Developing and Using CB Information

1. Developing and Using CB Information Dr. Abdullah Sultan

2. Why do we need this information? Understand the consumer “Fit” our products to the needs (and desires) of the consumer Develop better marketing strategies Protect consumers Make better purchases

3. Who Conducts Consumer Research? • In-House Marketing Research Departments • External Marketing Research Firms • Advertising Agencies • Syndicated Data Services • Retailers • Research Foundations/Trade Groups • Government • Consumer Organizations • Academics & Research Centers

4. Two Types of Consumer Research: Primary vs. Secondary Data • Primary • Collected specifically for current purpose • Could be internal or external • Experiments (lab studies) • Quasi-experiments (test markets, coupon studies) • Non-experimental (focus groups, observations, projective techniques) • Secondary • Collected for some other purpose • External (census, Gallup, etc.) • Internal (company records, data)

5. General Rule of Thumb: Collect secondary data first, then turn to primary data, why? • Advantages of secondary data: • Time savings, Low costs • Disadvantages of secondary data: • May be out of date • Definitions or categories might not be what you’re looking for • Might not be specific enough for your project

6. Focus Group Focus Group – A form of in-depth interview involving 6 to 12 consumers led by a moderator who asks participants to discuss a product, concept or other marketing stimulus

7. Observational Research A technique in which researchers observe how consumers behave in real-world surroundings

8. Experiments • Consumers randomly assigned to receive different “treatments”; e.g., shown different brand names • Treatment is called “independent variable”; e.g., in a test experiment, only the type of detergents is varied (whether it is biodegradable) -> infer its effectiveness

9. Test Market (Field Experiment) Studies the effectiveness of one or more elements of the marketing mix evaluating sales of the product in an actual market (e.g., a specific city).

10. Commonly used Test Markets

11. How do experiments differ from field experiments? • In field experiments, researchers conduct tests in the real world and observe the actual results. • In experiments, researchers control the test so that different groups of people can be compared on the basis of a key differentiated factor(s).

12. Why don’t we just ask people? People don’t know why they do what they do People don’t want to tell you why they do what they do Sometimes asking them changes their behavior 12

13. When Developing Products LOTS of questions to be answered! Consumers’ ideas Attributes Names Packaging Distribution Promotions – marketing communications Pricing 13

14. Consumer Behavior Research and The 4 P’s: Key Research Questions: How does the company design products, promotions, prices, and distribution (place) to satisfy the customer’s needs and wants? 14

15. Questions to Pose When Developing A New Product What ideas do consumers have for new products? What attributes can be added to or changed in an existing offering? What should our offering be called? What should our package and logo look like? What About Guarantees /warranties? 15

16. Making Promotion Decisions • What are advertising objectives? • What should advertising look like? • Where should advertising be placed? • When should we advertise? • Has advertising been effective? 16

17. Making Pricing Decisions What price should be charged? How sensitive are consumers to price and price changes? When should certain price tactics be used? 17

18. Making Distribution Decisions Where are target customers likely to shop? How should stores be designed? 18

19. Practical Scenarios • Imagine you’re a marketing manager for Burger King. You need consumer research to support future decisions about menu items and promotions. Which research tool(s) would you use to uncover the answers to the following questions – and why? • Do Burger King customers prefer the chain’s French fries over those of McDonald’s? • Which Burger King sandwich is the most popular in Kuwait? • Do coupons increase sales of the discounted menu items? • Would Burger King sell more burgers if it added cheese without raising the price? • Which media vehicles do Burger King customers prefer? • What condiments, if any, do take-out customers add to Burger King burgers eaten at home? • What new side dishes should Burger King introduce?

20. Consumer Research & Ethical Issues Positive Better consumption experiences Better customer relationships Negative Higher marketing costs – passed on Invasion of privacy Deceptive research policies 20

21. Correlation and Causation Correlation = relationship between two variables Causation = one variable producing an effect in another variable Correlation ≠ Causation

22. Washington State University - kre

23. Washington State University - kre

25. 3 Factors Necessary for Causation: Correlation Temporal antecedence No third factor driving both

26. 3 Factors Necessary for Causation Correlation – Storks and babies in same house Temporal antecedence No third factor driving both

27. 3 Factors Necessary for Causation Correlation – Storks and babies in same house Temporal antecedence Storks Babies No third factor driving both

28. 3 Factors Necessary for Causation Correlation – Storks and babies in same house Temporal antecedence StorksBabies No third factor driving both Houses with pregnant women, warmer

29. 3 Factors Necessary for Causation: Correlation more mosques / more crime (r = .85) Temporal antecedence No third factor driving both

30. 3 Factors Necessary for Causation: Correlation more mosques / more crime (r = .85) Temporal antecedence one doesn’t precede the other No third factor driving both large cities have more mosques and more crime/ small cities have fewer mosques and less crime

31. Spurious Correlation Spurious = artificial, fake Danger of data mining Lots of things are correlated, but not really related