chapter 3 smm

8/3/2019 Chapter 3 SMM

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By Obaid Pervaiz Gill

Managing Market Research and

Forecasting



Addressed Questions

What constitutes good marketing research?

What is the market research process?

How can marketers assess their marketing expenditure?

How can companies more accurately measure and forecastdemand?



A mini case of ‘SIGG’

Swiss bottle producer has been selling its aluminium waterand fuel bottles to the US outdoor market.

The bottles were sold at twice the price of closest

competitors.

Swiss reputation was assumed to drive sales; but it went

down after launch.

Market research revealed that people were worried of tasting

metal in water and did not like the flashy bottle design aswell.

What would you do given the insights?



The Market Research System Marketing managers commission studies for problems and

opportunities.

It is the job of marketing researcher to produce insights intocustomer buying behaviour

Marketing Insights provide diagnostic information about how andwhy we observe certain effects in the marketplace and what thatmeans to marketers

Market Research is the systematic design, collection, analysis andreporting of data and findings relevant to a specific marketing

situation. In-House Research: Orange Labs; marketers, researchers and

professional groups



Research for Companies For Large Companies:

Syndicated-service research firms (TNS Gallup, Euromonitor)

Custom marketing research firms (The Hermelin Group)

Specialty-line marketing research firms (Field-service firm;

Interviews)

For Small Companies:

Engaging students or Professors (Innovation Challenge for MBAs;

Mars, Hilton, IBM, Whirlpool)

Using the internet (Websites, chat rooms, published data etc.)

Checking out rivals (Chefs visit competing restaurants)



A mini case of HWL

Hutchison Whampoa Limited owns 3 Mobile in the UK andwas the pioneer in 3G service (wireless broadband).

Since then three has been a first mover in HSDPA (100 times

faster than GSM)

Signed an exclusive deal with ITV1 in UK to provide TV on

mobile phones.

It was the first one to introduce MSN messenger as a mobile

service. Why was 3 so successful and gave its competitors a run for

their money?



Step 1: Define the Problem, decision

alternative and research objectives

A problem should neither be narrowly nor broadly defined.

“3 should find out whether customer would be willing to spend £30 a

month to break even in two years” versus “Will our investment increase our

market share”

Effective way is to spell out a decision and then work backwards

“If 3 should offer a mobile phone service then should it be tailored to a

specific market group, if yes then what should be its price etc.”

Not all research projects are specific; some are Exploratory

(finding real nature of problem), Descriptive (seeks to quantifyvariables; demand), Causal (finds cause and effect relationship)



Step 2: Develop the Research Plan

It involves planning for gathering the needed information andestimating its costs.

To design a research plan we need to make decisions aboutthe data sources, research approaches, sampling plan and

contact methods. Data Sources: Secondary (already exists, collected for

some other purpose; government data), Primary (freshlygathered for a research project; supermarket consumer in

Karachi) Companies usually start from secondary data. Why do you

think it is like that?




Research Approaches: It can be carried out in five ways;

Observational research: It includes observing the relevant

actors and settings (Informal interviews at a cafe’;

Photographs can also elicit information)

Ethnographic Research draws its basis from anthropology and

other social science disciplines to provide deeper understand

of how people live and work (Lidl and the Ogilvy retail audit;

Intel and the Allscripts Healthcare Solution)




Focus Group Research: It is a gathering of, 6 to 10 peoplecarefully chosen based certain demographic or psychographic

considerations to discuss an interest at length.

It is a good exploratory step but extreme care should be

taken to avoid generalizing from focus group participants to

the whole market.

“Focus groups confirm what you already know”

(DDB Needham and SignBank; Internetand Internal company records)




Survey Research: They are undertaken to learn aboutpeople’s knowledge, beliefs, preferences and satisfaction to

measure the magnitudes of general population.

It can be done through questions to a customer panel run by

the company itself or other company

It can also be done by asking people questions in places such

as shopping malls.

Star Tours (Scandinavian Travel Agency) collects informationform people at the end of their holiday.




Behavioural Data: Customers leave traces of their purchasing behaviour in store scanning data, catalogue purchases and

customer databases.

Grocery data shows that high income people don’t

necessarily buy expensive brands and low income

people often buy expensive brands (M & S)

Experimental Research: It is designed to capture cause and effect

data by eliminating competing explanations.

3 might introduce two packages for mobile internet; one at £25

and other at £35, given that same number of people visited the

store it can draw inferences (SZABIST fee and student intake)




Research instruments: These are the tools for collectingprimary data.

Questionnaire: It consists of questions presented to

respondents

Types include Close Ended (all possible answers are given)

and Open Ended (often reveal more)

Close ended can be Dichotomous, Multiple Choice, Likert

Scale etc. Open ended can be Unstructured, Word Associations, Story

Completions, Picture etc.




Qualitative Measures: It involves working with non-numeratefindings.

Some researcher prefer it because it reveals deeper insights.

It can also come as a first step towards exploratory research

associated with concepts such as customer’s brand and

product perceptions.

Qualitative Research Approaches; Word Associations;

Projective Techniques (bubble exercises), BrandPersonification, Laddering etc. [Activity]



A mini case of LEGO

Its a Danish toy company offering creative and high qualitytoys for children.

It has effectively used qualitative research over the recent

years.

It has established long-lasting relationships with day care

centres to test its offerings.

Video filming is used and the data is later analyzed.

If you were to research students taking up programmes atSZABIST where would you start?



A mini case of Google

Internet giant Google tests its services in many globalmarkets.

It has realized that Japan provides the most refined test

audience.

Users are given mobile phones and are asked to perform

tasks such as finding a location, searching a product on web

etc.

What is the key benefit that Google can derive of itsresearch?




Sampling Plan: It asks the questions of; Sampling Unit; Who should we survey?

Sample Size; How many people should we survey?

Sampling Procedure; How should we choose the respondents?

Types of Sampling: Probability Sample: Simple Random Sample (equal chance of

selection), Stratified Random Sample (random sample fromgroups), Cluster Sample (sample of groups are drawn)

Non-probability Sample: Convenience Sample (most accessiblepeople), Judgement Sample (selecting good prospects forinformation), Quota Sample (prescribed number of people in eachcategory)




Contact Methods: Mail Questionnaires (PhD Research),Telephone Interview (Nix Telefon; The Swedish counter),

Personal Interview (Arranged Interviews; reservation and small

fee, Intercept Interviews; people and shopping malls), Online

Interview (Seth Diamond: Kraft Foods)

Online research tends to be fast, inexpensive, versatile and

honest.



Step 3: Collect the Information

It is the most expensive part of research and highly prone toerrors. It can have majors problems such as;

Respondents are not at home

Respondents refuse to participate

Respondents deceive or lie

Interviewer is biased

“One of the biggest obstacles to collecting information globally can

be consistency” Nan Martin, Synovate



Step 4: Analyze the Information

It involves tabulating the data and then developing frequencydistributions.

It may also involve testing different hypotheses and theories.

It may also include applying a sensitivity analysis to test the

assumptions and strength of the conclusion.



Step 5: Present the Findings

Researchers are expected to play role of a consultant byinterpreting and translating the data.

They are expected to present the information in an

understandable and compelling fashion.

One interesting way of presenting complex and information

rich findings is through visual and artistic collages



Step 6: Make the Decision

The manager who commissions the research needs to weighin evidence.

Their confidence in the research will suggest a new product

or no product launch.

Marketing Decision Support System is a coordinated collection of

data, systems, tools and techniques, with supporting software

and hardware. It gathers and interprets relevant information

to provide a basis for marketing action. (ABN AMRO; Hong

Kong, CRM)



Barriers to Research

A narrow conception of the research (fact finding operation)

Uneven calibre of researchers (weak training and low

creativity)

Poor framing of the problem (Coca Cola; taste over brand)

Late and erroneous findings

Personality and presentational differences (line manager v/s

marketing researchers)



A mini case of Star Wars

A General Foods executive opened a research venture.

A studio handed him a science fiction film to predict its

success

This film was researched to be a failure given the fact that it

had war in its name.

The film (Star Wars) turned out to be a million dollar

enterprise.

What is the key learning from this example?



Forecasting and Demand

Measurement

The aim is to forecast the size, growth, and profit potential of each opportunity.

Market Demand can be measured at a 3x3 matrix of Space

Level (World, Europe, Region, Territory, Customer),

Product Level (All sales, Industry sales, Company line sales,Product line sales, Product form sales, Product item sales),

Time Level (Short run, Medium run, Long run)

Potential Market (interest) v/s Available Market (interest,

income and access)

Target Market (pursued) v/s Penetrated Market (had)



A Vocabulary of Market Demand

Market Demand: Products bought by a defined customergroup, in a defined area, in a defined time period.

Market Potential: The approached limit as industry

expenditures reach infinity.

Market Minimum: The demand without any demand

stimulating circumstances.

Market Forecast: This the demand level to be achieved at a

given expenditure at a defined time.



Estimating Current Demand

Total Market Potential: It can be calculated in two ways 100 people x 3 books x Rs 6 = Rs1800

Chain Ratio Method: Demand for the new cola = Populationx avg. % of discretionary income spent on food x avg. % of

amount spent on food that is spent on beverages x average %spent on beverage that is spent on non- alcoholic beverages...and so on.

Area Market Potential: It can be calculated by Market-

Buildup Method; estimating manufacturing establishment,estimating the number of product each industry will buy based on per thousand employees or per million sales



Estimating Future Demands

Survey of Buyer’s Intentions: Purchase probability scale (Nochance 0.0 to certain 1.0)

Composite of sales force opinions

Expert opinion

Past sales analysis

Market test method

chapter 3 smm

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