Understanding Consumers and Markets through Research x461.1

1. Understanding Consumers and Markets through Researchx461.1 Matt Disston 714-356-6538 mattd@dmgnet.com

2. Understanding Consumers and Markets Through Research "The best teachers are those that show you where to look, but don't tell you what to see." -- Alexandra Trenfor

3. Grading Rubric • Midterm exam 18% • Final exam 22% • Attendance/Participation 10% • Proposal 50% ______ 100%

4. Proposal Summary Background Objectives Research Approach or Scope of Work Time, cost and critical path chart (cpm) Technical Appendix Secondary data Focus Group Script Questionnaire for the survey

5. ProposalSummary • Summarize the purpose of the proposal • Answer why this research will achieve the objectives • Target audience for the Summary is the Vice President of Marketing • Provide total cost estimate and time require to complete • Write this section last

6. ProposalBackground • Describe the market situation • What is the product? • Why is this product/service perceived as being a good idea by management? • Who are the customers? • Who is the competition? • Are there any special characteristics of this product or market? • SWOT

7. ProposalObjectives • What are the management objectives? • How will the research tasks generate useful information? • What are the most important “researchable questions” the research will answer once it is complete?

8. ProposalResearch Approach/Scope of work • This is a detailed, step by step list of tasks that describe the work to be completed • Specify the product of each task – For example: • Task 1. Meet with the client – At the outset of the research we will meet with the client to clarify the research to be completed. The product of this task will be a scoping memo which specifies any requests for information and specifies any decision points for the client throughout the research effort. • The Research Approach will have 5 or 6 tasks: • Task 1. Meet with the client • Task 2. Secondary research • Task 3. Focus Group • Task 4. Intercept Survey • Task 5. Analysis

9. ProposalTime, Cost and CPM • Construct a budget based on the hours you expect to spend on each task • Establish a billing rate for each employee position • Provide an estimate of the number of hours, by employee for each task • Each task should have a subtotal of the total budget • CPM chart should illustrate when each will be undertaken and in what order

10. Critical Path Method -- CPM

11. ProposalTechnical Appendix • Examples of the secondary research you found on your topic • Focus group script – Introduction, definitions, 30 – 40 questions grouped by topic • Questionnaire – description of methodology 20 – 30 questions

12. Marketing ResearchDefinition • Market research is the formalized process of obtaining information to be used in marketing decisions. • Product: Information! • not decisions, • not a marketing plan, • not a SWOT, • not a new business

13. Market ResearchVocabulary • 4Ps • Product • Price • Placement • Promotion • Market share • Market segment • Measures of central tendency • Mean • Median • Mode • Economics • Per capita • Rank order • Primary data • Secondary data • Experimental data • Segmentation • Targeting • Positioning • Marketing “pain”

14. Market ResearchThe Environment

15. Market ResearchProcess -- MIS Research Schematic: Research Schematic: Marketing Environment Internal Information Marketing Research Department External Information Organized Information Guidance Decisions Recurrent MIS Marketing Manager Monitoring Requested Requests and Refinement

16. Decision Support System • Provides necessary information at the time a decision is made • Incorporates business judgment in the form of business/computer models • Provides output to the decision maker based on their input and the input of others in the company • Example: Salesman’s Ipad at the point of sale

17. Decision Support • Understanding your own company? • Computer models/pro forma • Understanding customers? • Why do companies fail in Chinahttp://www.globalpost.com/dispatch/news/regions/asia-pacific/china/130918/why-big-american-businesses-fail-china • How would you research this question? • What should these companies have known? • How would you find this information? • Primary, secondary and experimental data

18. General Research Process • Establish the objective with the client – select the marketing opportunity/problem -- What is the customer’s “marketing pain”? • Express the objective(s) in terms of “researchable questions” • Agree on the measurements to use and the information needed to answer the “researchable questions” – what is the research design • Determine how to collect the information -- Data collection methodology • Design the data collection forms – questionnaire, competitor product specification sheets • Determine the sampling method/collect data • Analyze the data • Write the report Marketing Research – Methods http://www.dmgnet.com/uci/lectures/Market Research Process.pdf

19. Case 1 • What do you need to start a business? • Money? • A plan? • A product? • Marketing research? • You need A Customer! • No • No • No • No (Nice try!)

20. Case 1 I am a potential research client. I have developed a new design for a sport boat. It is called a Carabelli 30. I am manufacturing these boats in Brazil. I would like to expand my market. Carabelli 30 http://www.youtube.com/watch?v=xfZm-y9YkyU • Researchable Questions-- • Should I export them to the United States? • What research (information) do you recommend I have to make this decision? • How do you propose to find it?

21. Case 1 • Start with secondary information. • Sources: • Internal (4P’s) • What are the specifications of the product? • Price • Cost • Features • How is it manufactured? • What are the strategic relationships to make the product? • Where is it sold? • How is it currently promoted? • What are the objectives of the management team?

22. Case 1 • External • What are the characteristics of the customers who bought the product? • How do they use it? • How much did they pay? • What is the “value” they see? • Is there market segmentation? • What companies are the competitors? • Price, placement, promotion • What suppliers are required to build it and what are their requirements? • Are there governmental/export issues?

23. 3 Conceptions of Marketing • The production concept: consumers will buy goods that are widely available and inexpensive; focus is on improving efficiency in production & distribution • The selling concept: consumers will not buy enough of your product if you leave them alone; focus on advertising & contact with potential customers • The marketing concept: consumers will buy your products if you identify their needs & satisfy those needs better than competitors. Source: Kotler, Philip, John Bowen, and James C. Makens. Marketing for Hospitality and Tourism

24. Errors in Research Design • Surrogate information error • Measurement error • Experiment error • Frame error • Population specification error • Sample error • Selection error • Non-response error

25. Three Types of Data

26. Secondary DataForty Years of Music Distribution

27. Secondary Data and the Internet • The Internet • Sputnik – October 1957 • ARPA • 1960s technical papers • 1969 UCLA, SRI, Univ of Utah, UC Santa Barbara • ftp • 1972 – Ray Tomlinson – Email (@) • V.A. Shiva Ayyadurai –1978 age 14 for Univ of Medicine, NJ (Owns “EMAIL”) • 1978-79 Vinton Cerf – TCP/IP

28. The Internet(continued) • 1970s Proliferation of networks • ARPANET – scientific/military • USENET – bulletin boards • THEORYNET – academic • ALOHANET/PRNET – radio • BITNET – general use (1981)

29. The Internet(continued) • 1980s • 1981 - 1983 TCP/IP cutover • 1984 – DNS • .com, .edu, .net, .org, .gov, .mil • 1985 – WELL • 1986 – NSFNET – backbone created 56K • 1988 – backbone upgraded to 1.5 mps • IRC chat invented by Jarkko Oikarinen • 1989 ARPANET ceases

30. The Internet(continued) • 1990s • 1991 – WWW – Tim Berners Lee • 1993 – Internic created • 1993-94 Mosaic • Marc Andreessen • Netscape w/ Silicon Graphics • 1997 IE – Browser wars • 1999 – Netscape sold to AOL $4.2 B • Adreessen Horowitz – Twitter, Foursquare, Pinterist, Skype, Facebook, Groupon and Zynga • 1995 – JAVA, Streaming technologies

31. The Internet(continued) • 1990s – Gopher, Archie, Veronica, Jughead • 1994-95 Geographic domains • 1995 – Online services, ISP • Compuserve • Prodigy • AOL • 1996 – Internet2 • 1997 – 99 E-commerce, Etrade, • 2000 – IPv6 • 2003 – First online election – Switzerland • 2003 -- 09 Countries tax the Internet • 2005+ -- Social networking

32. The Internet • Business Models – Front end/back end decisions • Advertising • Pop ups • Banners • Ads • Pay for content • Membership • Software reliant • Internet service

33. The Internet • Gathering information – Depends on business model • Survey • Observation • Page hits • Downloads • Cookies • Input Data Gathering • Registration – Personal data/email • Orders

34. The InternetSecondary Data • Marketing Research – Methods http://www.dmgnet.com/uci/lectures/Market%20Research%20Process.pdf • USC Internet Resources http://www.sc.edu/beaufort/library/pages/bones/bones.shtml • Brooklyn College Internet Resources http://depthome.brooklyn.cuny.edu/economics/webresch.htm • How to develop an Internet search strategy - UC Berkeleyhttp://www.lib.berkeley.edu/TeachingLib/Guides/Internet/Strategies.html • What cookies are on your machine? • How do you Opt Out?

35. The InternetSecondary Data • Digital Music News – 40 Years of Music http://www.dmgnet.com/uci/powerpoint/109sx.gif • Google Analytics – DMG site • Videos • Tools • The problems with “Big Data” • http://www.ft.com/intl/cms/s/2/21a6e7d8-b479-11e3-a09a-00144feabdc0.html#axzz2xd2J0Z8q

36. Focus Group • Meet with the client • Create Script, get it approved • Create screener • Recruit attendees • Demographic survey upon arrival • Conduct focus group – record • Pay incentive • Write summary report within 48 hours

37. Measurement • Measurement is the assignment of numbers to characteristics according to rules. • Operational • Conceptual • Range of variables • True characteristics • Additional stable charactersitics • Short term characteristics • Situational characteristics

38. Experimentation • Examples of simple experimental design: • Experiments require a dependent and independent variable

39. Quantitative Research • Tactical vs Strategic research • Tactical – aimed at a specific issue. Answers a specific question. • What percentage of our customers are over 21? • Do people prefer red or green? • Strategic – may not have specific answer to test. Aimed at identifying the trends, characteristics and similarities in the data. • Looking for trends in a database – What are the biases in the data? • What are existing customers doing? • What are the shopping “bundles” our product experiences?

40. Quantitative ResearchPlanning the Questionnaire • Structured vs Unstructured • Related to the amount of freedom the respondent has to answer • Direct vs Indirect • Related to the amount of knowledge the respondent has about the topic of the research • Eg: Types of questions: • Structured – Direct • Multiple choice question where the respondent knows the topic • Structured – Indirect • Multiple choice where the respondent does NOT know the topic • Unstructured – Direct • Open ended question where the respondent knows the topic • Unstructured – Indirect • Psycho-analysis

41. Quantitative ResearchPrimary Data • Survey • Decide the type of survey method: • Telephone • Intercept • Mail • Computer • Determine sample • Domain • Unit • Extent • Timing • Questionnaire development • Field study plan • Tabulation plan

42. Quantitative Research • Observation • May be more accurate than a survey • Intrusive • Disney electronic tracking http://www.nbcnews.com/travel/travelkit/disney-world-track-visitors-wireless-wristbands-1B7874882 • Database • Subscription databases • Associations archives • Membership • Check data • Credit card data • Customer data (from sales dept and accounts)

43. Quantitative Research • Sampling • Scaling • Attitudinal scales • Comparative scales • Likert • Stapel • Paired alternatives • Constant sum

44. Survey Data Set

45. Market Research Analysis Nominal Ordinal

46. Market Research Analysis Interval

47. Market Research Analysis Ratio