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Research, segmentation and positioning del grupo de ADE en inglés A6-B6
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This is divided into two: the concepts and the tools.
MARKETING RESEARCH DEFINITION Marketing research is the systematic design, collection, and reporting of data relevant to a specific marketing situation facing an organization. It can help firms to assess market potential and market share or to measure the effectiveness of product, pricing, distribution, and promotion policies. It also gives insights into customers’ motivations, purchase behaviour, satisfaction and loyalty.
PURPOSE In addition to marketing intelligence information about general consumer, competitor, and marketplace happenings, marketers often need formal studies that provide customer and market insights for specific marketing situations and decisions.
SPECIFIC STUDIES OF MARKETING Studies of market structure o Is there any new business opportunity? o Measuring the perception of customers regarding the current market supply o Identify whether the customers would accept a single strategy or might consider different strategies.
Imaging or positioning o What brands or what products are those that are competing? o What are the strengths and weaknesses of brands? o What is the difference between one to another brand? o What image should offer the ideal brand? Market segmentation o How many types of consumers exist in the market? o What is the profile members’ of each segment? o What is the value of each segment? o What is the value proposition for each segment? o What is the most effective way to communicate with each segment? Pricing and demand analysis o They help us to know the price sensitivity of the target (i.e. it is possible to raise prices?) o To know the size of demand for each price level o Measure demand if prices go up or down o Is the price a relevant factor in the buying process? Studies on the quality of service o Evaluation of responsibility, customer perception competence, of reliability, accessibility, flexibility, friendliness, understanding, personalization… Product studies o Concept test: to understand how the target interprets and evaluates the product or service concept.
o Packaging test: Evaluation that makes the target audience of the perceptual aspect of packaging.
Distribution research o What kind of distribution we do? o What is the attitude of the members of the sales network? o Where should we locate the final sales points? o What should be the design and ambience of the point of sale Promotion research o What reputation has every media? What is the effectiveness of advertising? o These studies can be performed before the advertising campaign or promotion (identify possible errors), or thereafter to control the results.
Brand research o Whether or not the brand is crucial in the buying process o How much is the consumer willing to pay to have a particular brand? o Does the brand adds value? Studies that quantify the potential of the market o What part of the market has high potential to become consumer or user of a new product or a new service? o How much is reasonable to spend on promotions to capture the market based on the expected profitability of new customers? Design and redesign of products o To know what alternative design or redesign would have more acceptance among current customers, or potential customers.
o Market share than we could achieve with each of the alternatives (Design or redesign) o To know what potential customer profile could attract.
STAGES IN THE MARKETING RESEARCH PROCESS 1. Defining the problem and research objectives. Defining the problem and research objectives is often the hardest step in the research process.
If set wrong, all the effort, time and resources spent on research will have been in vain. The process usually starts when marketing department define the problem (What do I research?) and outlines the research objectives. It is an aid to: a. Specify what we want to investigate b. Understand why the information is needed c. How to obtain the information d. Assess the scale and the timetable of the project.
For instance, a company wants to “design a package for a new product”.
The research problem will be: “Assessing customers’ preferences for the different proposed packaging”.
2. Developing the research plan. When the research problem and objectives have been defined, the researchers develop a plan for gathering the information efficiently. The research plan outlines sources of data, specific research methods, contact methods, sampling plans, instruments that researchers will use to gather new data and research costs.
We need to decide what kind of sources of information do we use (one or both). The sources of information may be: Secondary data. (provide a good starting point for research and often help to define problems and objectives). Secondary data can be internal or external information.
o Internal information of the company: I own this data.
Company, reports, customer analysis, distribution and sales, etc.
o External information: Normally someone is paying for this information. Can be Private or public sources.
Private sources: i.e. Commercial databases Public sources: It reports from official sources (public administration, chambers of commerce, international organization). i.e. Mass media, social networks Primary data. Primary source of information is directly obtained by the researcher. We mainly obtain this information by: o Exploratory information. Exploratory research is designed with objective of providing a first orientation on the whole or any part of the phenomena occurring in the market under investigation. In general it is useful in the definition of the research problem where exploratory research may be used to: Define the problem more precisely and set priorities for further investigation Identify alternative courses of action.
Identify key variables and relationships for further investigation o Conclusive information. Conclusive research is designed in order to help make decisions. The main objective is to test hypotheses and examine relationships. The research process is more formal and structured than exploratory research. The samples are large and representative, and the data are analysed by quantitative methods.
This may be: Descriptive research. The main objective is to draw conclusions that help to describe the whole or a part of the phenomena occurring in the market under study. To do a good research, it is necessary to clearly specify the following information: Who interview What information should be obtained When and where should I get the information Why will you get at all the information we will collect How will you get the information Examples of a descriptive specifications on TV research: Who should be considered as a target audience? o Anyone who has TV at home o Anyone who watches TV o Anyone who watches TV 10h/week What information should be obtained from the target audience: o Frequency: the number of times that a person is exposed to the different channels.
o Image evaluation of the various channels o Target audience media habits, life style, socioeconomic data, consumer behaviour.
When should obtain information from respondents? o Before watching TV o During TV viewing o Immediately after watching TV Where should I get the information? o At home o On the street Why the information is collected? o To improve the image of a channel o To improve ratings o To change the TV programming How will you get the information? o People meter observations o Personal interviews The methods used in descriptive research are observation and survey. The descriptive designs may be: Transversals: collected from The a information is sample of a information is population at a particular time.
Longitudinals: The collected from the same sample of the same universe, repeatedly over time.
Causal research. The aim is to draw conclusions about cause-effect relationships that occur between the phenomena under study: Determine what are the causes and what are the effects of a phenomenon. i.e. identify the effect of customer satisfaction on loyalty.
We may use qualitative or quantitative techniques, according to the following slide: Qualitative research. Qualitative techniques studied by methods unstructured internal aspects of the individual. Its purpose is to discover the causes and motivations of their behavior. Qualitative research in marketing research comes from the knowledge and techniques of the social sciences (psychology and sociology). Care has to be taken when interpreting the results of the qualitative techniques, because the findings are based on small sample sizes. The techniques are: Depth interviews. Involve the interviewing of individual about the different topics for perhaps one or two hours. The deep interview is used when the presence of other people could inhibit the expression of honest answers and viewpoints, when the topic requires individual treatment, and when the individual is an expert on a particular topic.
Observation. This technique involves gathering primary data by observing people and their actions. These type of studies can be conducted in real situations (public streets, behavior of shoppers...).
Observation studies can be conducted by humans, by mechanical systems (camera, eye tracking…), or neuro-marketing research (observation of the responses of brain to marketing stimuli).
Group techniques/Group discussions.
Unstructured and direct qualitative technique (the respondent knows the purpose of the investigation) to obtain information. It aims to promote interaction and communication flow between the components of a group of people to discuss a particular topic. i.e. Brainstorming, focus group… Quantitative techniques can be descriptives such as observation and surveys or causals like experiments.
Observation is the collection of information techniques that is also quantitative. The difference with qualitative research is that the sample must be significant of the population.
Survey. Surveys remain the major market research technique and typically involve the following key decisions: o Who and how many people to interview: the sampling process.
o How to interview them: the survey method o What questions to ask: questionnaire design There are three types of surveys: Ad-hoc. It is a method to ask directly to potential customers or customers to know their attitudes, preferences, buying behavior in a specific market context. The major advantage of ad-hoc survey research is the flexibility (the sample and questionnaire are designed to fit the needs of specific research). It can be carried out in person, by phone/mail, by web… Omnibus.
It is a product of Research Institutes, Consultants… This survey makes a Research Institute, periodically, to a variable but representative sample of a fixed universe. The survey is multi-thematic and multi-customer (companies with complementary products).
The questionnaire was developed by the Research Institute with the questions from each company that participates in the omnibus.
Panel. Panel studies are a particular design of longitudinal study in which the unit of analysis is followed at specified intervals over a long period, often many years. The key feature of panel studies is that they collect repeated measures from the same sample at different time.
Experimentation. Experiments involve selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in group responses. Experimental research tries to explain causeand-effect relationships. Try to identify the existence of some kind of causal relationship between one or more variables, called independent (X) and dependent (Y). Consists of a set of phenomena that occur in a strictly controlled situation in which one or more factors are manipulated, while the others are held constant. This technique allow us to know situations like: The impact that a TV spot can have on the sales of a product for a period of time.
The variation that may occur in the composition of the basket of a consumer in an aggressive promotion campaign.
The sampling process. A sample is a segment of the population selected for marketing research to represent the population as a whole. Designing the sample requires three decisions: a. Who is to be surveyed(sampling unit) b. How many people should be surveyed?(sample size) c. How should the people in the sample be chosen (sampling procedure) Sampling unit*: Consumers? Managers? Owners? Sample size*: Larger samples give more reliable results than small samples, but larger samples cost more than small. The larger the sample size the more likely it is that the sample will represent the population There are different kinds of samples: Probability sample. Each population member has a know chance of being included in the sample, and researchers can calculate confidence limits for sampling error. Probability sample size of around 1000 can provide measurements that has tolerable error levels when representing a populations >100,000. The calculation is done through mathematical formulas or obtained directly from standard tables.
Nonprobability sample. The researcher select the easies population members from which to obtain information or people who are good prospects for accurate information. This kind of sample is used when probability samples cost too much or takes too much time. In this case, the sampling error cannot measured.
Research instruments. In collection primary data, marketing researches have two main instruments: Questionanaires. Administered face-to-face, by phone, mail, CATI (Computer-aided telephone interviewing…). There are many ways to ask questions: o Close-end questions. Include all the possible answers, and subjects make choices among them. (multi choice questions, scale questions).
o Open-end questions. This kind of question allows respondents to answer in their own words. Open-end questions are useful in exploratory research, when the researcher is trying to find out what people think, but not measuring how many people think in a certain way.
Questions should be arranged in a logical order. First, questions that create interest. At the end of the questionnaire, difficult or personal questions to avoid defensive answers.
Mechanical instruments: People meters. Instrument to be installed in homes to record TV audiences Checkout scanners. To record shoppers’ purchases(retailing) Eye camera. To study viewers’ eye movements while watching ads.
Neuromarketing. Measures brain activity to learn how consumers feel and respond to stimuli.
3. Gathering the information.
Implementation involves collecting, processing, and analysing the information. The data collection phase of marketing research is generally the most expensive and the most prone to error because: a. Some respondents will not be at home b. Others refuse to cooperate c. Others will give dishonest answers d. And is it possible that some interviewers will be biased when aske the questions 4. Analysis of the results. But implementing also means analysing the results, extract findings by tabulating the data and developing frequency distributions. The researches compute averages and measures of dispersion for the major variables and apply some advanced statistical techniques to test different hypotheses.
5. Interpreting and reporting the findings. This is about drawing conclusions from data analysis. Suggest, and propose strategies based on the conclusions to be taken into account in decision making process.
FINAL REPORT The key elements in a research report are: List of contents: contents, tables and images Preface (outline of agreed brief, objectives, scope and methods of research) Summary of conclusions and recommendations Previous related research(how previous research has had a bearing on this research) Research method Research findings Conclusions Appendices SEGMENTATION AND POSITIONING SEGMENTATION Market segmentation involves dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies. Market segmentation is defined as the identification of individuals or organizations with similar characteristics that have significant implications for the determination of marketing strategy.
LEVELS OF MARKET SEGMENTATION Segment marketing. A market segment consists of a groups of customers who share a similar set of needs and wants.
Niche marketing. A niche is a more narrowly defined customer group seeking a distinctive mix of benefits. Usually a subsegment.
Local marketing. Target marketing is leading to marketing programs tailored to the needs and wants of local customer groups. Global companies fails to address local needs or local culture, but a brand’s overall image might be diluted if the product and message are different in different localities.
Individual marketing. Today customers are taking more individual initiative in determining what and how to buy. In many cases, design the product they want (Internet). Customization is not for every company. It may be difficult to implement for complex products. This level of segmentation requires One-to-one marketing strategies.
SEGMENTING CONSUMER MARKETS Behavioural.
o Benefits sought. Group buyers according to the different benefits that they seek from the product or service. It requires finding the major benefits people look for in the product class. Examples: durability, performance, low price, luxury, relax, prestige… o Purchase occasion. Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase, or use the purchased product. This kind of segmentation can help companies build up product usage. Example: Most consumers drink orange juice in the breakfast, but companies have promoted drinking orange as a cool at other times of the day.
o Purchase behaviour. It may be segmented from: Some buyers are totally brand loyal, buying only one brand in the product group.
Some customers may have a tendency to buy an specific brand, but also buy two or three other brands.
Most customers practice brand-switching behaviour.
Others might show no loyalty to any individual brand, but switch brands on the basis of special offers, or they are variety seekers.
o Usage. Markets can also segmented into light, medium and heavy product users. And, also, by nonusers, ex-users, potential users, first-time users, and regular users.
o Perception and beliefs. It may be segmented from perceptions and beliefs of a product.
o Lifestyle. This kind of segmentation aims to categorize people in terms of their way of life, as reflected in their activities, interest and opinions (conservatives, sophisticates, trendsetters, live-to-cook, cook-to-live, etc.
According to personality traits (compulsive, gregarious, ambitious, extrovert, etc.
o Demographic. Divides the market into groups based on variables such as age, gender, family size, family life cycle, education, social class, etc.
Many companies have used income segmentation to attract specific groups of customers.
o Geographic. This segmentation calls for dividing the market into different geographical units, such as nations, regions, cities, neighborhoods, urban, suburban or rural areas.
SEGMENTING ORGANIZATIONAL MARKETS We can segment business markets with some of the same variables we use in consumer markets (benefits sought, geography, usage), but business markets also use other variables such as: Organizational size. Large organizations differ from medium-size and small organizations in having greater order potential, more formalized buying and management processes, specialization, and special needs.
Industry. Different industries may have unique requirements from products. For example: Software applications companies market their products to various sectors (banking, healthcare, etc.
manufacturing, education, Choice criteria. The basis is the key criteria used by buyers when they are evaluating supplier offerings (price, productivity, service).
Purchasing organization. Another segmentation variable is that of decentralized versus centralized purchasing, because of its influence on the purchase decision. This organization changes the way to sell them: o The centralized segment could be served by a national account sales force.
o The decentralized segment might be covered by territory representatives.
CRITERIA FOR SUCCESSFUL SEGMENTATION Effective. The segments identified should consist of customers whose needs are relatively homogeneous within a segment, but significantly different from those in other segments.
Measurable. It must be possible to identify customers in the proposed segments, and to understand their characteristics and behavior patterns.
Accessible. The market segments can be effectively reached and served.
The company must be able to formulate effective marketing programs for the segments that it identifies.
Actionable. The company must have the resources to exploit the opportunities identified through the segmentation scheme.
Profitable. The segments must be profitable.
SELECTING TARGET MARKET SEGMENTS Single-segment concentration. Through concentrated marketing, the company gains a strong knowledge of the segment’s needs and achieve a strong market presence. The company enjoy operating economies through specializing its production, distribution, and promotion. The risk is that a competitor may invade the segment. A segment can go unless.
Selective specialization(multisegment strategy). A company selects a number of segments, each objectively attractive and appropriate. There may be little or no synergy among the segments, but each promises to be profitable. There are different products and programs for each segment.
Sales are improved by greater diversification of products and channels. It increases costs of production, administration, promotion and R&D.
Example: Eat & Out.
Product specialization. The company makes a certain product and sells it to several different market segments. The risk is that the product may be supplanted by an entirely new technology (example: towels were replaced by electric hand dryer).
Market specialization. The company concentrates on serving many needs of a particular customer group. The risk is that the customer group may suffer budget cuts or shrink in size.
Full market coverage. The company attempts to serve all customer groups with all the products they might need. The company operates in several market segments and designs different products for each. Only very large companies can undertake a full market coverage strategy like Coca-Cola, Microsoft, Volkswagen, etc.
POSITIONING Positioning is the act of designing the company’s offering so that it occupies a meaningful and distinct position in the target customer’s mind.
A product’s position is the place the product occupies in consumer’s minds relative to competing products. The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. So, two words important are differentiation and positioning.
The strategy is choosing a differentiation and positioning strategy as well as communicating and delivering the chosen position.
CHOOSING A DIFERENTIATION AND POSITIONING STRATEGY It consist of three steps: 1. Identifying a set of differentiating competitive advantages upon which to build a position. To build profitable relationships with target customers, the firm must understand customer needs better than competitors. The companies need to differentiate by: a. Product differentiation. Versions, standardization (uniformity), quality, durability, reliability, reparability, style, etc.
b. Services differentiation. Delivery, installation, training, technical assistance c. Differentiation through people who provide services.
Professionalism, courtesy, credibility, trust, responsibility d. Differentiation through brand image. Atmosphere, symbols, events (sponsorship), advertising 2. Choosing the right competitive advantage. It must decide how many differences to promote and which ones: a. How many differences to promote.
i. Only one benefit. A very powerful benefit to be communicated aggressively ii. More than one differentiator. This may be necessary if two or more companies are claiming on the same attribute (differentiator).
b. Which differences to promote. Not every differences makes a good differentiator. A difference is worth establishing to the extent that it satisfies: i. Important. The difference delivers a value to buyers ii. Distinctive. Competitors do not offer this difference iii. Superior. The difference is superior to other ways that customers might obtain the same benefit.
iv. Communicable. The difference is visible to buyers.
v. Preemptive. Competitors cannot easily copy vi. Affordable. Buyers can afford to pay for the difference vii. Profitable. The firm introduces the difference profitably.
3. Selecting an overall positioning strategy. It is the answer to the customer’s question: “Why should I buy your brand?” Is the full mix of benefits upon which the brand is differentiated and positioned.
a. Only one benefit. A very powerful benefit to be communicated aggressively b. More than one differentiator. This may be necessary if two or more companies are claiming on the same attribute (differentiator).
COMMUNICATING AND DELIVERING THE CHOSEN POSITION All the company’s marketing mix efforts must support the positioning strategy.
Positioning company calls for concrete action (For example: If the company decides to build a position on better quality and service, it must first deliver that position.) Designing the Mk-mix involves working out the tactical detail of the positioning strategy. Establishing a position or changing one usually takes a long time. In contrast, positions that have taken years to build can quickly be lost.
KEYS TO SUCCESSFUL POSITIONING STATEMENT Clarity. The idea must be perfectly clear, both in terms of target market and differential advantage.
Consistency. A consistent message is required. Use the same positioning to avoid confusion.
Credibility. The selected differential advantage must be credible in the minds of target customers.
Competitiveness. It should offer something of value to the customer that the competition is failing to supply.
REPOSITIONING Frequently, perhaps because of changing customer tastes or poor sales performance, a product or service need to be repositioned. Repositioning involves changing the target markets, the differential advantage, or both.