Marketing Research Process Marketing Decisions Marketing Research Process Chapter 3 MBA Term II Fall 2017

Topics The Marketing Research System The Marketing Research Process Forecasting and Demand Measurement The Marketing Research System The Marketing Research Process Marketing Decision Support System

Measures of Market Demand Methods of segregating the market for demand measurement: Potential Market: Set of customers with a sufficient level of interest in a market offer, but not sufficient enough to create a market till they have the required level of income and access to the product. Available Market: Set of customers who have interest, income and access to a particular offer. Target Market: Part of the qualified available market the company decides to sell to/serve. Penetrated Market: Set of customers who are already buying the company’s products. Target Market: Groups of customers who qualify to become part of the available market that the company decided to serve.

Demand Measurement Companies can prepare as many as 90 different types of demand estimates for six different product levels, five space levels, and three time periods. Each demand measure serves a specific purpose Product item: Sunsilk; Product Form: Shampoo; Product Line: Haircare; Company Sales: Unilever; Industry sales: FMCG; All sales: Total Sales

Vocabulary for Demand Measurement Market Demand Market forecast Market potential Company demand Company sales forecast Company sales potential

Market Demand Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Market demand functions show the relationship between the market demand and the level of industry marketing efforts and expenditure.

Market Forecast It is a core component of the market analysis. It projects the future numbers, characteristics, and trends in the target market. Only one level of industry marketing expenditure actually happens. The market demand corresponding to that level of the marketing effort and expenditure is known as the market forecast. Market forecast only shows expected market demand, not the maximum market demand.

Market Potential This is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. Market potential is the entire size of the market for a product at a specific time. Market potential is usually measured either by sales value or sales volume. Example: Market for automobiles is higher in prosperity than recession.

Company Demand Company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. Company demand depends upon how the company’s products, services, prices and communications are perceived by the customers relative to the competitors. A company’s sales levels are deeply affected by the marketing expenditure level, marketing mix and marketing effectiveness.

Company Sales Forecast The company sales forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment. Two other concepts are important here: Sales Quota: Sales goal or target set for a product line, company division, or sales representatives. Sales Budget: This is an estimate of the expected volume of sales, primarily for making current purchasing, production and cash flow decisions.

Company Sales Potential This is company sales limit approached by company demand as company marketing effort increases relative to that of competitors. It is the maximum level of sales a company can expect to achieve in the forecast period with its present and planned levels of marketing effort and expenditure and the given set of market conditions.

Estimating Current Demand Total market potential is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A common way to calculate the TMP is by multiplying potential number of buyers by the average quantity each purchases, times the price. TMP: Potential number of buyers X Average quantity purchased by a buyer X the price

Estimating Current Demand Area Market Potential: Calculating to find out the total sales potential for a particular city, region, area or country. Two major methods to calculate AMP: Market build up method: The market-buildup method calls for identifying all the potential buyers in each market and estimating their potential purchases. It produces accurate results if we have a list of all potential buyers and a good estimate of what each will buy. Multiple factor index method: Also to do with calculating the Brand Development Index which is a ratio of brand sales to category sales expressed in percentage terms. (BDI)

Estimating Future Demand All forecasts are built on one of the three information bases: What people say: Involves surveying the opinions of buyers or people close to them such as dealers and traders. This can be done with the help of three methods: Survey of buyers intentions Composites of sales force opinions Expert opinion What people do: Putting a product into a test market to measure the reaction of the buyers. 3. What people have done: Involves analyzing the past buying behavior of consumers.

The Marketing Research System Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

Types of Marketing Research Firms Syndicated service research firms Firms gather consumer & trade information, which they sell for a fee e.g. ACNielsen, National Council For Applied Economic Research (NCAER) Custom marketing research firms They design & carry out research studies for various clients based on specific briefs. Specialty-line marketing research firms These firms provides specialized research services such as developing a research brief, collecting field data, preparing data analyses & reports for other firms.

The Marketing Research Process Define the problem, decision alternatives and research objectives Develop the Research Plan Collect the Information Analyze the information Present the Findings Make the Decision

Define the Problem Problem definition should not be done too narrowly or too broadly Too narrow definitions lead to inadequate data or information required to take effective decision. Clarity on the following two points helps in defining the problem appropriately: What is to be researched? Why is it to be researched?

Develop the Research Plan Developing plan to gather the required information Data sources Research approach Research instruments Sampling plan Contact methods

Develop the Research Plan Data Sources: Primary data, secondary data or both Research Approach: Primary data can be collected through five methods: Observations Focus Groups Surveys Behavioral data Experiments

Develop the Research Plan Research Instruments: Questionnaires: Closed ended and open ended Qualitative measures: Word associations, projective techniques, visualization, brand personification, laddering. Technological devices: Galvanometers, tachistoscope, skin sensors, brain wave scanners, full body scanners.

Closed End Questions Have you seen any recent ads of Somersby? Yes No

Multiple Choice Questions Where did you the ads of Somersby? Newspapers Facebook Youtube TV Websites Others (please mention)

Likert Scale Types Questions Indicate your level of agreement or disagreement on the following statement: Somersby is a much better non alcoholic drink, than any other energy drinks: Strongly disagree Disagree Neither agree or disagree Agree Strongly agree

Question Type: Importance Scale Hygiene and good service at a hospital is ………to me. Extremely important Very Important Somewhat important Not very important Not at all important

Question Type: Rating Scale Grande Hospital’s service is: Excellent Very Good Good Poor Very Poor

Question Types: Intention to Buy Scales How likely are you to purchase tickets of Buddha Air if they gave an extra 5% discount while booking tickets online? Definitely buy Probably buy Not sure Probably not buy Definitely not buy

Question type: Open Ended What is your overall perception about Buddha Air? Also state any recommendations for the brand, if any.

Question Type: Word Association What is the first word that comes to your mind when you hear the following: Airlines: ……………………………… Bank: ………………………………….. MBA: ……………………………………

Question Type: Sentence Completion When I think of taking a loan, the most important consideration in my decision is:

Question Types: Story Completion I went to Laxmi Bank a few days back and noticed that they have a separate line for senior citizens while they come in the bank for cash deposits and withdrawal. Seeing this I felt…………. Complete the story.

Question Types: Balloon

Qualitative Measures Word association Asks respondents what words come to their mind when they hear the brand’s name. Projective techniques Give people an incomplete or ambiguous stimulus & ask them to complete it. (E.g. Bubble Exercises) Visualization Requires people to create a collage from magazine photo or drawings to depict their perceptions. Brand personification Ask subjects what kind of person they think of when the brand in mentioned. (E.g. Mountain Dew, Pulsar, Lux, Rado) Laddering A series of increasingly more specific “why” questions.

Questionnaires: Do’s and Dont’s Ensure questions are free of bias Make questions simple Make questions specific Avoid jargon Avoid sophisticated words Avoid ambiguous words Avoid negatives Avoid hypotheticals Avoid words that could be misheard Use response bands Use mutually exclusive categories Allow for “other” in fixed response questions

Develop the Research Plan Sampling Plan: Sampling Unit: Whom should we survey? Sample size: How many people should we survey? Sampling procedure: How should we choose the respondents?

Develop the Research Plan Contact Methods: Telephone contacts Personal contacts Online contacts

Collect the Information The most expensive and prone to errors stage in research. Marketers may conduct surveys in home, over the phone, via the internet or at a central interviewing location like a shopping mall. Four major problems arise in surveys: Some respondents will be away form home or inaccessible and must be contacted again or replaced. Some respondents may refuse to cooperate. Some might give biased or dishonest answers. Some interviewers will be biased and dishonest.

Analyze the Information This is the second last step in the research process. Findings are extracted and data are tabulated. Application of some advanced statistical techniques and decision models. Hypothesis and theories are tested

Present the Findings Findings have to presented in a very understandable and compelling approach. Researches focus on maximizing the impact of their consumer research findings. Only those findings that are relevant to the major marketing decisions should be highlighted.

Make the Decision Managers either use the information, store it or discard it. They can also carry on some more research to validate the previous findings. Marketing managers make use of Marketing Decision Support System to make decisions about the findings that has been gathered.

Marketing Decision Support System (MDSS) A marketing decision support system is a coordinated collection of data, systems, tools, and techniques with supporting hardware and software by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.

Next Class!!! Case analysis submission in groups as in VC!! Short MCQ test on Marketing Research

THANK YOU!!!