2. Understanding the
market
• Penetrated Market
– Current number of users of a product or a service
and the sales volume generated by them.
• Potential market
– Those people who have an interest in buying the
product or the service
• Available Market
– Those people in the potential market having an ability
to use the product/service.
• Served or Target Market
– The market that the firm can effectively compete in
3. Segmentation and market
research
• “Segment”
– refers to a unique group of customers or potential
customers who share some common characteristics
that differentiate them from others.
• Segmentation of the consumer market may be
based on:
– Demographic variables
– Geographic variables
– Geo-demographic variables
– Psychographic variables
– Behavior patterns
4. Segmentation
• Geographic segments:
– Based on consumers geographic location including
streets, towns, cities, provinces, countries, regions,
continents, trading and/or political blocks, such as,
ASEAN etc.
• Demographic segments:
– based on variables such as age, sex, level of
education, marital status, family lifecycle, job type
and level of income etc.
• Geo-demographic segments:
– based on variables such as house-type and locations,
for example, people who live in high-rise apartment
complex
5. Segmentation
• Psychographic segments
– developed on the basis of the psychological
profile of people and includes variables such as
attitude, lifestyle and personalities of people.
• Behavioral segments
– based on behavior pattern of people such as
consumption behavior such as heavy user,
medium user, light user etc. and on the basis
of other benefit enjoyed.
6. Segmentation in Industrial,
organizational and Business-to
Business Market.
• Different variables that may be used
in these markets include:
– Customer type
• Type of product or service, standard
industrial classification code may be used
– Customer location
– Size
• In terms of sales, number of staff etc.
7. Product research
3 main aspects
– Idea Generation
• Includes alternative specifications for
product concepts utilizing end user
analysis or problem analysis.
– Screening: Evaluating new-product ideas
• Refers to initial screening of consumer
reactions to new product concepts. Not
effective for products that are radically
innovative and for products that require
significant changes in the consumption
pattern.
– Consumer product/market testing
• involves testing the product in the market
8. Idea generation
• Focus groups and direct observation provide
insights for product development.
• Secondary data, Group discussion,
Brainstorming [ on a given problem]
• Problem Inventory Analysis -->Examining
Customer complaints
• Attribute based customer surveys
– Involves listing all the product attributes
and then systematically modify one or more
of them to see what would improve the
product.
• Imitation, Acquisition, licensing
9. Screening
Purposes of concept testing:
• Determine customer
attitude towards the
product concept or idea.
• Measure customers’
reaction towards the
product’s attributes, e.g..
packaging, color, size,
etc..
• Predict the trial rate of
the intended product
• Determine whether the
product concept warrants
further development and
provide guidance on how
the concept might be
improved or re-defined
Data collection methods
include:
• Focus group discussion
• Survey Research
– Questions are to be
formulated carefully to
capture and effectively
communicate the spark
of an idea.
• Demonstration
10. Product/Market Testing
• Product and market testing provides a more detailed assessment
of a new product's chances for success.
• Includes technical testing, preference and satisfaction testing,
simulated test markets and test markets to evaluate potential
success/failure and define important marketing elements.
– Uncovers product shortcomings
– evaluate commercial products
– evaluate alternative formulations
– uncover the appeal of the product to various
market segments
– gain ideas for other elements of the marketing
program
11. Approaches to measure
performance
of the test product
• Three Approaches:
– Testing against a standard product
• Test Product --> brand leader
– Horse Racing Alternative
• Several test products are developed for
testing against one another to determine
which one attains the highest level of
consumer acceptance.
– Testing against a historical standard
• Test product --> Performance of a successful
product which may not be involved in the
test. A seldom used technique.
12. Test Marketing
• Objective:
– To obtain reasonable prediction for performance
of a new product;
– To understand the contributing factors
underlying a particular performance;
– To provide management with the opportunity to
pre-test alternative marketing strategies.
• Only those products, which have shown a good
chance of success in the earlier concept and
product development test, are subjected to
test marketing.
13. Typical information gathered
and major design issues in test
marketing
• Awareness level;
• Purchase and repurchase
rate;
• Users’ experience with
the product;
• Users’ perception of the
product;
• Users’ profile and
lifestyles;
• Reasons for not using
products;
• Market share.
Design Issues:
• The number of test
markets to be chosen;
– at least three
– involves cost-benefit
analysis
• The criteria used for
selecting test markets;
– a normal and not over-
tested market
• The length of the test.
– six to 12 months
14. Price Research
• Generally undertaken for exploring
pricing approaches for new products or
services before they are launched.
Involves
• showing different sets of brands in the
same product category to respondents at
different prices and asking them which
one they would buy;
• presenting different prices for a
product/service to respondents and asking
them if they would buy the
product/service.
15. Price Research
• Pricing research may also be conducted using consumer
panels. Data obtained may be analyzed using
regression analysis. Regression analysis can help in
sorting out effects of price Vs other variables on
quantities sold.
• Sample survey may also be used in price research.
However, this should be used with care since obtaining
a response curve using survey may be subject to error
and bias.
• Other pricing research techniques include:
– Laboratory experiments,
– simulated test markets
– using standard test market
16. Promotion Research
• Objective: To develop advertising appeals.
• Types of research generally undertaken include:
– Psychological or motivational studies
• Generally used within the framework of individual
interviews. Involves talking with people in depth about
what a product or service may mean to them, what
feelings are evoked by it, and discover what it
symbolizes to them.
– Sociological studies
• Focus group studies may be undertaken to generate
ideas.
– Anthropological studies
• A small number of people may be observed to
understand how a product fits into their lives and what
keep them interested in a particular brand.
17. Verbal Response
Physiological Response
Behavioral Response
Pre-test
Recognition
Recall
Triple Association
Post-test
MESSAGE RESEARCH
Circulation Research
Readership Research
Newspaper as a Medium
Telephone Interview
Audimeter Device
People Meter
Diary Method
Television as a Medium
Radio, Cinema, Internet
MEDIA RESEARCH
ADVERTISING RESEARCH
18. Pre-testing techniques
• Pre-test refers to the test of an ad-message
before releasing the advertisement. Test
techniques commonly used are:
– Verbal responses involving
• Consumer jury method
• Portfolio test
• Qualitative research
• On-the air-test and Theater persuasion test
– Physiological responses involving
• Galvanic skin responses
• Pupil dilation responses and
• Eye movement tracking
– Behavioral responses involving
• In-store persuasion
19. Post-testing techniques
• Most of the pre-testing techniques are applicable to post
testing. Additional ones are briefly described below:
• Recognition Test: Measures the incidence and intensity of
reading an advertisement. Normally involves interview with
100 to 150 qualified readers of a given issue of a magazine
or periodical that carried the advertisement. Specific
questions are then asked to see if they can remember the
ad, its contents and the extent to which they remembered.
• Recall: Respondents are not shown an advertisement in full
in advance but asked what he/she can remember about the
ad.
• Triple Association Test: Used for assessing respondents’
abilities to associate the product category, the brand, and
the copy theme. Two of these three are read or shown to a
respondent who is asked to mention the third.
20. placement research
• Determine…
• Types of distribution
• Attitudes of channel members
• Intensity of wholesale & resale coverage
• Channel margins
• Location of retail and wholesale outlets
