(2) preference for Cola vs. non-cola taste,
(3) price sensitivity—willingness to pay for brand names;
(4) heavy vs. light consumers. We now put these variables together to arrive at various combinations.
Several different kinds of variables can be used for segmentation.
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Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Campbell’s soup, for instance, has found that Western U.S. consumers on the average prefer spicier soups thus; you get a different product in the same cans at the East and West coasts. Facing flat sales of guns in the traditional male dominated market, a manufacturer came out with the Lady Remmington, a more compact, handier gun more attractive to women. Taking this a step farther, it is also possible to segment on lifestyle and values.”
- Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd.
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Another basis for segmentation is behavior. Some consumers are “brand loyal”—i.e., they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are “heavy” users while others are “light” users. For example, research conducted by the wine industry shows that some 80% of the product is consumed by 20% of the consumers—presumably a rather intoxicated group.
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One can also segment on benefits sought, essentially bypassing demographic explanatory variables. Some consumers, for example, like scented soap (a segment likely to be attracted to brands such as Irish Spring), while others prefer the “clean” feeling of unscented soap (the “Ivory” segment). Some consumers use toothpaste primarily to promote oral health, while another segment is more interested in breath freshening.
Task 3 primary and secondary research
Explain the importance of marketing research and how businesses use market research
- outline the relevant of marketing research to businesses
- explain how these principles can be used to develop a marketing strategy
Market research is often needed to ensure that we produce what customers really want and not what we think they want.
Primary vs. secondary research methods.
There are two main approaches to marketing.
Secondary research involves using information that others have already put together. For example, if you are thinking about starting a business making clothes for tall people, you don’t need to question people about how tall they are to find out how many tall people exist. You locate it on the internet.
Primary research, in contrast, is research that you design and conduct yourself. For example, you may need to find out whether consumers would prefer that your soft drinks be sweater or tarter.
Research will often help us reduce risks associated with a new product, but it cannot take the risk away entirely. It is also important to ascertain whether the research has been complete. For example, Coca Cola did a great deal of research prior to releasing the New Coke, and consumers seemed to prefer the taste. However, consumers were not prepared to have this drink replace traditional Coke.
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Surveys are useful for getting a great deal of specific information. Surveys can contain open-ended questions. Open ended questions have the advantage that the respondent is not limited to the options listed, and that the respondent is not being influenced by seeing a list of responses. However, open-ended questions are often skipped by respondents, and coding them can be quite a challenge. In general, for surveys to yield meaningful responses, sample sizes of over 100 are usually required because precision is essential.
Surveys come in several different forms. Mail surveys are relatively inexpensive, but response rates are typically quite low—typically from 5-20%. Phone-surveys get some what higher response rates, but not many questions can be asked because many answer options have to be repeated and few people are willing to stay on the phone for more than five minutes. Mall intercepts are a convenient way to reach consumers, but respondents may be reluctant to discuss anything sensitive face-to-face with an interviewer.
Surveys, as any kind of research, are vulnerable to bias. The wording of a question can influence the outcome a great deal. For example, more people answered no to the question “Should speeches against democracy be allowed?” than answered yes to “Should speeches against democracy be forbidden?” For face-to-face interviews, interviewer bias is a danger, too. Interviewer bias occurs when the interviewer influences the way the respondent answers. For example, unconsciously an interviewer that works for the firm manufacturing the product in question may smile a little when something good is being said about the product and frown a little when something negative is being said. The respondent may catch on and say something more positive than his or her real opinion. Finally, a response bias may occur—if only part of the sample responds to a survey, the respondents’ answers may not be representative of the population.
Focus groups are useful when the marketer wants to launch a new product or modify an existing one. A focus group usually involves having some 8-12 people come together in a room to discuss their consumption preferences and experiences. The group is usually led by a moderator, who will start out talking broadly about topics related broadly to the product without mentioning the product itself. For example, a focus group aimed at sugar-free cookies might first address consumers’ snacking preferences, only gradually moving toward the specific product of sugar-free cookies. By not mentioning the product up front, we avoid biasing the participants into thinking only in terms of the specific product brought out. Thus, instead of having consumers think primarily in terms of what might be good or bad about the product, we can ask them to discuss more broadly the ultimate benefits they really seek. For example, instead of having consumers merely discuss what they think about some sugar-free cookies that we are considering releasing to the market, we can have consumers speak about their motivations for using snacks and what general kinds of benefits they seek. Such a discussion might reveal a concern about healthfulness and a desire for wholesome foods. Probing on the meaning of wholesomeness, consumers might indicate a desire to avoid artificial ingredients. This would be an important concern in the marketing of sugar-free cookies, but might not have come up if consumers were asked to comment directly on the product where the use of artificial ingredients is, by virtue of the nature of the product, necessary.
Focus groups are well suited for some purposes, but poorly suited for others. In general, focus groups are very good for getting breadth—i.e., finding out what kinds of issues are important for consumers in a given product category. Here, it is helpful that focus groups are completely “open-ended:” The consumer mentions his or her preferences and opinions, and the focus group moderator can ask the consumer to elaborate. In a questionnaire, if one did not think to ask about something, chances are that few consumers would take the time to write out an elaborate answer. Focus groups also have some drawbacks, for example:
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They represent small sample sizes. Because of the cost of running focus groups, only a few groups can be run. Suppose you run four focus groups with ten members each. This will result in an n of 4(10)=40, which is too small to generalize from. Therefore, focus groups cannot give us a good idea of:
- What proportion of the population is likely to buy the product.
- What price consumers are willing to pay.
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The groups are inherently social. This means that:
- Consumers will often say things that may make them look good (i.e., they watch public television rather than soap operas or cook fresh meals for their families daily) even if that is not true.
- Consumers may be reluctant to speak about embarrassing issues (e.g., weight control, birth control).
Personal interviews involve in-depth questioning of an individual about his or her interest in or experiences with a product. The benefit here is that we can get really into depth (when the respondent says something interesting, we can ask him or her to elaborate), but this method of research is costly and can be extremely vulnerable to interviewer bias.
To get a person to elaborate, it may help to try a common tool of psychologists and psychiatrists—simply repeating what the person said. He or she will often become uncomfortable with the silence that follows and will then tend to elaborate. This approach has the benefit that it minimizes the interference with the respondent’s own ideas and thoughts. He or she is not influenced by a new question but will, instead, go more in depth on what he or she was saying.
Personal interviews are highly susceptible to inadvertent “signaling” to the respondent. Although an interviewer is looking to get at the truth, he or she may have a significant interest in a positive consumer response. Unconsciously, then, he or she may inadvertently smile a little when something positive is said and frown a little when something negative is said. Consciously, this will often not be noticeable, and the respondent often will not consciously be aware that he or she is being “reinforced” and “punished” for saying positive or negative things, but at an unconscious level, the cumulative effect of several facial expressions are likely to be felt. Although this type of conditioning will not get a completely negative respondent to say all positive things, it may “swing” the balance a bit so that respondents are more likely to say positive thoughts and withhold, or limit the duration of, negative thoughts.
Scanner data. Many consumers are members of supermarket “clubs.” In return for signing p for a card and presenting this when making purchases, consumers are often eligible for considerable discounts on selected products.
Researchers use a more elaborate version of this type of program in some communities. Here, a number of consumers receive small payments and/or other incentives to sign up to be part of a research panel. They then receive a card that they are asked to present any time they go shopping. Nearly all retailers in the area usually cooperate. It is now possible to track what the consumer bought in all stores and to have a historical record.
The consumer’s shopping record is usually combined with demographic information (e.g., income, educational level of adults in the household, occupations of adults, ages of children, and whether the family owns and rents) and the family’s television watching habits. (Electronic equipment run by firms such as A. C. Nielsen will actually recognize the face of each family member when he or she sits down to watch).
It is now possible to assess the relative impact of a number of factors on the consumer’s choice—e.g.,
- What brand in a given product category was bought during the last, or a series of past, purchase occasions;
- Whether, and if so, how many times a consumer has seen an ad for the brand in question or a competing one;
- Whether the target brand (and/or a competing one) is on sale during the store visit;
- Whether any brand had preferential display space;
- The impact of income and/or family size on purchase patterns; and
- Whether a coupon was used for the purchase and, if so, its value.
A “split cable” technology allows the researchers to randomly select half the panel members in a given community to receive one advertising treatment and the other half another. The selection is truly random since each household, as opposed to neighborhood, is selected to get one treatment or the other. Thus, observed differences should, allowing for sampling error, the be result of advertising exposure since there are no other systematic differences between groups.
Interestingly, it has been found that consumers tend to be more influenced by commercials that they “zap” through while channel surfing even if they only see part of the commercial. This most likely results from the reality that one must pay greater attention while channel surfing than when watching a commercial in order to determine which program is worth watching
Task 4 conduct a small marketing survey using a primary and secondary research and to evaluate the differences in the two types of research
Cadbury’s Sugar-Free chocolate Questionnaire
The questionnaire is created to view the thoughts and opinions of people concerning the new sugar-free chocolate specially launched for diabetic people and young children. I have managed to query 50 people with different age groups. The questionnaire contains the results which have been observed.
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Age Group: 10-20 = 15 20-30 = 6 30-50 = 9 50+ = 20
- Gender: Male = 22 Female = 28
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What type of chocolates do you buy?
Mars = 16 Snickers = 8 Twix = 5 Cadbury’s Diary Milk = 8 Kit Kat = 6
Timeout = 3 Milky Bar = 2 Other = 2
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How often do you buy chocolates in a week?
once a week = 17 2-3 times a week = 22 3-4 times a week =11
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Would you prefer to buy low-calories, sugar-free chocolate?
Yes =35 No = 15
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Do you consider the price of the product when purchasing it?
Yes = 32 No = 18
- How much are you willing to pay for a low-calorie sugar-free chocolate?
15p-20p = 13 20p-30p = 14 30p-40p = 17 40p-50p = 6
- What type of filling you would prefer?
Carmel = 18 fruit and nuts = 20 toffee = 8 mint = 4
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Do you buy a chocolate according to the taste or the look of the packaging?
Taste = 44 look of Packaging = 6
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Are you willing to buy a chocolate with new and different flavour?
Yes = 46 No = 4
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Where do you buy chocolates from?
Newsagent/Local Shop = 28 Supermarket = 15 Other = 7
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Where do you hear most about your chocolates from?
TV adverts = 11 Posters =17 Internet =12 Other = 10
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Do you think sugar free chocolates will reduce the health risks for diabetic people?
Yes = 37 No = 13
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Do you think this would encourage Diabetic people to eat low-calorie, sugar-free chocolate?
Yes = 34 No = 16
Evaluation of the Results
- Age Group:
As you can see form the graph that old people and young children have participate most in this questionnaire, which means the targeted audience that was targeted is happy with the launch of this product.
2. Gender:
The graph tells us that female have voted the most which means female eat most chocolates.
3. What type of chocolates do you buy?
The graph shows that 15 people have chosen Mars chocolate as their favourite chocolate, whereas only 8 people have voted for Cadburys which means that Cadburys should launch the new product to increase their popularity and sales. It also gives us the competitor’s view where the competitors are very effective and it would be a challenge for the Cadburys.
4. How often do you buy chocolates in a week?
The result shows us that a lot of people have chosen 2-3 weeks that means chocolates are very popular and people do eat chocolates very much, this will be a positive factor for the Cadburys to launch a healthy chocolate that will be eaten more.
5. Would you prefer to buy low-calories, sugar-free chocolate?
70% of people have agreed with the launch of this new sugar-free chocolate. This shows that many people are happy with the health and concern that Cadburys has decided to provide, which is a good factor towards the encouragement of the new sugar-free chocolate.
6. Do you consider the price of the product when purchasing it?
A Lot of people consider the price of the product when purchasing it this means that price should be considered and should be what the customers want.
7. How much are you willing to pay for a low-calorie sugar-free chocolate?
This type of question helps us to set the price of the product and this results shows that 18 people have chosen the price between 30-40p which is not too high and not too low.
8. What type of filling you would prefer?
40% of the people have chosen fruit and nuts, which means it is a good idea to launch the chocolate as in 2 in 1, to be tasteful and healthy.
9. Do you buy a chocolate according to the taste or the look of the packaging?
The taste of the chocolate is considered very much because as most of the people have voted for the taste which means Cadburys will have to make it delicious in form of healthy product. The packaging also matters to some people so the product should be attractive and eye-catching.
10. Are you willing to buy a chocolate with new and different flavour?
Again a lot of people 92% have agreed with the launch, which is a push factor for Cadburys to come up with a new product to dominate the market.
11. Where do you buy chocolates from?
The result shows how popular Cadburys is it shows the newsagents and the supermarkets are very popular to supply the product.
12. Where do you hear most about your chocolates from?
Posters are the most admired way of promoting the product. It should benefit Cadburys by promoting their in new product from posters because as posters are the cheapest way of advert so it will help them reduce costs.
13. Do you think sugar free chocolates will reduce the health risks for diabetic people?
37 people have said yes and they do thing that it will reduce health risks for the diabetic people, which is an extreme encouragement of the Cadburys to launch the new sugar-free chocolate for the diabetic people.
14. Do you think this would encourage Diabetic people to eat low-calorie, sugar-free chocolate?
68% of the people have again agreed with this launch it will encourage the diabetic people and Cadburys. This is a great support for the Cadburys which gives them confidence to launch more product like this chocolate.
task 5 competitors
investigate the competitors for a particular products.
Competitors Research:
This is the research for the Cadburys Competitors. It is important to know everything about their competitors. Cadburys have many competitors that are: Mars, Nestlé, Snickers. By discovering the research about the competitors it will be easier for Cadburys to set out its goals and market strategies.
Mars:
Mars is a £14bn business operating in over 100 countries. It has a huge business our size, and it is privately owned, which makes them one of the largest 'small family businesses' in the world. Their success is not simply due to developing the right products. It's a unique combination of innovation and determination, the essence of which can be found in the Five Principles that shape our business:
- Quality
- Responsibility
- Mutuality
- Freedom
- Effeciency
The Cadburys has to make sure they notice these five strategies very well and try to evaluate them into theirs new launch and also by analysing their financial statement as well to try to point out the success.
Nestle:
Nestle is the world's biggest food manufacturer, with well over 500 factories in 85 countries, and a portfolio that is famous for chocolates. The Nestlé Company is named after its founder, Henri Nestlé, who, in 1867, at a time of high infant mortality. The picture below shows the Nestle Company’s financial statement for three years.
The profile shows that it has huge turnover and income. So the step for the Cadburys would be to keep the price down and increase sales to get huge turnover.
Snickers:
Snickers was first introduced to the public in 1930 and is now the number one selling candy bar in the United States. It is made of peanut butter nougat, topped with caramel and roasted peanuts and covered with milk chocolate. The peanuts are crisp-textured special grade which have good flavor and keep well. SNICKERS® is a global brand, however, in the U.S. they are made in Chicago, Illinois and Waco, Texas.
The following picture shows the Company’s financial statement which briefs out company’s turnover for three years.
