Data Mining&Business Planning of Engineering/Research Projects

Data Mining&Business Planning of Engineering/Research Projects Practice 3 Dr. Gábor Pauler, Associate Professor Faculty of Sciences, University of Pécs Tel:30/9015-488 E-mail:pauler@t-online.hu

Content of the practice • Checking home assignment 3: Product, Place, Promotion plan • Qualitative and Quantitative Market Research • Qualitative Market Research: Focus Groups • Definition • Planning and preparation • STEP 1: Information objectives • STEP 2: Select Moderator • STEP 3: Design forms • STEP 4: Select participants • STEP 5: FG room layout • Executing group session • STEP 6: Introduction of Moderator • ACTIVITY 6.1: Create communicative athmosphere • ACTIVITY 6.2: Encourage argument • ACTIVITY 6.3: Regulate conversation • ACTIVITY 6.4: Integrate group session • What Moderator should not do? • Results • Forms summary charts • Text report by Moderator • Home assignment 3: Focus Group • References

Qualitative and Quantitative Market Research • You could see in Presentation 3 that P4:Optimal pricing cannot be resolved without Market Research (Piackutatás): • It has quantitative (Kvantitatív) part, which will base on data collected in a Survey (Lekérdezés) and analyzed by BusinessPlanner 2.0. We will talk about it at Presentation 4 • But to determine what is worth to ask in a survey an what is not, first you have to make Qualitative (Kvalitatív) research: This is because entrepeneurs just love their own ideas, and instictly want to promote that. However a survey is NOT an advertising tool, if you use it for that purpose, you will get totally distorted, useless results for business planning. • (Eg. If you ask: „Would you like to buy my wonderful Miracle Roof, which will save you an ocean of money, at very limited price, and will totally change your life, and helps you pick up the cutest girls, and if you do not buy it, you are an environment-unfriendly bastard?” • The ansver will be „Yeees…” in 99.9999%, and you won’t understand why people in the reality still not buying that…)

Qualitative Market Research: Focus Groups: Definition • The main qualitative research tool is Focus Group (FG) (Fókusz csoport): • It is a 1-1.5 hour directed Group session (Csoportfoglalkozás) about a new product/service idea • Lead by a neutral, but motivated, communicative Moderator (Moderátor) • There are 6-12 participants, who are representatives of major expected customer groups on the targeted market (from your Home assignment 2) • Eg. if you want to open heavy-metal music store, do not invite grand- mothers, just because they have time to go! Probably they won’t be your best customers) • Also, at special topics, they can be experts of related fields • Its purpose is seeking QUESTIONS and CONFLICTS arising about your idea (will be queried in the Survey later!), not answers, because FG is a non-representative (Nem reprezentatív) small group: • It is hard to solve proportional participation of all customer groups (eg. some of them are too busy to participate) • One participant’s views can influence all others opinion • Traditional Hungarian marketing practice is too verbal unfortunately: FG is considered the main tool, and made after a preliminary survey – where questions are created from pure fantasy. This is because analyzing results of FG requires less knowledge in Data Mining and Statistics… • Eg. A major telecommunications company present at the Hungarian market launches 36-40 FGs around one topic: it is almost as expensive as 1000 respondent survey, but at least not representative… 3-4 FGs and 1 Survey designed from questions arised would be more effective <

Focus Groups: Planning & Preparation 1 • STEP 1: Determine the objectives of information collection (Információszer-zési cél) about the planned product/service. The most frequent objectives are: • What are features of customers buying the given group of products? • What are the major feautures of products in the category of your product? • How important they are for different customers? • Who are your competitors, even with partially similar product/service? • What is their performance in product features, what is your performance? • What would be the most suitable pricing unit of your product/service? • What is considered low, medium and high price for one unit of that? • How customers would buy your product/service in time? • What is the time period they usually decide buying such a product/service? • From which source they would finance buying it, in which proportion? • CASE STUDY 2: CarSculpturers Ltd. (http://www.carsculpturers.com ) is a small enterprise newly established by final year university students to create low cost, but trendy extreme optical tuning for young peoples cars. (See Executive Summary of their project). They decided to organize FG before launching Survey to discover the following topics: • What young people are expecting from cars? • How we can exceed their expectations providing some extravagant products at reasonable cost, which are more creative than very common low-cost, low-level Tesco-Homasita optical tuning? • Eg. What about to put plexiglass window on hood (Motorháztető) and give a chrome coating of engine block(Motorblokk) illuminated by internal LED-lighting, creating a pussy magnet (P.n.i mágnes) from even an old Suzuki Swift 1.1?

Focus Groups: Planning & Preparation 2 • STEP 2: Selecting the Moderator • In high budget FGs, a specially trained Psychologist is hired • But even at low-budget solution, the moderator should have an informal, communicative style, to let even shy people openly express their views • It is good if Moderator is personally interested in product category (Eg. likes cars) but should not be a fanatic or have any serious biases (Előítélet) in the topic • For project teams, it is better to find Moderator outside the team, not influenced by groupthink (Csoportnyomás) • STEP 3: Designing data collection Forms (Munkalap) of FG with the collaboration of Moderator. Forms can contain 5-8 questions assembled from the following types: • Association (Asszociációk): whatever comes in your mind about a topic, that describes best your hidden attitude (Rejtett hozzáállás) towards the product category: • Eg. „If car brands are animals, which animal would describe best the Renault?” • It is important that participant should fill it quickly, under time pressure created by Moderator: if they have time to set up theories about it, that will totally distort (Eltorzít) answers: • Eg. „What comes first in your mind when I say these words: party, WD40, girls, tyre cleanser” the quick answer is „Gina, Zsuzsi”, while the well considered is „Girls don’t like car maintenance” – Even if there is almost no such a car maintenance chemical which is NOT used by current generation to lay down girls in par- ties, they won’t admit that, just involuntarily!

Focus Groups: Planning & Preparation 3 • Completions (Kiegészítő eljárások): it is easier to express hidden attitudes if we get some starting point. We can ask participants to complete an unfinished sentence: Eg. „I like Renault because… I dislike Renault because...” • Ranking (Rangsorolás): we can give a list of some product features, and ask participants to order them by importance: • Eg. Which are the most important car extras? Inmobilizer, GPS, USB, Central lock, Sun roof… • Be careful about that most people cannot order more than 5-7 things reasonably • Always clarify how to mark more important (Eg. 1:Most important 5:Less important) • Adversaries (Ellentétpárok): we can give two extremes by all important product features evaluating our/ competitors product, and ask people to select one of them with underlining: • Eg. Renault is: Conformist  Rebel Rational  Emotional Sporty  Economic • This is necessary because people tend to avoid expressing characteristic opinion when they are in a group of strangers • Projection (Projektív kérdezés): in sensitive topics (money, power, sex) it is easier to get real opinions, if question is unpersonalized, and projected to other people: • „What girls will think of a guy who has an old and cheap car, but highly tuned up?”

Focus Groups: Planning & Preparation 4 • STEP 4: Selecting participants: Final participants (marked with red) are selected from a wider Base set (Alapkeret) of people considering their socio-demographic (Szocio-demográfiai) background data collected from friends, Facebook, iwiw, etc.: • Slection should represent most important customer lifestyle groups (Eg. local students or living in dormitory(Kolesz) with engineering major(Főszak)) • We can assume that they are interested in the topic (Eg. car tuning) • Size of base set should be double of FG size: in case selected participant rejects participation we turn to another similar memeber of base set • Participants are motivated to take part with minor (around max. EUR 5-10 valued) gifts, even if you have more money for it – otherwise they will feel obliged to say what you would like to hear (Eg. „Yes, I want Miracle Roof at all price…”). • Aides of the moderator organize and contact participants in advance, and again at last evening before FG, because people forget easily… • There should be always reserve members also if somebody does not show up. (In the unlikely event everybody comes, we give the gift to resreve members and release them immediately)

Focus Groups: Planning & Preparation 5 • STEP 5: FG room layout: Separated room in silent environment (Eg. Library), reserved for at least 2 hours, equipped with: • 1 central round table + desktop micropohone • Moderator sits centrally, looking at participants sitting all around in equal position • Flipchart or projector available for Moderator • Soft drinks, cakes/chips distributed, without noisy plastic packaging!!!, no alcohol!!! • Forms are distributed on table, but turned down, Moderator will tell when to use them • Pen and namecard for all participants • 2 Video cameras pre-installed and tested behind semi-transparent window screening everybody in 2 different angles (in case of low budget: 1 camera screening all participants above the moderators head) • The whole session is video-recorded to catch even the slightest face reactions behind words (Eg. Q: „Would you mind if there would be a kindergarden in the roof space, just above your head”, A: „Yes, noo, of course, I like kids”, while on his face: „I would roast that 4 year old little serial killers with flame-thrower”) • Moderators aide sitting aside takes notes about key sentences and their occourence in time, because it is time consuming to search single sentence from a 1.5-2hour video later

Focus Groups: Execution 1 • STEP 6: Moderators Introduction: the Moderator introduces himself, then • Adresses the topic of FG, tells expected running time (1-1.5 hours) • Introduces the participants in alphabetic order (don’t let them introduce themselves, because it takes forever!) • Proposes that everbody should use first-name basis (Tegezés) • Distributes namecards and ask to silence mobile phones • Tells that session will be video-recorded for exactness, but it is treated confidentially and erased after analysis • ACTIVITY 6.1: Moderator creates communicative athmosphere: • Initate talking with some humour (Thanks for brave bottle opening) • Frees fantasy (Let loose your fantasy) • Encourages criticizing sponsors (Please tell negative experiences) • Eases „experimental rabbit”-feeling (There is a funny method): The Moderator here was stone-hard proficient psychiatrist making quite well living from leading FGs for market research firms routinely. So he is the last considering these methods funny. But this wording eliminated the feeling „we are screened” • ACTIVITY 6.2: Moderator encourages argument: people at all age in all culture has very strong instinct (Ösztön) to fit into groups opinion, if there is no stake (Tét) of it. But our goal here is NOT group consense (like in Brainstorming) but to discover questions and conflicts! So: • Encourage shy people (Two of you did not tell a word) • Discover minority opinion (Do you agree with this) • Let express minority opinion (Everybody thought other way) • Provocate participants if they get bored (Is price always first)

Focus Groups: Execution 2 • ACTIVITY 6.3: Moderator regulates conversation: there are people who immediately start to force their views on others. To avoid it: • Block detours(Elkerülés) from original topic and stop flaming (Leave alone Suzuki): Hungarian society is cut by wealth, lifestyle, life expectations, etc. by the line „Suzuki Swift 1 owners” ↔ „Real car owners”, so without intervention, flaming is endless… • Sedate dominant persons (Let her express views): it’s not sure that the loudest guy will be the best customer: All participants were mostly boys and university students, except one girl, who was hairdresser and shy. Boys pressed hard on how they will buy Volvo S80 or BMW 7 and tune it (of course, after 15-20 years…). Finally it turned out the girl already had a small, grey subcompact car. She wanted to make it more funny from limited budget. She was the only real customer… • Block separate private communication among participants (Dont conversate separately) but do it extremly pollite way to avoid rejection: „All of your opinion is important for us, so please share with us what you are talking about” • ACTIVITY 6.4: Moderator integrates session: • Takes care about time allocation, block endless debates on minor details (Time management) • In pre-planned points, asks participants to turn up forms and fill out, and collects from them • At the end, summarizes questions and conflicting views arised

Focus Groups: Execution 3: What Moderator should not do: • The Moderator should not read questions and instructions, but memorize them. It will look more proficient • The Moderator should not ever express his own personal views of the topic or influence participants any way (Eg. If moderator tends just see strictly or move slightly towards one guy when talking, he/she will feel pressed) • In case one of the participants asks Moderators opinion, there is one possible standard answer: „Of course, I have an opinion all about this, but I will tell at the end, not influencing anybody”- nobody will stay longer to listen it! • The Moderator should not uncover the sponsor/your product idea for participants in advance: the conversation starts from broader scope (Eg. environment friendliness) gradually narrowing down topic (Eg. problems of develope more habitable environment in downtowns) in the first half hour, to discover general preferences of different customers. Then participants are exposed to the product idea in 3-5 minutes (Eg. Miracle Roof). THIS IS NOT A PROMOTION PRESENTATION! So there won’t be any fancy pictures, slideshows, impressing flash animations, etc. The Moderator simply reads the idea described in 1 paragraph, often rounded with other fake ideas we do not want make. • Moderator should not allow representative of sponsor to interfere with participants (Eg. Real story. Small village at Dunántúl, „kuttúr”-building, retired/senior participants, topic is bank offices. One grandma starts denunciate OTP, all others agree. Suddenly, representative of OTP jumps in yelling: „You are totally wrong,you do not know,what you are talking about, OTP is the best!”) • Moderator should not be informed about the business plan detailed, because he/she can unanimously(Önkéntelenül) influence participants to satisfy sponsors (Eg. Market Researchers in Hungary usually paid only if they justify the favourite idea of The Boss. This is damn expensive solution to increase bosses ego. A Harley-Davidson or a luxury whore from Ukrain is cheaper)

Focus Groups: Results 1 9.00 Averge importances of car features 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 HP Extras Sale Body Price Age Color Doors Safety Credit Warrant Economy Miles run Variability Reliabilityi Engine displ • Data collected at forms can be summarized on charts describing average importances, frequency of mentions, etc. BUT, these are not real statistics, because FG as sample is non-representative: one extra participants opinion and influence could make different results. Therefore you can use it only as preliminary information !

Focus Groups: Results 2 • After closing the session, Moderator writes a report about the most debated questions, supported with 8-10 hyperlinks to short 10-15 sec video-clips of the corresponding reactions. This will serve as input at designing the Survey: • Conflicting attitudes will go in Attitude questions (Attitűd kérdések) part • Most important product features will be further queried at Importance/ Performance questions (Fontosság/Teljesítmény kérdések) part • Creating short clips is absolutely necessary, because busy boss won’t have time to see a 1.5 hour video for 5 interesting sentences. • Besides forms, free conversation resulted in the following questions and conflicts (see video clips for facial reactions): • Unsatisfaction with market leading Suzuki Swift 1 safety record (Suzuki safety) • A car should be remodeled like a flat, to reflect personality and style of the owner (My car my style) This supports the low budget customization idea. • There was a debate wheter women need feminine cars. Women objected this. (Feminine cars for females) (There was a girlfriend-boyfriend couple, which objects the rules of FG to call strangers only, but base set was limited. The guy pressed on that „little red cars” are for girls. His girlfriend did not want to confront him before the group, so just murmured. But the proficient Moderator noticed it, jumped on, and pulled out her real opinion.) • Young people are dreaming about expensive sports cars, but because of economic rationality, they decide to buy cheaper (What young people prefer) • Safety devices should not be extras. They should be included in base price (Safety is not extra)

Focus Groups: Results 3 • There was a debate about how important customized settings of seats and steering wheel are (Customized setting).(The Moderator intensionally did not write here any „result” of debate, because we are looking for questions here, not answers. If you are curious about it, ask in the Survey!) • Renault lacks any dynamism and extravagance as group could not associate to any animal (More trendy look). • In the future Renault needs more characteristic design like Peugeot (Peugeot leads design).(Which it did later in fact)

Home Assignment 3: Focus Group • Project teams of students should organize focus groups with 6-8 participants researching conflicting views about their course project product ideas. The moderator can be team member or an external person also. • Each team should write 4 page summary supported with 8-12 videoclips and summary tables about conflicting views about ALL of this questions:(3points) • What are features of customers buying the given group of products? (Eg. Select by:Conformist↔Rebel,Trendy↔Conservative,Rich↔Poor, etc.) • What are the major feautures of products in the category of your product/service? (eg. for green roofs: insulation, radiation reflection, dust adsorbtion, cost, lifetime, ease of maintenance, etc.) • How important they are for different customers (Eg. 1:less important 6:very important  the max is NOT 5, because then everyone would stick to 3, the medium value) (conflicting views are mostly welcome)? • Who are your competitors, even with partially similar product/service? • What is their performance in the features above, what is your performance (Eg. 1:bad, 5:excellent  using 5 is OK here)? • What would be the most suitable pricing unit of your product/service (Eg. manufacturer should give price for one piece, for one installation, average price for a square meter/feet, etc.)? • What is considered low, medium and high price for one unit of that? • How customers would buy your product/service in time? (Eg. No buy/ only once, no sense to buy it more / buy more as long as it fashionable / buy it constatly from time to time / buy it at inceasing quantities) • What is the time period they usually decide buying such a product/service (Eg. 1 day for bread, 5-15 years for buildings) • From which source they would finance buying it, in which proportion?

References Focus Groups Theory: • http://managementhelp.org/evaluatn/focusgrp.htm • http://www.webcredible.co.uk/user-friendly-resources/web-usability/focus-groups.shtml • http://www.extension.iastate.edu/Publications/PM1969B.pdf • http://www.focusgroups.com/ • http://www.hik.hu/tankonyvtar/site/books/b156/ch02.html • http://www.arts.u-szeged.hu/socio/racz/telkut/fokusz.htm Practical Application: • http://www.szondaipsos.hu/modszereink/fokusz • http://www.4k.hu/index.php?mod=25&sid=105

Data Mining&Business Planning of Engineering/Research Projects