APPLICATIONS OF MARKETING RESEARCH
APPLICATIONS OF MARKETING RESEARCH
PRICING RESEARCHPrice is what buyer pay to acquire product from
sellerIt is the way to express value of product in money termsIn
pricing research, answers are sought to questions relating to the
ability of consumers to pay
Pricing Research includes:Determine the price expectations of
consumers in the different market segmentsComparing the pricing
strategies of the competitorsTesting the alternative pricing
strategiesEvaluating the consumer reactions and responses to the
company prices
Pricing StrategiesEconomy Pricing Low priceCost of marketing and
manufacture are minimumPenetration PricingInitially price charged
is low in order to gain market shareOnce this is achieved, the
price is increasedPrice SkimmingCharge a high price because of
substantial competitive advantageAdvantage is not sustainablePrice
inevitably falls due to increased supply
Premium pricingUniqueness of the product or service fetch them a
high priceHigh prices are charged for luxuries
Types of Pricing ResearchComparative Pricing ResearchSingle
respondent is questioned to react to two or more prices of the same
product Declarative DesignRespondents are exposed to a product
profile and asked to declare a price that they perceive to be
acceptable or realistic or the maximum they would pay
Pricing Research MethodsPrice Sensitivity Meter (Van
Westendorp):Too expensiveToo cheapExpensiveCheapConcept
Test/Concept Evaluation:Definitely would purchaseProbably would
purchaseMight or might not purchaseProbably would not
purchaseDefinitely would not purchase
Conjoint Analysis:Respondents are forced to make trade-offs
between products and product featuresTo determine how people value
different features that make up an individual product or serviceTo
determine what combination of a limited number of attributes is
most influential on respondent choice or decision making
Discrete Choice:Involve choices between two or more discrete
alternativesDiscrete choice models are statistical procedures that
model choices made by people among a finite set of alternativesThe
models have been used to examine, e.g. the choice of which car to
buy, where to go to college, which mode of transport (car, bus,
rail) to take to work among numerous other applications
Advertising ResearchConcentrates on the type of advertising
campaign that would be most suitable for the product, the ideal
time for product launch, limitations of the product
Step involved in developing an advertising
programSetting/formulating objectivesFinding the right target
audienceSelecting the messageChoosing an appropriate media
vehicle
Setting Advertising ObjectivesDAGMAR-Defined Advertising Goal
for Measuring Advertising ResultsTakes the consumer through
successive levels of inwardness, awareness through exposure,
comprehension (recognition), intention and finally action
(purchase)
DAGMAR ApproachDefining Advertising Goals for Measured
Advertising ResultsRussel H. Colley gave this approachHe
distinguished 52 advertising goals These goals pertain to sales,
image, attitude and awareness
Some of the goals are:Persuade a prospect to visit a showroom
and ask for a demonstrationBuild up the morale of the companys
sales forceFacilitate sales by correcting false impression,
misinformation and other obstaclesAnnounce a special reason for
buying now (price, discount, premium and so on)Make the brand
identity known and easily recognizableProvide information and
implant attitude regarding benefits and superior features of
brand
According to DAGMAR approach, the communication task of the
brand is to gain:AwarenessComprehensionConvictionImage
Finding the Right Target AudienceRequires knowledge of market,
the universe and quantitative techniques
Determining or Selecting MessageMessage consist of idea together
with relevant informationMessage design identifies the consumer
perceptions about the productWhat is the nature of the product?For
whom it is targeted? The segmentWhat are the unique characteristics
of the product?Who are the competitors?Is the product different
form other available offerings?
Choosing an appropriate Media VehicleAdvertising media are the
vehicles which carry the advertising messagesChoose medium that
offers the maximum reach in the target audience of the specific
productCost effectivenessDemographic characteristics and market
potential of target group
Methods of Copy TestingRating test:Ads are rated in accordance
with the scale values and a numerical score is obtainedPortfolio
test:A no. of alternative copies that are to be tested are placed
in portfolioThe audience of the target group are given the folio
and asked to go through itInterviewer ask series of recall
questions related to portfolio
Physiological Tests:Records an individuals physiological
responses on advertisements like respondents eyes and emotions on
seeing an advertisement
Post Testing MethodsMemory Test Recognition test:Readership and
listenership survey Show cards are developed containing clippings
of advertisementsAsked to identify the brand name and the media in
which it appeared
Enquiry TestThe number of enquiries produced by consumer about
an ad copy is considered a measure of its effectiveness success in
attracting or retaining readersCouponing techniquesSale
TestAdvertising effectiveness in terms of increase in sales
Product ResearchA product is anything that can be offered to a
market for attention, acquisition, use or consumption that might
satisfy a want or needTangibility, Intangibility, Exchange value,
Attribute association (brand, package, warranty etc), Consumer
Satisfaction.
Product ClassificationIndustrial GoodsUsed for further
production of goodsCapital Goods, Raw materials, components parts
etc.Consumer GoodsReady for final consumption by consumersShopping
Goods( fans, furniture)Convenience Goods (soaps, vegetables, fruits
etc.)Specialty Goods (special eating items, fancy goods etc. )
New Product Development ProcessIdea GenerationGathering
ideasScreening IdeaSales, production cost, profit potential,
competitors response if the product is launchedConcept Development
and TestingIdea is developed into a product concept
Market Strategy DevelopmentTarget market, planned product
positioning and sales, market share, profit goalsProducts planned
cost and budget for the first yearPlanned long run sales, profit
goals, marketing mix strategy
Business AnalysisViability of the product ideaForecast of market
size(e.g. overall demand)Operational costs(e.g. production
cost)Financial projections( e.g. sales and profits)Competitor
analysisInternal research (purchasing and production
personnel)External research (customer and distributor surveys)
Product and Marketing Mix DevelopmentDevelops the product
concept into a physical productPrototype is developedCustomer
experience the physical product Favorable reaction helps solidify
the marketers decisionEstimated purchase rates, how product will be
used by the customerTest MarketingChecks the viability of the
product in a more realistic market settingCommercializationProduct
is introduced in the markets
Product Life CycleIntroduction Stage:To inform potential
buyersTo encourage middlemen to stock productsTo induce
acceptanceThe main features of this stage are:Low sales volumeHigh
costsProfits are negativePromotional expenses are high
Growth Stage:Sales volume increaseProfits arise (economies of
scale)Market expandsCosts reduced due to economies of scaleCustomer
awarenessCompetition increases
Maturity Stage:Little growth potential for the productHigh sales
volumeHigh profitsPrices tend to dropIncrease in competitive
offeringsDecline Stage:Sales and profit declineMarket begins to
shrinkDecision to drop the product
Distribution ResearchChannels of distribution facilitates
transfer of product from manufacturer to ultimate consumer
Types of Channel
MembersResellersWholesalersRetailersAgentsInternetSpecialty Service
FirmsAgents and BrokersDistribution Service Firms
Benefits offered by Channel MembersHelps in enhancing
salesProvide Financial SupportProvide feedbackCost Savings in
SpecializationReduce Exchange Time
Factors Affecting Distribution ChannelsProduct issuesNature of
productPromotion IssuesType of promotional activities needed to
sell the productExtensive salesperson to customer contact (eg.
Electronics purchases) Pricing IssuesInclusion of resellers effect
the products pricing
Target Market issuesDistribution coverageChannel Relationship
IssuesRelationships within the channel of distribution
Channel PowerInfluence that one party within a channel has over
other channel memberProduct Power:Product or service provider
markets a brand that has high level of customer demandMarketer of
the brand is in a powerful positionMiddlemen or Wholesale Power:
Services a large number of small retailers with products obtained
from a large number of manufacturers
Retailer Power :Retailer commands a significant percentage of
sales in the market they serveChannels are dependent on the sales
generated by the retailer
Types of Distribution SystemDirect Distribution SystemDirect
Mailer Marketing SystemsMarketers website or marketers
cataloguePersonal CommunicationToll-free telephone ordering
Exclusive showroomsProduct marketer operates their own exclusive
retail outletsPersonal SellingSalesperson is involved in creating
and managing sales
MOTIVATIONAL RESEARCHMotive is a inner state that activates and
directs the behaviour of an individual towards certain goal and
activityMotivation research attempts to identify forces and
influences that consumers may not be aware of e.g. cultural,
sociological forces
Motivational research is based on two basic assumptions:Every
individual has drive which when stimulated generate a responseEvery
individual is influenced to a certain extent by his environment
Consumer motivation helps to improve marketing strategies by
understanding :Consumer psychology which has been influenced by
env.(e.g. culture, family, media)Perception of consumer how they
think, feel and select different alternativesBehaviour of consumer
regarding decisions while marketingEnhancement of consumer
knowledge to influence marketing outcomesTo reach consumers how
marketers can improve and adopt their marketing campaigns and
strategies
Types of MotivationExternal MotivationPositive
motivationNegative or Fear MotivationInternal MotivationIntrinsic
in nature and comes from withinSelf MotivationOur goal, our role
model are our great motivators
Techniques of Motivational ResearchAttitude Research:The Likert
ScaleSemantic Differential ScaleDepth ResearchIndepth InterviewThe
focus groupProjective Research Sometimes a Respodent can see in
others what he cannot see or admit about himself.Story
CompletionWord Association TestSentence Completion. I love Diwali
becauseThematic Appreciation Test Pictures are shown
Sales and Market ForecastingMarket demand assessment is required
because it describes success or failure of a marketing task for a
productMarket potential is the highest limit that market demand can
reach with the increase in marketing effort in a given
environment
Factors Affecting Market DemandPrice of the productNumber of
substitution available to the customerComprehending the needs and
desires of peopleForecasting the number of buyers in the specific
market for a product
Methods for Measuring Market PotentialDirect Data
MethodComparison of actual sales with expected salesCorollary Data
MethodMeasuring of market potential is based on the idea that data
related to one product would automatically tell the sales potential
of another
Factors affecting Sales ForecastingControllable forcesCost of
the productQuality of productSales promotional
techniquesAvailability of productsUncontrollable
ForcesCompetitorsGovernment policies and practicesTechnological
advancementsSocial changesEconomic changesPolitical situations
Techniques used for sales forecastingQualitativeExpert
opinionsSurveysSales Force EstimateQuantitative Regression
AnalysisMoving Average MethodExponential SmoothingLarge no. of
forecast are to be made for a number of items
Ei=WYi+(1-W)Ei-1Ei-1=previous computed exponentially smoothed
valueY=present observed value of the time seriesW=subjectively
assigned weighing factor or smoothing coefficient W
Importance of Sales AnalysisDeveloping companys sales
planEstablishing future salesSetting standards for sales
performanceEstablishing sales goals for each unit and for each
individual in the organizationEstimating total sales force needed
in the futureAllocating salesmans time, effort, territory
etc.Taking decision about salesman remuneration, training and
compensationPreparing sales expense budget
Demand Measurement and ForecastingIt seeks to investigate and
measure the forces that determine sales for existing and new
productsProduction or sales in anticipation of future demandTwo
methods of demand forecastingSurvey methods Statistical methods
Survey MethodsConsumers interview method: Survey of buyers
intentions or preferencesDirect Interview Method Complete
enumeration method: Sample survey method or the consumer panel
methodCollective opinion method or opinion survey method
Statistical MethodsTrend Projection MethodEconomic
Indicators
