Use of Statistical Techniques in Market Research

1. Use of Statistical Techniques in Market Research An overview

2. What is market research? • Essentially analysing peoples relationships to brands/products/policy • FMCG/Services/social policy • Two components: • Qualitative • Quantitative • Both do the ‘same’ thing • build models

3. Broad brush strokes • Who do you want to talk to? • Has someone else/you talked to the above? • Why do you want to talk to them? • How will this information be used?

4. Examples • Poll survey – eg. Colmar Brunton Poll • Market segmentation • Can I simplify thinking about my customers into easier to understand segments • Customer satisfaction studies • What should I change (and how) my customers experience of this service

5. Examples • Advertising effectiveness • Which products should I launch • At what price/ what features

6. Colmar Brunton Poll • Sampling – talk to eligible voters • Sample needs to be representative • Needs to be done in 1-4 days • CATI interviewing used • Question wording very important

7. One News Colmar Brunton poll

8. One News Colmar Brunton poll RELEASED: Sunday 5th November 2008 POLL CONDUCTED: Evenings of 1st-5th October 2007 inclusive SAMPLE SIZE: N = 1010, Eligible Voters SAMPLE SELECTION: Random nationwide selection using a type of stratified sampling to ensure the sample includes the correct proportion of people in urban and rural areas. SAMPLE ERROR: Based on the total sample of 1010 Eligible Voters, the maximum sampling error estimated is plus or minus 2.8%, expressed at the 95% confidence level. METHOD: Conducted by CATI (Computer Assisted Telephone Interviewing). WEIGHTING: The data has been weighted to Department of Statistics Population Estimates to ensure it is representative of the population in terms of age, gender, and household size. REPORTED FIGURES: Reported bases are weighted. For Party Support, percentages have been rounded up or down to whole numbers, except those less than 3.5% which are reported to 1 decimal place. For all other figures percentages have been rounded up or down to whole numbers except those less than 1% which are reported to 1 decimal place. METHODOLOGY The party vote question has been asked unprompted as at February 1997.

9. One News Colmar Brunton poll Party Support “Under MMP you get two votes. One is for a political party and is called a party vote. The other is for your local M.P. and is called an electorate vote.” Party Vote* “Firstly thinking about the Party Vote which is for a political party. Which political party would you vote for?” IF DON’T KNOW – “Which one would you be most likely to vote for?”

10. Segmenting your market Segmentation • Identify segmentation bases and segment the market. • Develop profiles of resulting segments. Targeting • Evaluate attractiveness of each segment. • Select target segments. Positioning • Identify possible positioning concepts for each target segment. • Select, develop, and communicate the chosen concept.

11. U.S. SME Lifestyle Segmentation Example

12. Segmenting your market • Techniques used (of many) • Factor analysis to reduce dimensions • Cluster analyses to create ‘segments • Fastclus algorithm very popular • A difficult process • Needs much direction form experienced ‘segmentors’ • Discrimination techniques used to place future observations into segments

13. Customer Satisfaction Studies Thinking firstly about the service you received from (top secret). I am going to read you some statements about this service and as I read you each statement, please give your opinion using a five-point scale where 1 is extremely dissatisfied and 5 extremely satisfied (read, rotate (start at x). write in (one digit) per statement) How satisfied or dissatisfied are you with:. ... everything being kept straightforward ... being kept in touch while the claim was being processed ... the general manner and attitude of the staff you dealt with ... your claim being dealt with promptly ... being treated fairly

14. Presentation of results Strengths Concern Maintain or divert Secondary drivers

15. Satisfaction studies • How do you measure importance?? • Correlation fine but misses relationships between Xs • MLR bad as assumes X’s uncorrelated • PCR used – regression on principal components etc… • Other solutions include CART

16. New product/pricing studies • What new features need to be included/added • What price are most customers prepared to pay? • How do my competitors’ prices affect my share of the market

17. Please indicate which of the following you would buy if these were the prices per dozen: Heineken Steinlager Stella Artois $22.95  $18.95  $20.95  Export Gold Amstel $14.95  $18.95  Other premium beers Other mainstream beers 19.95  $13.95  SCENARIO 1

18. New product/pricing studies • Techniques used: • Experiments designs • Main effects/interactions • Choice modelling • Multinomial logistic regression • Survival analysis

19. New product/pricing studies

20. How advertising is modelled... New 5-10% decay in recall/week

21. How advertising is modelled... • Give TARPS a memory = Adstock • Via exponential smoothing • Linear model on Adstock vs ECT • intercept = long term memory • slope = return /unit Adstock • Once happy can use for scheduling…

22. Major points • Constrained optimisation • The problems are both stimulating and demanding • Interpretation is everything

23. Useful website • Check out our website to find out more about the Market Research Society of New Zealand www.mrsnz.org.nz