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Chapter 02- Scientific Investigation
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1. RESEARCH METHODOLOGY LESSON 15: APPLICATIONS OF MARKET RESEARCH Students, now we have covered various theoretical concepts in Perceptual maps can have any number of dimensions but the marketing research. We have dealt how to marketing research. most common is two dimensions. Any more is a challenge to Now today, we will discuss the various applications of marketing draw and confusing to interpret. The first perceptual map below research. shows consumer perceptions of various automobiles on the two 1. Product Research dimensions of sportiness/conservative and classy/affordable. This sample of consumers felt Porsche was the sportiest and classiest 2. Price Research of the cars in the study (top right corner). They felt Plymouth was 3. Distribution Research most practical and conservative (bottom left corner). 4. Promotion Research Perceptual Map of Competing Products Product Research Cars that are positioned close to each other are seen as similar on The main product decisions that need to be considered are the the relevant dimensions by the consumer. For example consumers physical design of the product and its demand potential. Many see Buick, Chrysler, and Oldsmobile as similar. They are close companies spend millions of rupees onR & D in order to come competitors and form a competitive grouping. A company up with a new product that will satisfy consumer needs. We cover considering the introduction of a new model will look for an area various information requirements and techniques used for this on the map free from competitors. Some perceptual maps use purpose. different size circles to indicate the sales volume or market share A managerial decision to use a pretest market analysis is justified of the various competing products. if sufficiently accurate predictions can be achieved, the timing of Displaying consumers’ perceptions of related products is only the analysis is before large investment commitments are necessary, half the story. Many perceptual maps also display consumers’ useful diagnostics for improvement are generated, and the cost of ideal points. These points reflect ideal combinations of the two the analysis is reasonable. In these situations failures can be dimensions as seen by a consumer. The next diagram shows a reduced, time-to-market can be shortened, and products improved study of consumers’ ideal points in the alcohol/spirits product to increase customer satisfaction space. Each dot represents one respondents ideal combination of New Product Research the two dimensions. Areas where there is a cluster of ideal points New product development is critical to the life of most (such as A) indicates a market segment. Areas without ideal points organizations as there will be uncertainties associated with them. are sometimes referred to as demand voids. Thus, the purpose of marketing research for them would reduce Perceptual Map of Ideal Points and Clusters the uncertainties associated with the new products. Four stages of A company considering introducing a new product will look for new product development could be seen: areas with a high density of ideal points. They will also look for • Generating New-Product Concepts areas without competitive rivals. Placing both the ideal points and the competing products on the same map best does this. • Evaluating and Developing those Concepts Some maps plot ideal vectors instead of ideal points. The map • Evaluating and developing the actual products below, displays various aspirin products as seen on the dimensions • Testing in a Marketing Programme of effectiveness and gentleness. It also shows two ideal vectors. Concept Generation The slope of the ideal vector indicates the preferred ratio of the There are two types of concept generation research: two dimensions by those consumers within that segment. This • Need identification research: study indicates there is one segment that is more concerned with effectiveness than harshness, and another segment that is more • Concept Identification interested in gentleness than strength. Need Identification Research Perceptual Map of Competing Products with Ideal The emphasis in need research is on identifying unfilled needs in Vectors the market. Following are some examples: a. Perceptual maps need not come from a detailed study. There a. Perceptual Maps, in which products are positioned along the are also intuitive maps (also called judgmental maps or dimensions by which users perceive and evaluate, can suggest consensus maps) that are created by marketers based on their gaps into which new products might fit. Perceptual mapping understanding of their industry. Management uses its best is a graphics technique used by marketers that attempts to judgement. It is questionable how valuable this type of map visually display the perceptions of customers or potential is. Often they just give the appearance of credibility to customers. Typically the position of a product, product line, management’s preconceptions. brand, or company is displayed relative to their competition. © Copy Right: Rai University 11.556 89
When detailed marketing research studies are done and group dynamics. Transcripts are also created from the video RESEARCH METHODOLOGY methodological problems can arise, but at least the tape. information is coming directly from the consumer. There is Respondents often feel a group pressure to conform and this can an assortment of statistical procedures that can be used to contaminate the results. But group dynamics is useful in convert the raw data collected in a survey into a perceptual developing new streams of thought and covering an issue map. Preference regression will produce ideal vectors. Multi thoroughly. dimensional scaling will produce either ideal points or competitor positions. Factor analysis, discriminant analysis, Types of Focus Groups cluster analysis, and logit analysis can also be used. Some Two-way focus group - one focus group watches another focus techniques are constructed from perceived differences group and discusses the observed interactions and conclusions between products, others are constructed from perceived Dual moderator focus group - one moderator ensures the session similarities. Still others are constructed from cross price progresses smoothly, while another ensures that all the topics are elasticity of demand data from electronic scanners. covered b. Social and environment trends can be analyzed. Dueling moderator focus group - two moderators deliberately c. An approach termed benefit structure analysis has product take opposite sides on the issue under discussion users identify the benefits desired and the extent to which Respondent moderator focus group - one or more of the the product delivers those benefits, for specific applications. respondents are asked to act as the moderator temporarily The result is an identification of benefits sought that current Client participant focus groups - one or more client products do not deliver. representatives participate in the discussion, either covertly or overtly d. Product users might be asked to keep a diary of a relevant Mini focus groups - groups are comprised of 4 / 5 members. portion of their activities. Analysing such diaries can provide Telesession (or teleconference) focus groups - telephone an understanding of unsolved problems associated with a network is used particular task. On-line focus groups - computers and internet network is used e. In focus-group interviews, product users might discuss problems associated with product-use situations. A focus Traditional focus groups can provide accurate information, and group is a form of qualitative research in which a group of are less expensive than other forms of traditional marketing people, are asked about their attitude towards a product, research. There can be significant costs however : if a product is to concept, advertisement, idea, or packaging. Questions are be marketed on a nation-wide basis, it would be critical to gather asked in an interactive group setting where participants are respondents from various locales throughout the country since free to talk with other group members. In the world of attitudes about a new product may vary due to geographical marketing, focus groups are an important tool for acquiring considerations. This would require a considerable expenditure in feedback regarding new products. travel and lodging expenses. Additionally, the site of a traditional focus group may or may not be in a locale convenient to a specific In particular, focus groups allow companies wishing to develop, client, so client representatives may have to incur travel and lodging package, name, or test market a new product, to discuss, view, expenses as well. and/or test the new product before it is made available to the public. This can provide invaluable information about the potential Online Focus Groups market acceptance of the product. With the advent of large scale computer networks, such as the In traditional focus groups, a pre-screened (pre-qualified) group Internet, it is now possible to link respondents electronically. of respondents gathers in the same room. They are pre-screened Respondents share images, data, and their responses on their to ensure that group members are part of the relevent target computer screens. This avoids a significant amount of travel market and that the group is a representative subgroup of this expenses. For instance, NFO Research, a large market research market segment. There are usually 8 to 12 members in the group, company, has a system of on-line focus groups which allows and the session usually lasts for 1 to 2 hours. A moderator guides respondents from all over the country to gather, electronically, the group through a discussion that probes attitudes about a while avoiding countless logistical headaches. Online groups are client’s proposed products or services. The discussion is usually limited to 6 or 8 participants. The biggest problem with unstructured (or loosely structured), and the moderator encourages online focus groups is ensuring that the respondents are the free flow of ideas. Although the moderater is seldom given representative of the broader population (including computer specific questions to ask, he/she is often given a list of objectives non-users). or an anticipated outline. While such a system does eliminate some of the logistical headaches Client representatives observe the discussion from behind a one- and travel expenses associated with conducting focus groups, it way mirror. Participants cannot see out, but the researchers and still requires one or more representatives from a client to be their clients can see in. Usually, a video camera records the meeting physically located with the moderator conducting the focus group. so that it can be seen by others who were not able to travel to the Only in this way can questions be added in real time to further focus group site. Researchers are examining more than the spoken probe a particular response. Thus, even the online system incurs words. They also try to interpret facial expressions, body language, some travel expenses since a client representative will need to travel to a research site or vice versa. © Copy Right: Rai University 90 11.556
Accordingly, there is a need for a system and method of conducting Concept Identification RESEARCH METHODOLOGY focus groups using remotely located participants, including one During a New-product development process there is usually a or more moderators, one or more clients and one or more point where a concept is formed but there is no tangible usable respondents, who are all physically remote from each other. In product that can be tested. The concept should be defined well order to do this, such a system must allow for the implementation enough so that it is communicable. There may be simply a verbal of at least two separate chat discussions to be conducted description, or there may be a rough idea for a name, a package, or simultaneously between the three classes of focus group an advertising approach. The aim is to determine if the concept participants to provide an electronic analog to a one-way mirror warrants further development and to provide guidance on how it segregating clients from respondents. In addition, such a system might be improved and refined. Conjoint analysis typically is used must allow and prohibit participation in the different chat to obtain an ideal combination of the concept’s various features. discussions based on the class of the participant. Thus, research questions might include: f. In Lead user analysis, instead of just asking users what they • Are there any major flaws in the concept? have done, their solutions are collected more formally. Lead • What consumer segments might be attracted to it? users are those who face needs early that later will be general in • Is there enough interest to warrant developing it further? a market place; they are positioned to benefit significantly by solving problems associated with these needs. Once a lead user • How might it be altered or developed further? is identified, the concepts that company or person generates are Most concept testing, however, involves exposing people to the tested. concept and getting their reactions. In exposing people to the Lead users are an extremely valuable cluster of customers and concept, the market researcher needs to address a series of potential customers who can contribute to identification of future questions: opportunities and evaluation of emerging concepts. Understanding • How are the concepts exposed? these users can provide richness of information relatively efficiently. • To whom are the concepts exposed? Eric von Hippel introduced the concept of ‘Lead Users’ in the • To what are they compared? mid 1980s. He defined the lead user as those users who display • What questions are asked? the following two characteristics: It is important to make a distinction between the different types They face the needs that will be general in the market place, but face of testing applied at different stages of the development process. them months or years before the bulk of that marketplace This helps the development team to understand the purpose of encounters them each test and consider how data is to be captured. They are positioned to benefit significantly by obtaining a solution Different testing methods will have different objectives, approaches to those needs Where a company has experience within a market and types of modeling. Four general types of testing are described place, it should be relatively straight forward to identify those in more detail: customers who demand special solutions, push existing solutions to the limit or who have customized standard products to satisfy • Exploratory tests their own desires. • Assessment tests Von Hippel suggests that a key element in identifying lead users is • Validation tests to first identify the underlying trends, which result in these users • Comparison tests or customers having a leading position. The lead users are those ISO 9000 tests are also briefly summarised. who are at the leading edge of these trends. Exploratory Tests Where possible, lead users should not necessarily be sought from Carried out early in the development process during the fuzzy within the usual customer base, it can be useful to look beyond front end, when the problem is still being defined and potential existing customers perhaps to users of complementary or solutions are being considered, preferably once the development substitute goods or in analogous markets. In addition, the lead team has a good understanding of the user profile and customer users may only have an interest in improvements or changes to needs. The objective of the exploratory test is to examine and specific elements or attributes of a product. explore the potential of preliminary design concepts and answer There are few industries of product types where there are no lead some basic questions, including: users who have requirements or demands ahead of the rest. By • What do the users think about using the concept? targeting these clusters, it is possible to identify opportunities for future products and evaluate emerging concepts. Where possible, • Does the basic functionality have value to the user? if lead users are sufficiently interested, then they can be considered • Is the user interface appropriate and operable? as a part of the extended product design team. They may even be • How does the user feel about the concept? prepared to share the burden of investment in order to find a • Are our assumptions about customer requirements correct? suitable solution. • Have we misunderstood any requirements? Furthermore, if today’s lead users do not find appropriate solutions from existing suppliers, then they could well turn into This type of early analysis of concepts is potentially the most tomorrow’s competitors. critical of all types of prototyping and evaluation, for if the development is based on faulty assumptions or misunderstanding © Copy Right: Rai University 11.556 91
about the needs of the users, then problems are almost inevitable but with team input on developing standards and measurement RESEARCH METHODOLOGY later on. Data collection will tend to be qualitative based on criteria. observation, interview and discussion with the target audience. Data from a validation test is likely to be quantitative, based on Ideally, the customer should be asked to use the product without measurement of performance. Normally, this is carried out against training or prompting, to assess the intuitiveness of controls and some benchmark of expected performance. Usability issues may instructions. Some quantitative measures may be appropriate, such be scored in terms of speed, accuracy or rate of use, but should as time to perform tasks, number of failures or errors. always be quantified. Issues such as desirability may be measured Assessment Tests in terms of preference or user ranking. Data should also be formally While the exploratory test aims to explore the appropriateness of recorded, with any failures to comply with expected performance a number of potentially competing solutions, the assessment logged and appropriate corrective action determined. test digs into more detail with a preferred solution at a slightly Comparison Tests later stage of development. The main aim of an assessment test A comparison test may be performed at any stage of the design is to ensure that assumptions remain relevant and that more process, to compare a concept, product or product element against detailed and specific design choices are appropriate. The assessment some alternative. This alternative could be an existing solution, a test will tend to focus on the usability or level of functionality competitive offering or an alternative design solution. Comparison offered and in some cases, may be appropriate for evaluating early testing could include the capturing of both performance and levels of performance. Assuming that the right concept has been preference data for each solution. The comparison test is used to chosen, then the assessment test aims to ensure that it has been establish a preference, determine superiority or understand the implemented effectively and answer more detailed questions, such advantages and disadvantages of different designs. as: ISO 9000 tests • Is the concept usable? ISO 9000 defines a number of test activities: • Does the concept satisfy all user needs? Design Review • How does the user use the product and could it be more A design review is a set of activities whose purpose is to evaluate effective? how well the results of a design will meet all quality requirements. • How will it be assembled and tested and could this be During the course of this review, problems must be identified achieved in a better way? and necessary actions proposed. • Can the user complete all tasks as intended? Design Verification Assessment testing typically requires more complex or detailed Design verification is a process whose purpose is to examine design models than the exploratory test. A combination of analytical and development outputs and to use objective evidence to confirm models, simulations and working mock ups (not necessarily with that outputs meet design and development input requirements. final appearance or full tooling) will be used. Design Validation The evaluation process is likely to be relatively informal, including Design validation is a process whose purpose is to examine resulting both internal and external stakeholders. Data will typically be products and to use objective evidence to confirm that these qualitative and based on observation, discussion and structured products meet user needs. interview. The study should aim to understand why users respond in the way that they do to the concept. Product Evaluations and Development The aim is to predict market response to determine whether or Validation Tests not the product should be carried forward. The validation test is normally conducted late in the development process to ensure that all of the product design goals have been Use Testing met. This may include usability, performance, reliability, This gives the users a reasonable time to feel the product and maintainability, assembly methods and robustness. Validation inquires their reactions and their intentions to buy it. Researchers tests normally aim to evaluate actual functionality and performance, can contact respondents in shopping centers, by personal visits to as is expected in the production version and so activities should their homes or offices, or on telephone. be performed in full and not simply walked through. Limitations It is probable that the validation test is the first opportunity to • Due to unclear instructions, a misunderstanding, or lack of evaluate all of the component elements of the product together, cooperation, the respondents may nor use the product although elements may have been tested individually already. Thus, correctly and may therefore report a negative opinion. the product should be as near to representing the final item as • The fact that they were given a free sample and are possible, including packaging, documentation and production participating in a test may distort their impressions. processes. Also included within validation tests will be any formal evaluation required for certification, safety or legislative purposes. • Even when repurchase opportunities were made available, Compared to an assessment test, there is a much greater emphasis such decisions may be quite different than when they are on experimental rigour and consistency. It may be preferable for made in a more realistic store situation. evaluation to be carried out independently from the design team, • The users will not accept the product over a long period of time. © Copy Right: Rai University 92 11.556
• They may inflate their intention to buy. Consumers may say Test Marketing RESEARCH METHODOLOGY that they will buy the product but may end up not doing so. Test marketing allows the researcher to test the impact of the total marketing program, with all its interdependence, in a market Blind-use Testing context as opposed to the artificial context associated with the Even though a product may be proved superior in the laboratory, concept and product tests that have been discussed. the consumer may not perceive it to be superior. For e.g., Amul sweets, which was perceived as a superior by the company by all Functions standards, were introduced in the market. It was supposed to be • To gain information and experience with the marketing hit during Diwali time and advertisements were released to prop program before making a total commitment to it. up sales. Unfortunately the consumers perceived the product as a • To predict the program’s outcome when it is applied to the premium product and did not substitute their purchases from total market. the local Halwai. Types of Test Market Predicting Trial Purchase To predict trial levels of new, frequently purchased consumer • The sell-in test markets are cities in which the product is products, ESP (Estimating Sales Potential) model has been sold just as it would be in a national launch. The product has developed. Trial levels were predicted on the basis of three variables: to gain distribution space. • Product class penetration (PCP), the percentage of • The controlled-distribution scanner markets (CDSM) households purchasing at least one item in the product class are cities for which distribution is pre-arranged and the within one year. purchases of a panel of customers are monitored using scanner data. • Promotional expenditures-total consumer-directed promotional expenditures on the product. Certain parameters that have to be looked into while deciding • Distribution of the product-percentage of stores stocking sell-in test market: the product (weighted by the store’s total sales volume). • Representativeness: Ideally, the city should be fairly Once the model is estimated, it can be applied to other new representative of the country in terms of characteristics that products. The researcher simply estimates the percentage of will affect the test outcome, such as product usage, attitudes household using the product class, the total expenditures planned and demographics. for the new product, and the expected distribution level. The • Data Availability: Information about Store audit is helpful model will then estimate the trial level that will be obtained. in evaluating the test. The selected cities should contain Trial also can be estimated directly using controlled shopping retailers who will cooperate with store audits. experience. A respondent is exposed to the new product promotion • Media isolation and Costs: It is desirable to avoid media and allowed to shop in a simulated store or in an actual store in spill-over. Using media that “spill-out” into nearby cities is which the product is placed. The respondents then have an wasteful and increases costs. Conversely, “spill-in” media opportunity to make a “trial” or first purchase of the product. from nearby cities can contaminate a test. Media cost is another consideration. Pretest Marketing Two approaches are used to predict the new brand’s market share: • Product flow: It may be desirable to use cities that don’t have much “product-spillage” outside the area. Preference Judgments • Number: A single city can lead to unreliable results because Here the preference data are used to predict the proportion of of the variations across cities of both brand sales and purchases of the new brand that respondents will make given consumer response to marketing programs. that the new brand is in their response set. These estimates for the • Implementing and controlling: The test should be respondents in the study are coupled with an estimate of the proportion of all people who will have the new brand in their controlled in such a manner that it ensures the marketing response set., to provide an estimate of market share. This is also program is implemented in the test area so as to reflect the used to analyse the concomitant market share loses of other brands. national program. The test itself may tend to encourage If the firm has other brands in the market, such information can those involved to enhance the effectiveness of the marketing be critical. program. Salespersons may be more aggressive. Retailers may be more cooperative. The competitors may react by Trial and repeat purchase levels: This is based on the respondent’s deliberately flooding the test areas with free samples or in- purchase decisions and intentions-to-buy judgments. A trial store promotions. Even they can retaliate or can also estimate is based on the percentage of respondents who purchase monitor the results themselves. the product in the laboratory, plus an estimate of the product’s • Timing: Normally, a test market should be in existence for distribution, advertising (which will create product awareness), and the number of free samples to be given away. The repeat- one year, so that all important seasonal/cultural factors can purchase rate is based on the proportion of respondents who be observed and estimated. make a mail order repurchase of the new brand and the buying- • Measurement: The basic measure is sales based on intentions judgments of those who elected not to make a mail shipments or warehouse withdrawals. Store audit data order repurchase. The product of the trial estimate and the repeat provide actual sales figures and are not sensitive to inventory purchase estimate become a second estimate of market share. fluctuations. They also provide information on: distribution, © Copy Right: Rai University 11.556 93
shelf-facings, and in-store promotional activity. Measures between total revenues and total costs. This implies that the RESEARCH METHODOLOGY such as brand awareness, attitude, trial purchase, and repeat researcher’s major tasks are to forecast the costs and the revenues purchase are obtained directly from the consumer. This over the relevant range of alternative prices. information helps evaluate the marketing program and can Research for Penetration Pricing help interpret sales data. The most useful information This is based on the concept that average unit of production costs obtained from consumers is whether they bought the continue to go down as cumulative output increases. Potential product at least once, whether they were satisfied with it, and profits in the early stages of the product life cycle are sacrificed in whether they repurchased it or plan to. the expectation that higher volumes in later periods will generate • Costs: Costs which are quantifiable, include - development sufficiently greater profits to result in overall profit for the product and implementation of the marketing program; preparation over its life. of test products; administration of the test and collection of Following pricing pattern is adopted to increase market share: data associated with the test. The costs and risks that may delay the launch of a new product are more difficult to a. Offer a lower price (even below cost) when entering the quantify. If a new product launch is delayed, an opportunity market. to gain a substantial market position might be lost. b. Hold that price constant until unit costs produce a desired percentage markup. Pricing Research Research may be used to evaluate alternative price approaches for c. Reduce price as costs fail to maintain markup at the same new products before launch or for proposed changes in products desired percentage. already in the market. Despite the ubiquitous nature of the above questions, researchers commonly encounter four limitations when using this approach Pricing Approaches for pricing research: • Gabor and Grainger Method (Price skimming strategy), I. it provides no competitive information. where different prices for a product are presented to respondents, who then are asked if they would buy. A “buy- II. it relies on price awareness. response” curve of different prices, with the corresponding III.it is inefficient when evaluating numerous product number of affirmative purchase intentions, is produced. The specifications. objective is to generate as much profit as possible in the IV.it relies on aggregate-level analysis. present period. Each limitation is discussed below. • Multibrand-choice Method (Share penetration strategy), where respondents are shown different sets of brands in the Provides no Competitive Information same product category, at different prices, and are asked A concept test asks respondents to evaluate how likely they would which they would buy. This allows the respondents to take be to purchase a specific product without any information about into account competitors’ brands, as they normally would other products that might be available in the market. When outside such a test. Thus, this technique represents a form shopping, consumers generally have the chance to see a set of of simulation of the point of sale. The objective is to competing products and pick one from the set. When presented capture an increasingly larger market share by offering a lower with a set of products to select from, consumers can make trade- price. Pricing research for the two different approaches differs offs between features and price to determine their preferred product. substantially in terms of the information sought. In the absence of this comparative task, respondents may have difficulty answering reliably. Following questions are generally asked with regard to pricing research: Relies on Price Awareness • At what price would you consider the product to be so The respondent compares the price presented in the concept to an expensive that you would not consider buying it? (Too internal reference price to determine if the price is fair or not. This expensive) determination is based on a respondent’s awareness of the current pricing in the category. • At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? Inefficient to Evaluate Various Product Specifications (Too cheap) Often, a researcher would like to evaluate a small number of specific product variations at the same time price is being evaluated. • At what price would you consider the product starting to get For instance, there might be an interest in the market’s willingness expensive, so that it is not out of the question, but you to pay for a specific feature or how the inclusion or exclusion of a would have to give some thought to buying it? (Expensive) product characteristic influences purchase likelihood. The concept • At what price would you consider the product to be a test can be used to evaluate these various specifications. However, bargain-a great buy for the money? (Cheap) most researchers would suggest that each respondent only evaluate Research for Skimming Pricing one concept. Therefore to evaluate various product specifications, This is based on the concept of pricing the product, at the point at the total sample size must grow. To illustrate, if we wished 200 which profits will be the greatest until market conditions change observations per cell, and we are only testing three prices (three or supply costs dictate a price change. Under this strategy, the cells), we would require 600 respondents. However, if we have optimal price is the one that results in the greatest positive difference © Copy Right: Rai University 94 11.556
three alternative product variations, with each variation at three each territory. An analysis of actual sales versus market RESEARCH METHODOLOGY prices, we now have nine cells and would require 1800 respondents. potential for each sales representative can be made. Also, Relies on aggregate-level analysis following inferences can be made: A concept test will rely on aggregate, or at most subgroup-level i. Average market potential is less as per each sales analysis. That is, this approach will make respondent’s representative heterogeneity difficult to detect and measure. ii. Territory, which have too many sales representatives The traditional concept test can be effectively used in pricing iii. Market potential is more but have too few sales research when the product features are already determined, the representatives level of price awareness is high, and the competitive context is • Field Experiment approach- is also applicable only after such that evaluating a single product is not too limiting. the sales program has begun. Experiments are done with the Distribution Research calls made, to determine the number and location of sales representatives. This is done in two ways: Traditionally, the distribution decisions in marketing strategy involve: i. Making more frequent calls on some prospects and less frequent calls on others, in order to see the effect • The number and location of salespersons, on overall sales, keeping the number of sales • Retail outlets, representatives unchanged. • Warehouses, and ii. Increasing the number of representatives in some • The size of discount to be offered. territories and decreasing them in others to determine The discount to be offered to the members in the channel of the sales effect. distribution usually is determined by what existing or similar Promotion Research products are offered, and also whether the firm wants to follow a Here the focus is on the decisions that are commonly made when “push” or a “pull” strategy. designing a promotion strategy. The decision for the promotion Warehouse and Retail Location Research part of a market strategy can be divided into: Location decisions include: • Advertising decisions, which have long-term effects. “What costs and delivery time would result, • Sales Promotion decisions, which affect the company in the short term. if we choose one location over another?” Companies spend more time and resources on advertising research The approximate location (optimal location), that will minimize than on sales promotion research because of the greater risk and the distance to customers, weighted by the quantities purchased, uncertainty in advertising research. will have to be determined. Chain shops with multiple outlets and franchise operations must decide on the physical location of Advertising Research: Advertising decisions are more costly and their outlets. Data about surrounding residential neighbourhood, risky. Advertising research involves generating information for income levels, and competitive stores would help in choosing making decisions in the: optimal location. • Awareness stage Number and location of Sales Representatives • Recognition stage How many sales representatives should be there in a given territory? • Preference stage, and Approaches • Purchasing stage • Sales effort approach- when the product line is first Most often, advertising research decisions are about advertising introduced and there is no operating history to provide sales copy. Marketing research helps to determine how effective the data. This is done by: advertisement will be. Research on media decisions is separate ii. Estimating the number of sales calls required to sell from advertising research. to, and to service, prospective customers in an area for The effectiveness of an advertisement depends upon the brand a year. This will the sum of the number of visits involved and its advertising objectives. Four categories are used in required per year to each prospect (customer) in the advertising research: territory. • Advertisement recognition iii. Estimating the average number of sales calls per • Recall of the commercial and its contents representative that can be made in that territory. • The measure of commercial persuasion, and iv. Divide the estimate in step (i) by the estimate in step • The impact on the purchase behavior. (ii) to obtain the number of sales representatives required. Advertising Recognition • Statistical analysis approach- is used after the sales The respondents are tested whether they can recognize the program is under way. Once a sales history is available from advertisement as one they have seen before. each territory, an analysis can be made to determine if the appropriate number of sales representatives is being used in © Copy Right: Rai University 11.556 95
References RESEARCH METHODOLOGY Donald R. Cooper – Business Research Methods, Tata McGraw – Hill Publication Easterby-Smith M et al- Management Research-an introduction (Sage Publications, 1991) Gallagher, J. William, “Report Writing for Management”, Addison- Wesley Golen, P. Stevan, “Report Writing for Business and Industry”, Business Communication Service Kothari C R – Quantitative Techniques (Vikas Publishing House 3rd ed.) Levin R I & Rubin DS - Statistics for Management (Prentice Hall of India, 2002) Nargundkar R – Marketing Research Text and Cases (Tata McGraw- Hill 2002) Miller D C- Handbook of Research Design and Social Measurement (Sage Publications, 1991) Paul D. Leedy, Practical Research: Planning & Design, Prentice Hall R. Lesikar and John Pettit, Report Writing for Business Notes © Copy Right: Rai University 96 11.556
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