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050825_Address to Insight Asia Conference 2005_Non-Traditional Tools for Understanding Consumers


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050825_Address to Insight Asia Conference 2005_Non-Traditional Tools for Understanding Consumers

  1. 1. Non-Traditional Tools for Understanding Consumers Prepared for: Address to Insight Asia Conference 2005 Prepared by: Spire Research & Consulting Date: 25 August 2005Prepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 1
  2. 2. Spire background Spire: A strategic market intelligence firm serving enterprises in the Asia-Pacific. We focus on holistic, strategic studies on the external business environment to support market entry, feasibility and strategic investment decision-making. Material for this session is drawn from Spire’s regional practice and from material published in the Spire E-Quarterly. To receive the Spire E-Quarterly, please email us at ejournal@spireresearch.comPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 2
  3. 3. Thesis: Non-traditional research tools add value when used prior to traditional consumer research programs Non-traditional tools include: Secondary data analysis Expert interviewing, targeting: Expert observers of a market Channels Competitor and substitute analysis Non-traditional tools can be useful in: Setting priorities for traditional consumer market research investment Formulating hypotheses for testing Adding context to better understand consumer research findings Non-traditional tools can be a powerful source of competitive advantage in a consumer insight program – informing recruitment criteria, questionnaire or DG design and interpretation of results.Prepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 3
  4. 4. Example: The China Beer Market Scenario: Introducing an imported, foreign brand of beer into China Secondary research Review consumer study objectives – focus on promising niches? To understand share of imported/foreign beer and trend, from analysis of trade data First register which are the import Expert interviews and visits to pubs, hotels and retailers for brands that have a foothold – later used to test consumer awareness of products checks those brands to work out best To form a preliminary view on the major imported brands positioning To later design consumer Key Competitor analysis using secondary research questionnaire to test importance of To analyze data on critical success factors such as bottle design competitor CSFs – e.g. is choice of and relationships with key channels pub more important than choice of brand Channel interviews (distributors, retailers, pubs, hotels), secondary research on geographic and demographic If there is need to prioritize patterns by income and beer consumption consumer research budget, use this to help decide focus by geography To form a preliminary view on promising channel segments, or channel segment customer segments and geographic regionsPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 4
  5. 5. How do non-traditional research tools add value? The value of non-traditional tools can be seen in terms of: Setting priorities for traditional consumer market research investment where necessary: Selecting geographic areas of greatest interest Prioritizing segments of greatest interest by product category or customer type Formulating hypotheses for testing using consumer research tools Providing context for understanding consumer research findingsPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 5
  6. 6. Identifying promising Geographic zones We can prioritize geographic areas by looking at economic or demographic indicators… But which ones? Much depends on whether one is marketing “high-end” or “low-end” consumer products or commercial/industrial products For products with low income elasticity, we should look more at population distribution, taking into account age, ethnic or religious demographics where necessary For products with high income elasticity, we should look more at metrics like income per head, household spending, retail sales or disposable income... …though this data is not always easily available by province and city and in some cases may need to be estimated We can prioritize geographic areas using macro-strategic research to discover historical sales of product by type Secondary data may be available in some cases, eg vehicle registrations by province… …but often, secondary data is not available and estimates need to be made based on industry interviews Judgments about promising geographic regions should take into consideration not only absolute sales volumes but sales values and the likely growth rate, taking into account product life cyclesPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 6
  7. 7. Identifying promising Product Categories Prioritizing segments by product category, price band or customer type is another path for non-traditional tools to add value Product category prioritization: Often a program of consumer research examines demand for a product category which has a number of sub-categories, e.g. different engine capacities for motorcycles Macro-strategic research tools can be used to elicit information on historical and forecasted future sales by product sub-category, based on secondary data searches and information exchange with channels and competitor producers This helps to prioritize focus by product category, to make best use of limited budget or timePrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 7
  8. 8. Identifying promising Customer Segments Customer segment prioritization This objective is more problematic using non-traditional tools Engaging with channels to understand their view of key segments can be of value For example: Power tools research, where non-traditional tools helped determine what proportion of the market was DIY/home consumer versus industrial users, a critical input for prioritizing customer segments for traditional research Research on data-enabled phones – interviews with retailers to understand characteristics of customers in terms of demographic profile and line of work, to validate our hypotheses about what profile of customers to recruit for consumer research Research on industrial equipment – arriving at a view on the most promising vertical segments and geographic regions by starting first with competitor and channel interviews before going on to customer interviewsPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 8
  9. 9. Formulating Hypothesis for Testing Formulating or validating initial hypotheses for testing can be done with the help of expert or channel interviews and secondary research. These can relate to: Usage and attitude towards product category and brands Drivers of buying and switching behavior Which competitors or substitutes have a strong position Examples of using non-traditional tools prior to consumer research, to generate hypotheses for testing Online sales of electrical and electronic goods in Japan – competitor benchmarking suggested that Japanese e- commerce consumers prefer a COD mode of payment Home computer peripherals - competitor analysis helped our client to ask the right questions during consumer research about reactions to new competitor product conceptsPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 9
  10. 10. Interpreting Consumer Research Findings Non-traditional tools can provide context for understanding and making use of consumer research data by, for example: Understanding the reasons behind consumer research findings, for example changes in the economy or access to credit which may impact consumer interest in a product Quantifying the size of demographic, economic or geographic segments, so as to set feasible sales targets Understanding the number, distribution and companies in specific types of channels (for example: hypermarkets, DIY retail stores, Post Office outlets, photography mini-labs), to help plan channel programs Elaborating on legal and regulatory requirements necessary when at the go-to-market stagePrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 10
  11. 11. Non-traditional tools: Secondary Research Secondary data analysis encompasses : Published economic, demographic and industry data The reliability of sources, even where they are Government sources, needs to be scrutinized and adjustments made where necessary Such data can inform the choice of consumer research method – for example telephone penetration viewed in conjunction with income per head data can help decide if most of the targeted segment can be reached by telephone Product sales trend data is sometimes available from published sources, based on underlying macro-environmental research programs Import/export data and production data can be extracted and examined Trade data for product categories is often grouped together to secure minimum numbers of data points per HS code Trade data should be adjusted for re-exports Trade data in some Asian countries should be used with caution due to problems with underlying data collection accuracy For products where substantial volumes are not imported but locally produced, local production data can be crucial…but sometimes hard to findPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 11
  12. 12. Non-traditional tools: Secondary Research (cont’d) Published market commentary is often very helpful in formulating hypotheses about: Trends in product design, consumption patterns, competition, distribution and technology Popular product sub-categories Such commentary can be found in trade periodicals and news media, but also from other sources such as: Sector reports published by investment banks Competitor press releases, annual reports and IPO prospectuses Trade and country news websites Example: a press released on a publicly listed competitor’s website highlighted consumer research findings on a stationery product market in KoreaPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 12
  13. 13. Non-traditional tools: Competitor Product Analysis Studying competitor or substitute products can yield valuable inputs for designing consumer research questionnaires and discussion guides For example, when researching the digital print mini-lab business, knowing that online print websites are thriving in a country like Korea may suggest a question about when they would print online versus visiting a digital mini-lab Another example: when researching almonds in Indonesia, local products were found that looked similar to almonds, known as “Java almonds.” Consumer interviewees were shown the difference between Java almonds and Western almonds, to ensure correct survey resultsPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 13
  14. 14. Non-traditional tools: Expert Interviewing Experts can offer input on prioritization & hypotheses for testing Who could be experts? Academics. Example: Business school academic specializing in BPO, interviewed for a project on document outsourcing Journalists Can be trade periodical journalists but also news media journalists with relevant specialization Government officials Useful because regulators can offer an understanding of the market situation, but also because Government influences trends rather than just observing them Trade bodies Can be useful in cases where the trade organization has permanent staff and conducts research. A Delphic approach can be used to process expert feedbackPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 14
  15. 15. Non-traditional tools: Channel Interviewing The client’s channels can be engaged using in-depth interviews or focus groups bringing together executives with similar roles in the channel company – Spire is experienced in both The value of Channel interviews is similar to that for Experts The principle to follow would be to select channels that are closest to the end-customer and to interview the relevant individuals in the company For some industrial and commercial products, the decision-making process can be complex and elongated, with various tiers of channels, contactors and consultants influencing or even making the decision to buy Understanding novel channels will help in prompting consumers during qualitative or quantitative consumer research. Novel but emerging channels would include auction web- sites, Multi-Level Marketing and direct sales initiatives from manufacturersPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 15
  16. 16. Non-traditional tools: Competitor Analysis Studying how competitors view their customers, what new product concepts they have placed before customers and how their activity may have impacted customer attitudes and perceptions… …is valuable in designing consumer research tools. We should also study providers of substitutes and successful best practice leaders which may not be direct competitors. Forecasting competitor future plans can be useful. Examples: Using patent searches to suggest new product concepts in the competitors pipeline, which can be tested in consumer research to determine the best counter-strategy Studying product substitutes when researching a consumer data storage product, to understand what was the closest substitute people now had to our clients product. In some countries, it was flash cards and for others, back-up portable drives. Recruitment of consumer respondents would be by ownership of the dominant product. Studying a successful direct selling firm in Japan, learning how customers may call up several times to ask questions before they buy – this hypothesis could be tested in consumer researchPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 16
  17. 17. Non-traditional tools: Client Interviews Lastly, it should be noted that interviews with client company executives in charge of local sales can be useful in developing initial hypotheses to inform consumer research. Interviews or focus groups that are conducted by an external market research firm can be more useful in eliciting frank feedback about the market situation from such executives.Prepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 17
  18. 18. Tel: (65) 6838 5355 Fax: (65) 6838 5855 78 Shenton Way #20-01 Singapore 079120 www.spireresearch.comPrepared for: Address to Insight Asia Conference 2005 Date: 25 August 2005 Page 18