PCSC2: Primary Research Strategies: How to Build a Million Dollar Business


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Kevin Gentry, PhD and Rebekah Paul's presentation from ProductCamp SoCal. Held November 6, 2010 at Cal State Fullerton - The Mihaylo College of Business & Economics.

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PCSC2: Primary Research Strategies: How to Build a Million Dollar Business

  1. 1. How to Build a Million Dollar Business November 2010
  2. 2. Introducing… 20+ years experience Previously in senior positions at Quaker Oats Information Resources Grey Advertising Holds a Master of Arts and a doctorate (Social Psychology) from USC Has taught courses at USC, Santa Monica College, and West Los Angeles College Kevin Gentry, Ph.D. Group Vice President
  3. 3. Introducing… 16+ years of sales, marketing, and business development experience Oversees introduction of C.A. Walker to potential customers Previously worked for a research firm and a branding company in business development Holds a B.S. degree in Business Administration, Marketing emphasis from CSUN Rebekah Paul Business Development Mgr
  4. 4. Who We Are • In business since 1972 • Privately Held and Employee Owned • Mid-Sized Firm • Fully Integrated Data Processing and Programming
  5. 5. Current Client List
  6. 6. Market Research Strategic Issues • Sampling  Representative to populations  U.S. Census-based demographics  eRewards and eSearch • Interview Length  Minimum: 5 minutes  Maximum: 25 minutes  Average: 10 - 15 minutes • Incentives  Paid to each participant, not sweepstakes  Panels include in the cost  May add to it (typically $100 - $150) if narrow target, e.g. physicians, requesting sensitive information, etc.
  7. 7. FAIL Not developing your products along with the customer, knowing what their pain points are and what problem you’re solving Making critical business decisions when too close to the situation, when views and experiences are too narrow, lacking perspective and objectivity Getting all wrapped up in building a product but never pausing to find out if there will be demand for it Not taking part of the budget to do the research necessary to validate the market: size of the market, how fast it’s growing and competitor activity Not interviewing at least 100 people in your target market to talk about what they’d like to see in a product Source: BNET.com
  8. 8. Testing new products at concept or pre-production stage Measuring demand for new products, estimating market size/sales volume Understanding prospects: demographics, how they make purchase decisions Determining product feature/price trade-offs Market Research Strategies
  9. 9. 9 Case Study – Testing New Product Concepts A Manufacturer of nutritionally enhanced products wanted to measure reactions of vegetarians to two different forms of a particular vitamin (“1” and “2”) added to a product line. • Online survey among vegetarian publication subscribers responding to an email blast • Males and females • 3,287 responded and 1,057 passed the screeners • Must have used the product line in the past year
  10. 10. 10 Case Study – Testing New Product Concepts Measures include: • Likelihood to purchase • Product line by itself • Product line with vitamin no form (e.g. B) • Product line with vitamin form 1 added (e.g. B2) • Product line with vitamin form 2 added (e.g. B12) • Awareness of derivation of forms 1 and 2 • Preference of vitamins based on derivation
  11. 11. 11 Case Study – Testing New Product Concepts 65% 58% 50% 49% 23% 16% 0% 10% 20% 30% 40% 50% 60% 70% Product line by itself No form Form 1 Form 2 Form 1 + derivation Form 2 + derivation 3- Positive purchase interest of the product line with added vitamin goes down among all vegetarians as information is provided about vitamin formulation and derivation Total (N=1,057)
  12. 12. 12 Case Study – Measuring Demand for New Products, Estimating Market Size/Sales Volume As part of an ongoing program, a Film Studio wanted to measure demand for the DVD release of one of their Family film titles, estimate market size, and project sales using a proprietary norms database that we developed. • Online interviews of nearly 5,000 DVD households • 90% Adults 18-54 • 10% Kids/Teens 8-17 • 1+ DVDs purchased in past 6 months
  13. 13. 13 Case Study – Measuring Demand for New Products, Estimating Market Size/Sales Volume Measures include: • Film awareness • Film ratings among those who saw it • DVD purchase intent • Preference for single-disk or double- disk version and at what cost • First-month purchase urgency • First-pick among competitive titles • Sales volume forecast
  14. 14. 14 Case Study – Measuring Demand for New Products, Estimating Market Size/Sales Volume The title had broad appeal, awareness and viewership among both parents and non- parents, with “Excellent/Very Good” ratings:  Parents with 6-14 year olds are the core target  Purchase intent was strong and above average compared to Family film norms database Sales volume forecast for the title (at $19.99): Aggressive estimate* 6.5mm units Moderate estimate 5.7mm units Conservative estimate* 4.8mm units *Forecast within +/-15% of actual DVD sales, supporting accurate adjustment of marketing and advertising expenditures for home video sales
  15. 15. 15 Case Study – Understanding Prospects/Purchase Decisions A Health Insurance Company wanted to understand how and why its California customers are choosing their purchase channel (Agent vs. Direct vs. Internet), how committed they are to that channel, and what their key individual health plan purchase criteria are. • Primary or co-decision maker • Between 18-55 years of age • 281 telephone interviews with recent purchasers/members from their database • 37% applied through an Agent • 38% applied Direct • 25% applied through the Internet
  16. 16. 16 Case Study – Understanding Prospects/Purchase Decisions Measures include: • Did they contact an Agent at all • Why or why not • If yes, how did they find him or her • If yes, to what degree did they rely on the Agent when making a decision • Did they contact Direct at all • Why or why not • Did they contact via Internet at all • Why or why not
  17. 17. 17 Case Study – Understanding Prospects/Purchase Decisions When purchasers/members made a decision, they were most focused on (top 5, in order of importance): • Best benefits for the price • Good pharmacy benefit • Choice of plans to fit budget • Choice of amount of coverage • Good customer service Choice of which channel to use is largely dependent upon the purchaser’s perception of which is most convenient, how self-reliant the purchaser is, and whether or not the purchaser personally knows or has been referred to an agent
  18. 18. Case Study – Feature/Price Trade-off Determine the trade-off between features and price in purchase decisions for a specific office product line Discrete Choice Modeling used to value product variables’ price premiums • 601 online surveys • Office Supply Decision Makers • 80% purchased <= 50 of these products in the past 6 mos 13 variables including: Durability Materials Design Price Style Size 7 Products with differing combinations of the 13 variables
  19. 19. Case Study – Feature/Price Trade-off 0% 20% 40% 60% 80% 100% Design Element 10 Design Element 9 RecycledMaterials Design Element 7 Design Element 6 Design Element 5 Design Element 4 Design Element 3 Design Element 2 Design Element 1 Durability Size Price 1% 1% 3% 4% 4% 4% 5% 6% 9% 10% 11% 12% 20% Most important features for purchase intent Recycled materials not yet a key purchase consideration
  20. 20. Case Study – Feature/Price Trade-off $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $3.05 $1.24 $3.33 $3.69 $4.17 $5.41 $5.01 $5.31 $5.46 Upgrade 4 Upgrade 3 Upgrade 2 Upgrade 1 +13.8 +23 +18.5 +17.2 Incremental Share Achieved by Maximum Upgrade From baseline product ValueIncreaseFrombaseline
  21. 21. ~ FIN ~