The Butt Stops Here. The Butt Stops Here

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1 Who Conducts Consumer Research? General Marketing Research Structure Corporate Marketing Departments: Ultimate users of marketing research. Internal resources are generally limited (15% > 10). Major Ad Agencies: Data used for the creation and execution of campaigns for corporate clients. Syndicated Service and Custom Research Firms: Design research, manage its execution, and buy data collection from other firms. Field Service and Specialized Firms: Collects raw data. Types of Consumer Behaviour Data General Marketing Research Structure Primary Data: Collected specifically to solve a particular problem. Secondary Data: Already available data, but gathered for some other purpose: Internal (company records and reports). External (press, industry and government reports, Internet, etc.). Surveys Focus Groups Diaries Interviews Storytelling Consumer Behaviour Research Methods Photography and Pictures Observations and Ethnographies Purchase Panels Database Marketing Controlled Experiments Field Experiments Consumer Surveys Snapshot of opinions, reported behaviours, etc. at one point in time. Can be conducted on a specific segment of the population (e.g., seniors) or a representative sample. Example: Polls conducted by consumer.org.nz 1

2 Survey Example Controlled Experiments Consumers randomly assigned to receive different treatments (called independent variables) to see if they affect something (the dependent variables). Independent Variable: Treatment or entity that is studied or that varies in a research project. Dependent Variable: What is measured and then compared across conditions (e.g. attitude, purchase intention). Controlled Experiment Example Treatment (Independent Variable): Format of a Print Ad Condition 1: Colour Ad Condition 2: B&W Ad Field Experiments A market test that studies the effectiveness of one or more elements of the marketing-mix. mix. Evaluates product sales in an actual market (e.g., a specific city or region). The Butt Stops Here The Butt Stops Here Dependent Variable: Attitude toward the ad, likelihood to stop smoking, etc. Example: Database Example Top Supermarket Group: Desires to penetrate the US market. Pre-deployment Operations: Secret mock-up stores. Besides standard market research, top executives lived with US families. Preparing its Clubcard to gather US data: Example: Babywipes and beer correlation. Illegal P2P monitoring. Marketing implications? 2

3 Observations and Ethnographies Marketing Implications of Consumer Behaviour Research Observations: Unobtrusive ways of looking at what consumers do. Ethnographies: Allow a deep understanding of someone s life. Use the anthropologist's tool kit of methods and theories. Often documented in video and stories. Developing a customer-oriented oriented strategy: Segmenting the market. Understanding consumers in each segment and sub-segments. segments. Selecting the target market. Positioning. Why Segment the Market? Evaluating Market Segments Viable Target Segment Considerations: Similar but different. Is it measureable? Large enough to be profitable? Is it possible to communicate with the segment? Once segments have been identified, choose a targeting strategy. Segmenting the Market Target Market Selection Consumers with similar profiles are part of the same segment: Consumers with different profiles are allocated to different segments: A marketing mix strategy requires marketers to identify, evaluate, and select both a: Market: people or institutions with purchasing power, authority, and willingness to buy. Target Market: segment most likely to purchase product or service. No one marketing mix can satisfy every consumer: Separate marketing mixes are required for different segments. 3

4 Market Segmentation Benefits Increases profit potential. Identifies underserved segments. Clarifies marketing objectives associated with specific target markets. Allows for more precise marketing efforts. Links strategies and tactics to a specific target. Provides a framework for understanding a market. Provides insights on how to meet consumer needs. Approaches to Segmentation Consumer Markets Demographic: Age, gender, ethnic group, life stage, and education. Geographic: Physical location of buyers and users. Psychographic: Lifestyles, values, personalities. Media Habits: Media consumption behaviour. Behavioural: Occasions of purchase, user status, usage rate, adopter type, and brand loyalty. Segmentation Example How can we segment this population? One Tribe of 20 Another Way to Segment: Age Another Segmentation Strategy: Age and Gender Two Tribes: 10 Older and 10 Younger Four Tribes: 5 Older Men, 5 Younger Men, 5 Older Women, 5 Younger Women, 4

5 Controversial Segmentation? What about a Customized Strategy? Twenty Tribes of One Example: Food Segmentation Example: Food Segmentation Mainstream Nurturing: Nurture family through food Meal time = quality time Good taste is #1 consideration Meals are special occasions Healthful Explorers: Actively trying to eat healthy Focus on quality/freshness Creative & Experimental tastes Often too busy to cook, need easily accessible alternatives Food on Demand: Other activities have higher priority Do enjoy food Food must be easy, accessible Healthy Traditional Cooks Also nurtures through food Emphasis is on balanced nutrition Favor wholesome, traditional foods Discourage snacking Weary Providers: Dinner time is family time Meals are stressful Prefer easy, quick, familiar foods Tend to cater to kids tastes Mobile Munchers: Busy and active Meals and snacks blur together Need portable foods Traditional Recipients: Want good tasting, wholesome traditional food Rely on someone else to prepare Segmentation Weights Can Differ Segmentation Mainstream Nurturing Healthful Explorers Food on Demand Healthy Traditional Cooks Weary Providers Mobile Munchers Traditional Recipients 3Ms: Measurable (ability to measure size and characteristics). Meaningful (sufficient sales and growth potential). Marketable (can be reached and served efficiently). Segmented Marketing Is Not Useful When: Segmented market is too small and not profitable. Heavy users comprise so much of market that they are the only relevant target. Brand is already dominant and does not need segmentation. 5

6 Choosing a Targeting Strategy Target Markets Strategies Undifferentiated Marketing Differentiated Marketing Concentrated Marketing Micro-Marketing Undifferentiated Marketing: one product line promoted to all consumers with a single marketing mix. Differentiated Marketing: numerous products are promoted using a different marketing mix designed to satisfy varying segments. Concentrated Marketing: (niche marketing): commitment all of marketing resources to serve a single market segment. Micromarketing: potential customers targeted at a very basic level (e.g., postal code, occupation, etc.). Example: Best Buy s Retail Segmentation Five retail segments identified through automatic video surveillance: Young Technology Enthusiasts. Suburban Mothers. Affluent Early Adopters. Family Men. Small Business Owners. Marketing Implications of Consumer Behaviour Research Improving existing products / service. Developing new products / service: What to name a product / service? What should the product design look like? How to package a product? What should the product logo look like? Marketing Implications of Consumer Behaviour Research (Cont.) Promotion Decisions: What should the advertisement look like? How, where and when should we advertise? How to train sales people? How to measure effectiveness? Pricing Decisions: How sensitive are consumers to price? Will coupons or rebates work? Distribution Decisions: Where are target consumers likely to shop? How should stores be designed? 6