Presentation on theme: "The Market Research Process: New Product Development Patterns of Entrepreneurship Analytical Tools."— Presentation transcript:
The Market Research Process: New Product Development Patterns of Entrepreneurship Analytical Tools
New Product Development Process Business Strategy Idea generation Idea screening and evaluation Business analysis Product/service development Product/service testing Market entry The first part of this presentation concentrates on Idea Screening and Evaluation and Product/Service Development
Market Research Process Define problem and research objectives Develop research plan Collect Information Analyze Information Present Findings
Research Tool Kit Primary Research: Investigating the original source of data, interviewing customers/prospects –Focus groups: gathering of 6-10 pre-selected respondents to discuss product or service; candid discussions encouraged; sample is too small to be projected; objective is exploratory –Survey Research: Usually randomly selected (with parameters) sample to project to larger population in question; survey can contain open-ended and closed-ended questions; objective to learn perceptions, satisfaction levels, etc. Primary Research: Continued –Experimental Research:Most scientifically valid; If you can develop a version of your product/service, select different groups of subjects, control for external variables and note differences. Comparable to a test run before product/service enters market.
Secondary Research Resources Secondary Research: Investigating research findings already written Sources - Government Publications –Statistical Abstract of US (demographics, economics and social data) –County and City Data Book (relevant stats broken down by county and city) –U.S. Industrial Outlook (projections of industrial activity by industry including production, sales, shipments, etc.) –Other government publications like Census of Population, Federal Reserve Bulletin, Survey of Current Business More Sources - Periodicals –Standard and Poors Industry Surveys (provide updated stats and analyses of industries) –Moodys Manuals (financial data and names of executives) –Marketing journals like Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research –Trade Magazines including Direct, BrandWeek, Sales and Marketing Management –Business Magazines like Harvard Business Review and The Economist
Secondary Research Resources Quantitative Sources - Commercial Data –A.C Nielsen Company Data (Data on products sold in retail, supermarket scanner, television and others) –MRCA Information Services (Data on weekly family purchases of consumer products) –Simmons Market Research Bureau (Annual reports covering verticals by demographics and brand preferences) Research Houses –Sell data to subscribers useful to construct models for forecasting demand –Audit Bureau of Circulation –Arbitron –Audits and Surveys –Dun and Bradstreet –National Family Opinion –Standard Rate and Data Service
Statistical Tools Unlikely you will use most of these techniques; list presented below for your general knowledge Other modules on Wiley web site (companion site) offer interactive exercises Statistical tools: Multiple Regression: Estimating best fitting equation showing how value of dependent variable varies with changing values in number of independent variables –Example: Estimate how unit sales are influenced by ad expenditures, price and competitors moves Discriminant Analysis: Classifying persons into two or more categories –Example: Reveal variables that discriminate between loyal and non-loyal customers Conjoint Analysis: Ranking of preferences for different offers to identify relative importance of attributes to customers –Example: Identify most important attributes (price, warranty, service and brand) and tradeoffs involved for end-users of a laptop computer manufacturer
Statistical Tools (Contd) Cluster Analysis: Separate data into specified number of mutually exclusive groups such that groups are homogeneous on chosen factors –Example: Create five different types of technology consumers based upon purchasing behavior and recency of purchase relative to product release date; categories may be earlier adopters, or laggards etc. Multidimensional Scaling: Produce perceptual maps of competitive products or brands to measure how they stack up among each other –Example: Find out how a particular brand is perceived versus other brands on trust, reliability, and quality
Assessing Market Demand Forecasting demand crucial for determining potential of new business idea Market demand function depends on external factors like industry marketing expenditures, demographics or economic conditions Market potential is the limit approached by market demand as industry marketing expenditures are maximized for a given economic environment (prosperity, recession) –Note: Market potential is conditional to its economic environment Total market potential is the maximum amount of sales available to all firms in an industry during a given period. Q = nqp where: Q = total market potentialn = number of buyers for product under given assumptions q = quantity purchased by average buyer p = price of an average unit n is often difficult to estimate; one technique is to start with population and sequentially remove segments outside of products market
Assessing Market Demand (Contd) Another method for calculating total market potential: chain-ratio –Multiplying base number by several adjusting percentages –Example: TMP for hair shampoo for dry hair for men Population x.5 (percentage of males) x personal discretionary income per capita x average percentage of discretionary income spent on personal products for men x average percentage of amount spent on personal products that is spent on hair shampoo x expected percentage of amount spent on shampoo that will be spent on shampoo for dry hair –Some of the above data are available in the secondary sources listed in an earlier slide Sum of competitors sales –Industry trade association will often collect and publish total industry sales –More expensive option if needed: data research house like A.C. Nielsen
New Product Development Process Business Strategy Idea generation Idea screening and evaluation Business analysis Product/service development Product/service testing Market entry The second part of this presentation concentrates on Market Entry, including the 4 Ps.
Expansion Strategies Expansion opportunities – there are four basic strategies: Sell more existing products to existing customers (market penetration) Sell existing products to new customers (market development) Sell new products to existing customers (product development) Sell new products to new customers (diversification)
ALTERNATIVE MARKETING CHANNELS Marketing plan should specify where in supply chain business is marketing. Which of the above is the customer?
Channel design decisions and decision criteria Identification of channel alternatives Evaluation and selection of channel(s) to be used Selection of channel participants Design stagesDecision criteria Intensity of distribution Access to end-user Prevailing distribution practices Necessary activities and functions Revenue-cost analysis Time horizon for development Control considerations Legal constraints Channel availability Market coverage Capability Intermediarys needs Functions provided Availability
PROMOTION MIX TOOLS Advertising Print ads Broadcast ads Billboard ads Packaging logos and information Personal selling In-person sales presentations Telemarketing Sales promotion Games, contests Free samples Trade shows Couponing Trading stamps Price promotion Signs and displays Publicity Print media news stories Broadcast media news stories Annual reports Speeches by employees The promotion mix
PROMOTION TOOLS STRENGTHS AND WEAKNESSES Low Very low Very high Poor to good GoodModerate Very good Poor to good Poor Poor to good Very good None Low to moderate Very good Low High Moderate to high Advertising Sales promotion Publicity Personal selling Criteria Cost per Audience member Confined to target markets Deliver a Complicated message Interchange with audiences Credibility
ADVANTAGES AND DISADVANTAGES OF MAJOR ADVERTISING MEDIA
ADVANTAGES AND DISADVANTAGES OF MAJOR MEDIA (continued)