on discipline, heritage, tradition; with the same technological facilities available

Since it is launching premium schools in smaller cities, it wants to understand the market in terms of their needs & ability to pay

Research objective was to assess the acceptability of the 2 school concepts in the proposed cities and therefore recommend which one would work wherethe expectations of parents & teachers from a schoolneed gaps existing amongst the current options available the perception of school-concepts, esp. the name (new vs. established)the price - school fee that parents were willing to pay

15Marketing AnalyticsIf you cant measure it, you cant manage it. Results That Increase Revenue

More sales leads

Increased closing ratio, conversion rate (a higher percentage of leads become customers)

Shorter sales cycles

More new customers

Larger sales to existing customers, consisting of:

More units per sale, or

Higher-ticket products or services, or

Up-sells (sales of related products or services)

More-frequent sales to existing customers

Longer customer relationships or reduced attrition or re-activation of inactive customers

Additional distributors or licensees for your products or services

Additional suppliers whose products or services you can resell profitably

Results That Reduce Expenses

Sales of higher-margin products or services (reduced cost of goods sold)

Fewer product returns or fewer refunds for service errors

Avoidance of regulatory action against your company

Quicker or less-expensive resolution of regulatory challenges

Avoidance of boycotts, vandalism and sabotage

Prevention of crime against employees

Reduced shrinkage Fewer accidents

Increased productivity per employee (reduced labor cost per revenue rupee)

Lower recruiting costs

Reduced employee turnover

What results are we looking for?Marketing programs, including social media, advertising, promotion and public relations (PR) programs, can produce three types of results:

Awareness: The target audience knows something about your company, product or service.

Perception: The target audience thinks about your company, product or service in a certain way.

Behavior: The target audience does something (e.g., buys your product or service), or refrains from doing something (e.g., doesnt boycott your company).

What Is a Metric?A metric is a measuring system that quantifies a trend, dynamic, or characteristic.In virtually all disciplines, practitioners use metrics to explain phenomena, diagnose causes, share findings, and project the results of future events.Throughout the worlds of science, business, and government, metrics encourage rigor and objectivity.Marketing MetricsMetrics the science of measuring ; Measurable performance standards are called metrics, which are the cornerstone of accountabilityMarketing Analyticsare tools that produceMarketing Metrics(performance metrics) that help marketers analyze and improve marketing performance.What metrics can tell us..AnalyticsMetricsWhat does it tellHealthTemperature98.6Normal body temperatureBlood Pressure120/80Normal BPPulse65Pulse rate is normalMarketingMarket Dev. Index 40Only 40% of the market potential has been developed

Customer Retention 67% Losing 33% of our customers each yearMarketing ROI150%Rs 1.50 profit per Rs 1 of marketing and sales expenseSome Marketing Metrics..Customer RetentionA customer retention of 67 percent is a marketing metric derived from the following marketing analytic.

Customer Retention = (Customers Retained/Total Customers at the Start of Year ) * 100

CR =( 67,000 / 100,000) x 100%= 67%

This business retains 67 percent of its customer base each year. To maintain customer base of 100,000 they needed to attract 33,000 new customers each year. This is expensive since the cost of acquiring a new customer can be 5 to 10 times more expense that the cost of retaining a customer. If the company is able to improve this metric performance to 75 percent, they will reduce the cost of acquiring replacement customers by a considerable amount.

Customer Acquisition Cost (CAC)

Sales and Marketing cost add up all the program, social media, advertising spend, plus salaries, plus commissions and bonuses, plus overhead -- in a time period, divided by the number of new customers in that time period. That time period,, could be a month, a quarter, or a year. For instance, if you spent Rs. 300,000 on Sales and Marketing in a month and added 30 customers that month, then your CAC is Rs.10,000.

Time to Payback CAC This is the number of months it takes you to earn back the CAC you spent to get a new customer.

You take the CAC and divide by margin-adjusted revenue per month for the average new customer you just signed up, and the resulting number is the number of months to payback.

In industries where customers pay one time upfront, this metric is less relevant because the upfront payment should be greater than the CAC, otherwise you are losing money on every customer.

On the other hand, in industries where customers pay a monthly or annual fee, you usually want the Payback Time to be under 12 months, meaning that you become profitable on a new customer in under a year, and then after that you start making money.

Market ShareMarket share is the percentage of a market (defined in terms of either units or revenue accounted for by a specific entity.Unit Market Share: The units sold by a particular company as a percentage of total market sales, measured in the same units.Unit Market Share%=Unit Sales#/Total Market Unit Sales#Relative Market Share Relative market share indexes a firms or a brands market share against that of its leading competitor.These metrics are useful in comparing a firms or a brands relative position across different markets and in evaluating the type and degree of competition in those markets.RMS = Brands Market Share (Rs,#)/ Largest Competitors Market Share (Rs,#)Employee Retention RatesEmployee retention implies that your marketing team focuses on internal audiences, as well as boosts overall company perception. Good retention rates vary by industry, but impact the bottom line across the board in terms of the internal resources needed to interview, hire, onboard and develop new employees.To find your companys retention rate, look at number of employees last year at this time. For example, lets say company ABC had 500 employees. After a full year, 350 of those original 500 employees are still working at company ABC. The retention rate is 350 / 500, or 70% (which isnt very good..30% people left??).

Customer SatisfactionThe number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals.Generally measured on a 15 scale, in which customers declare their satisfaction with brand in general or specific attributes.

12345Very DissatisfiedSomewhatDissatisfiedNeither Satisfiednor DissatisfiedSatisfiedVery SatisfiedNet Promoter ScoreNet Promoter Score (NPS):is based on the theory that one question can measure customer perception and performance. How likely is it that you would recommend Company ABC to a friend or colleague

Not at all likely Extremely LikelyNPS= Percentage of promoters(9/10)-percentage of detractors(1-6)

12345678910Measuring performance Southwest Airlines