pcsc2: primary research strategies: how to build a million dollar business

21
How to Build a Million Dollar Business November 2010

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Kevin Gentry, PhD and Rebekah Paul's presentation from ProductCamp SoCal. Held November 6, 2010 at Cal State Fullerton - The Mihaylo College of Business & Economics.

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Page 1: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

How to Build a Million Dollar Business

November 2010

Page 2: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Introducing…

20+ years experience

Previously in senior positions at

Quaker Oats

Information Resources

Grey Advertising

Holds a Master of Arts and a doctorate (Social Psychology) from USC

Has taught courses at USC, Santa Monica College, and West Los Angeles College

Kevin Gentry, Ph.D.Group Vice President

Page 3: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Introducing…

16+ years of sales, marketing, and business development experience

Oversees introduction of C.A. Walker to potential customers

Previously worked for a research firm and a branding company in business development

Holds a B.S. degree in Business Administration, Marketing emphasis from CSUN

Rebekah PaulBusiness Development Mgr

Page 4: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Who We Are

• In business since 1972

• Privately Held and Employee Owned

• Mid-Sized Firm

• Fully Integrated Data Processing and Programming

Page 5: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Current Client List

Page 6: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Market Research Strategic Issues

• Sampling Representative to populations U.S. Census-based demographics eRewards and eSearch

• Interview Length Minimum: 5 minutes Maximum: 25 minutes Average: 10 - 15 minutes

• Incentives Paid to each participant, not sweepstakes Panels include in the cost May add to it (typically $100 - $150) if narrow target, e.g. physicians,

requesting sensitive information, etc.

Page 7: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

FAIL

Not developing your products along with the customer, knowing what their pain points are and what problem you’re solving

Making critical business decisions when too close to the situation, when views and experiences are too narrow, lacking perspective and objectivity

Getting all wrapped up in building a product but never pausing to find out if there will be demand for it

Not taking part of the budget to do the research necessary to validate the market: size of the market, how fast it’s growing and competitor activity

Not interviewing at least 100 people in your target market to talk about what they’d like to see in a product

Source: BNET.com

Page 8: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Testing new products at concept or pre-production stage

Measuring demand for new products, estimating market size/sales volume

Understanding prospects: demographics, how they make purchase decisions

Determining product feature/price trade-offs

Market Research Strategies

Page 9: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

9

Case Study – Testing New Product Concepts

A Manufacturer of nutritionally enhanced products wanted to measure reactions of vegetarians to two different forms of a particular vitamin (“1” and “2”) added to a product line.

• Online survey among vegetarian publication subscribers responding to an email blast

• Males and females• 3,287 responded and 1,057 passed the screeners• Must have used the product line in the past year

Page 10: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

10

Case Study – Testing New Product Concepts

Measures include:

• Likelihood to purchase• Product line by itself• Product line with vitamin no form (e.g. B)• Product line with vitamin form 1 added (e.g. B2)• Product line with vitamin form 2 added (e.g. B12)• Awareness of derivation of forms 1 and 2• Preference of vitamins based on derivation

Page 11: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

11

Case Study – Testing New Product Concepts

65%58%

50% 49%

23%16%

0%10%20%30%40%50%60%70%

Product lineby itself

No form Form 1 Form 2 Form 1 +derivation

Form 2 +derivation

3-D Line 1

Positive purchase interest of the product line with added vitamin goes down among all vegetarians as information is provided about vitamin formulation and derivation

Total (N=1,057)

Page 12: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

12

Case Study – Measuring Demand for New Products, Estimating Market Size/Sales Volume

As part of an ongoing program, a Film Studio wanted to measure demand for the DVD release of one of their Family film titles, estimate market size, and project sales using a proprietary norms database that we developed.

• Online interviews of nearly 5,000 DVD households

• 90% Adults 18-54• 10% Kids/Teens 8-17 • 1+ DVDs purchased in past 6 months

Page 13: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

13

Case Study – Measuring Demand for New Products, Estimating Market Size/Sales Volume

Measures include:

• Film awareness• Film ratings among those who saw it• DVD purchase intent • Preference for single-disk or double-

disk version and at what cost• First-month purchase urgency• First-pick among competitive titles• Sales volume forecast

Page 14: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

14

Case Study – Measuring Demand for New Products, Estimating Market Size/Sales Volume

The title had broad appeal, awareness and viewership among both parents and non-parents, with “Excellent/Very Good” ratings: Parents with 6-14 year olds are the core target Purchase intent was strong and above average

compared to Family film norms database

Sales volume forecast for the title (at $19.99):

Aggressive estimate* 6.5mm units

Moderate estimate 5.7mm units

Conservative estimate* 4.8mm units

*Forecast within +/-15% of actual DVD sales, supporting accurate adjustment of marketing and advertising expenditures for home video sales

Page 15: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

15

Case Study – Understanding Prospects/Purchase Decisions

A Health Insurance Company wanted to understand how and why its California customers are choosing their purchase channel (Agent vs. Direct vs. Internet), how committed they are to that channel, and what their key individual health plan purchase criteria are.

• Primary or co-decision maker• Between 18-55 years of age• 281 telephone interviews with recent

purchasers/members from their database• 37% applied through an Agent• 38% applied Direct• 25% applied through the Internet

Page 16: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

16

Case Study – Understanding Prospects/Purchase Decisions

Measures include:

• Did they contact an Agent at all• Why or why not• If yes, how did they find him or her• If yes, to what degree did they rely

on the Agent when making a decision• Did they contact Direct at all

• Why or why not• Did they contact via Internet at all

• Why or why not

Page 17: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

17

Case Study – Understanding Prospects/Purchase Decisions

When purchasers/members made a decision, they were most focused on (top 5, in order of importance):

• Best benefits for the price• Good pharmacy benefit• Choice of plans to fit budget• Choice of amount of coverage• Good customer service

Choice of which channel to use is largely

dependent upon the purchaser’s perception of which is most convenient, how self-reliant the purchaser is, and whether or not the purchaser personally knows or has been referred to an agent

Page 18: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Case Study – Feature/Price Trade-off

Determine the trade-off between features and price in purchase decisions for a specific office product line

Discrete Choice Modeling used to value product variables’ price premiums

• 601 online surveys• Office Supply Decision

Makers• 80% purchased <= 50 of

these products in the past 6 mos

13 variables including:Durability Materials

DesignPriceStyleSize

7 Products with differing combinations

of the 13 variables

Page 19: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Case Study – Feature/Price Trade-off

0% 20% 40% 60% 80% 100%

Design Element 10

Design Element 9

Recycled Materials

Design Element 7

Design Element 6

Design Element 5

Design Element 4

Design Element 3

Design Element 2

Design Element 1

Durability

Size

Price

1%

1%

3%

4%4%

4%

5%6%

9%

10%11%

12%

20%

Most important features for purchase intent

Recycled materials not yet a key purchase consideration

Page 20: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

Case Study – Feature/Price Trade-off

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$3.05

$1.24

$3.33 $3.69

$4.17

$5.41 $5.01 $5.31 $5.46

Upgrade 4Upgrade 3Upgrade 2Upgrade 1

+13.8 +23 +18.5 +17.2Incremental Share Achieved by Maximum Upgrade

From baseline productValu

e In

crea

se F

rom

bas

elin

e

Page 21: PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

~ FIN ~