market research

1. RESEARCH METHODOLOGY
LESSON 15:
APPLICATIONS OF MARKET RESEARCH
Students, now we have covered various theoretical concepts in Perceptual maps can have any number of dimensions but the
marketing research. We have dealt how to marketing research. most common is two dimensions. Any more is a challenge to
Now today, we will discuss the various applications of marketing draw and confusing to interpret. The first perceptual map below
research. shows consumer perceptions of various automobiles on the two
1. Product Research dimensions of sportiness/conservative and classy/affordable. This
sample of consumers felt Porsche was the sportiest and classiest
2. Price Research
of the cars in the study (top right corner). They felt Plymouth was
3. Distribution Research most practical and conservative (bottom left corner).
4. Promotion Research
Perceptual Map of Competing Products
Product Research Cars that are positioned close to each other are seen as similar on
The main product decisions that need to be considered are the the relevant dimensions by the consumer. For example consumers
physical design of the product and its demand potential. Many see Buick, Chrysler, and Oldsmobile as similar. They are close
companies spend millions of rupees onR & D in order to come competitors and form a competitive grouping. A company
up with a new product that will satisfy consumer needs. We cover considering the introduction of a new model will look for an area
various information requirements and techniques used for this on the map free from competitors. Some perceptual maps use
purpose. different size circles to indicate the sales volume or market share
A managerial decision to use a pretest market analysis is justified of the various competing products.
if sufficiently accurate predictions can be achieved, the timing of Displaying consumers’ perceptions of related products is only
the analysis is before large investment commitments are necessary, half the story. Many perceptual maps also display consumers’
useful diagnostics for improvement are generated, and the cost of ideal points. These points reflect ideal combinations of the two
the analysis is reasonable. In these situations failures can be dimensions as seen by a consumer. The next diagram shows a
reduced, time-to-market can be shortened, and products improved study of consumers’ ideal points in the alcohol/spirits product
to increase customer satisfaction space. Each dot represents one respondents ideal combination of
New Product Research the two dimensions. Areas where there is a cluster of ideal points
New product development is critical to the life of most (such as A) indicates a market segment. Areas without ideal points
organizations as there will be uncertainties associated with them. are sometimes referred to as demand voids.
Thus, the purpose of marketing research for them would reduce Perceptual Map of Ideal Points and Clusters
the uncertainties associated with the new products. Four stages of A company considering introducing a new product will look for
new product development could be seen: areas with a high density of ideal points. They will also look for
• Generating New-Product Concepts areas without competitive rivals. Placing both the ideal points and
the competing products on the same map best does this.
• Evaluating and Developing those Concepts
Some maps plot ideal vectors instead of ideal points. The map
• Evaluating and developing the actual products
below, displays various aspirin products as seen on the dimensions
• Testing in a Marketing Programme of effectiveness and gentleness. It also shows two ideal vectors.
Concept Generation The slope of the ideal vector indicates the preferred ratio of the
There are two types of concept generation research: two dimensions by those consumers within that segment. This
• Need identification research:
study indicates there is one segment that is more concerned with
effectiveness than harshness, and another segment that is more
• Concept Identification
interested in gentleness than strength.
Need Identification Research
Perceptual Map of Competing Products with Ideal
The emphasis in need research is on identifying unfilled needs in
Vectors
the market. Following are some examples:
a. Perceptual maps need not come from a detailed study. There
a. Perceptual Maps, in which products are positioned along the
are also intuitive maps (also called judgmental maps or
dimensions by which users perceive and evaluate, can suggest
consensus maps) that are created by marketers based on their
gaps into which new products might fit. Perceptual mapping
understanding of their industry. Management uses its best
is a graphics technique used by marketers that attempts to
judgement. It is questionable how valuable this type of map
visually display the perceptions of customers or potential
is. Often they just give the appearance of credibility to
customers. Typically the position of a product, product line,
management’s preconceptions.
brand, or company is displayed relative to their competition.
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2. When detailed marketing research studies are done and group dynamics. Transcripts are also created from the video
RESEARCH METHODOLOGY
methodological problems can arise, but at least the tape.
information is coming directly from the consumer. There is Respondents often feel a group pressure to conform and this can
an assortment of statistical procedures that can be used to contaminate the results. But group dynamics is useful in
convert the raw data collected in a survey into a perceptual developing new streams of thought and covering an issue
map. Preference regression will produce ideal vectors. Multi thoroughly.
dimensional scaling will produce either ideal points or
competitor positions. Factor analysis, discriminant analysis, Types of Focus Groups
cluster analysis, and logit analysis can also be used. Some Two-way focus group - one focus group watches another focus
techniques are constructed from perceived differences group and discusses the observed interactions and conclusions
between products, others are constructed from perceived Dual moderator focus group - one moderator ensures the session
similarities. Still others are constructed from cross price progresses smoothly, while another ensures that all the topics are
elasticity of demand data from electronic scanners. covered
b. Social and environment trends can be analyzed. Dueling moderator focus group - two moderators deliberately
c. An approach termed benefit structure analysis has product take opposite sides on the issue under discussion
users identify the benefits desired and the extent to which Respondent moderator focus group - one or more of the
the product delivers those benefits, for specific applications. respondents are asked to act as the moderator temporarily
The result is an identification of benefits sought that current Client participant focus groups - one or more client
products do not deliver. representatives participate in the discussion, either covertly or overtly
d. Product users might be asked to keep a diary of a relevant Mini focus groups - groups are comprised of 4 / 5 members.
portion of their activities. Analysing such diaries can provide
Telesession (or teleconference) focus groups - telephone
an understanding of unsolved problems associated with a
network is used
particular task.
On-line focus groups - computers and internet network is used
e. In focus-group interviews, product users might discuss
problems associated with product-use situations. A focus Traditional focus groups can provide accurate information, and
group is a form of qualitative research in which a group of are less expensive than other forms of traditional marketing
people, are asked about their attitude towards a product, research. There can be significant costs however : if a product is to
concept, advertisement, idea, or packaging. Questions are be marketed on a nation-wide basis, it would be critical to gather
asked in an interactive group setting where participants are respondents from various locales throughout the country since
free to talk with other group members. In the world of attitudes about a new product may vary due to geographical
marketing, focus groups are an important tool for acquiring considerations. This would require a considerable expenditure in
feedback regarding new products. travel and lodging expenses. Additionally, the site of a traditional
focus group may or may not be in a locale convenient to a specific
In particular, focus groups allow companies wishing to develop,
client, so client representatives may have to incur travel and lodging
package, name, or test market a new product, to discuss, view,
expenses as well.
and/or test the new product before it is made available to the
public. This can provide invaluable information about the potential Online Focus Groups
market acceptance of the product. With the advent of large scale computer networks, such as the
In traditional focus groups, a pre-screened (pre-qualified) group Internet, it is now possible to link respondents electronically.
of respondents gathers in the same room. They are pre-screened Respondents share images, data, and their responses on their
to ensure that group members are part of the relevent target computer screens. This avoids a significant amount of travel
market and that the group is a representative subgroup of this expenses. For instance, NFO Research, a large market research
market segment. There are usually 8 to 12 members in the group, company, has a system of on-line focus groups which allows
and the session usually lasts for 1 to 2 hours. A moderator guides respondents from all over the country to gather, electronically,
the group through a discussion that probes attitudes about a while avoiding countless logistical headaches. Online groups are
client’s proposed products or services. The discussion is usually limited to 6 or 8 participants. The biggest problem with
unstructured (or loosely structured), and the moderator encourages online focus groups is ensuring that the respondents are
the free flow of ideas. Although the moderater is seldom given representative of the broader population (including computer
specific questions to ask, he/she is often given a list of objectives non-users).
or an anticipated outline. While such a system does eliminate some of the logistical headaches
Client representatives observe the discussion from behind a one- and travel expenses associated with conducting focus groups, it
way mirror. Participants cannot see out, but the researchers and still requires one or more representatives from a client to be
their clients can see in. Usually, a video camera records the meeting physically located with the moderator conducting the focus group.
so that it can be seen by others who were not able to travel to the Only in this way can questions be added in real time to further
focus group site. Researchers are examining more than the spoken probe a particular response. Thus, even the online system incurs
words. They also try to interpret facial expressions, body language, some travel expenses since a client representative will need to travel
to a research site or vice versa.
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3. Accordingly, there is a need for a system and method of conducting Concept Identification
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focus groups using remotely located participants, including one During a New-product development process there is usually a
or more moderators, one or more clients and one or more point where a concept is formed but there is no tangible usable
respondents, who are all physically remote from each other. In product that can be tested. The concept should be defined well
order to do this, such a system must allow for the implementation enough so that it is communicable. There may be simply a verbal
of at least two separate chat discussions to be conducted description, or there may be a rough idea for a name, a package, or
simultaneously between the three classes of focus group an advertising approach. The aim is to determine if the concept
participants to provide an electronic analog to a one-way mirror warrants further development and to provide guidance on how it
segregating clients from respondents. In addition, such a system might be improved and refined. Conjoint analysis typically is used
must allow and prohibit participation in the different chat to obtain an ideal combination of the concept’s various features.
discussions based on the class of the participant. Thus, research questions might include:
f. In Lead user analysis, instead of just asking users what they • Are there any major flaws in the concept?
have done, their solutions are collected more formally. Lead • What consumer segments might be attracted to it?
users are those who face needs early that later will be general in
• Is there enough interest to warrant developing it further?
a market place; they are positioned to benefit significantly by
solving problems associated with these needs. Once a lead user • How might it be altered or developed further?
is identified, the concepts that company or person generates are Most concept testing, however, involves exposing people to the
tested. concept and getting their reactions. In exposing people to the
Lead users are an extremely valuable cluster of customers and concept, the market researcher needs to address a series of
potential customers who can contribute to identification of future questions:
opportunities and evaluation of emerging concepts. Understanding • How are the concepts exposed?
these users can provide richness of information relatively efficiently. • To whom are the concepts exposed?
Eric von Hippel introduced the concept of ‘Lead Users’ in the • To what are they compared?
mid 1980s. He defined the lead user as those users who display
• What questions are asked?
the following two characteristics:
It is important to make a distinction between the different types
They face the needs that will be general in the market place, but face
of testing applied at different stages of the development process.
them months or years before the bulk of that marketplace
This helps the development team to understand the purpose of
encounters them
each test and consider how data is to be captured.
They are positioned to benefit significantly by obtaining a solution
Different testing methods will have different objectives, approaches
to those needs Where a company has experience within a market
and types of modeling. Four general types of testing are described
place, it should be relatively straight forward to identify those
in more detail:
customers who demand special solutions, push existing solutions
to the limit or who have customized standard products to satisfy • Exploratory tests
their own desires. • Assessment tests
Von Hippel suggests that a key element in identifying lead users is • Validation tests
to first identify the underlying trends, which result in these users • Comparison tests
or customers having a leading position. The lead users are those ISO 9000 tests are also briefly summarised.
who are at the leading edge of these trends.
Exploratory Tests
Where possible, lead users should not necessarily be sought from
Carried out early in the development process during the fuzzy
within the usual customer base, it can be useful to look beyond
front end, when the problem is still being defined and potential
existing customers perhaps to users of complementary or
solutions are being considered, preferably once the development
substitute goods or in analogous markets. In addition, the lead
team has a good understanding of the user profile and customer
users may only have an interest in improvements or changes to
needs. The objective of the exploratory test is to examine and
specific elements or attributes of a product.
explore the potential of preliminary design concepts and answer
There are few industries of product types where there are no lead some basic questions, including:
users who have requirements or demands ahead of the rest. By
• What do the users think about using the concept?
targeting these clusters, it is possible to identify opportunities for
future products and evaluate emerging concepts. Where possible, • Does the basic functionality have value to the user?
if lead users are sufficiently interested, then they can be considered • Is the user interface appropriate and operable?
as a part of the extended product design team. They may even be • How does the user feel about the concept?
prepared to share the burden of investment in order to find a
• Are our assumptions about customer requirements correct?
suitable solution.
• Have we misunderstood any requirements?
Furthermore, if today’s lead users do not find appropriate
solutions from existing suppliers, then they could well turn into This type of early analysis of concepts is potentially the most
tomorrow’s competitors. critical of all types of prototyping and evaluation, for if the
development is based on faulty assumptions or misunderstanding
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4. about the needs of the users, then problems are almost inevitable but with team input on developing standards and measurement
RESEARCH METHODOLOGY
later on. Data collection will tend to be qualitative based on criteria.
observation, interview and discussion with the target audience. Data from a validation test is likely to be quantitative, based on
Ideally, the customer should be asked to use the product without measurement of performance. Normally, this is carried out against
training or prompting, to assess the intuitiveness of controls and some benchmark of expected performance. Usability issues may
instructions. Some quantitative measures may be appropriate, such be scored in terms of speed, accuracy or rate of use, but should
as time to perform tasks, number of failures or errors. always be quantified. Issues such as desirability may be measured
Assessment Tests in terms of preference or user ranking. Data should also be formally
While the exploratory test aims to explore the appropriateness of recorded, with any failures to comply with expected performance
a number of potentially competing solutions, the assessment logged and appropriate corrective action determined.
test digs into more detail with a preferred solution at a slightly Comparison Tests
later stage of development. The main aim of an assessment test A comparison test may be performed at any stage of the design
is to ensure that assumptions remain relevant and that more process, to compare a concept, product or product element against
detailed and specific design choices are appropriate. The assessment some alternative. This alternative could be an existing solution, a
test will tend to focus on the usability or level of functionality competitive offering or an alternative design solution. Comparison
offered and in some cases, may be appropriate for evaluating early testing could include the capturing of both performance and
levels of performance. Assuming that the right concept has been preference data for each solution. The comparison test is used to
chosen, then the assessment test aims to ensure that it has been establish a preference, determine superiority or understand the
implemented effectively and answer more detailed questions, such advantages and disadvantages of different designs.
as:
ISO 9000 tests
• Is the concept usable?
ISO 9000 defines a number of test activities:
• Does the concept satisfy all user needs?
Design Review
• How does the user use the product and could it be more
A design review is a set of activities whose purpose is to evaluate
effective?
how well the results of a design will meet all quality requirements.
• How will it be assembled and tested and could this be During the course of this review, problems must be identified
achieved in a better way? and necessary actions proposed.
• Can the user complete all tasks as intended?
Design Verification
Assessment testing typically requires more complex or detailed Design verification is a process whose purpose is to examine design
models than the exploratory test. A combination of analytical and development outputs and to use objective evidence to confirm
models, simulations and working mock ups (not necessarily with that outputs meet design and development input requirements.
final appearance or full tooling) will be used.
Design Validation
The evaluation process is likely to be relatively informal, including
Design validation is a process whose purpose is to examine resulting
both internal and external stakeholders. Data will typically be
products and to use objective evidence to confirm that these
qualitative and based on observation, discussion and structured
products meet user needs.
interview. The study should aim to understand why users respond
in the way that they do to the concept. Product Evaluations and Development
The aim is to predict market response to determine whether or
Validation Tests
not the product should be carried forward.
The validation test is normally conducted late in the development
process to ensure that all of the product design goals have been Use Testing
met. This may include usability, performance, reliability, This gives the users a reasonable time to feel the product and
maintainability, assembly methods and robustness. Validation inquires their reactions and their intentions to buy it. Researchers
tests normally aim to evaluate actual functionality and performance, can contact respondents in shopping centers, by personal visits to
as is expected in the production version and so activities should their homes or offices, or on telephone.
be performed in full and not simply walked through. Limitations
It is probable that the validation test is the first opportunity to • Due to unclear instructions, a misunderstanding, or lack of
evaluate all of the component elements of the product together, cooperation, the respondents may nor use the product
although elements may have been tested individually already. Thus, correctly and may therefore report a negative opinion.
the product should be as near to representing the final item as
• The fact that they were given a free sample and are
possible, including packaging, documentation and production
participating in a test may distort their impressions.
processes. Also included within validation tests will be any formal
evaluation required for certification, safety or legislative purposes. • Even when repurchase opportunities were made available,
Compared to an assessment test, there is a much greater emphasis such decisions may be quite different than when they are
on experimental rigour and consistency. It may be preferable for made in a more realistic store situation.
evaluation to be carried out independently from the design team, • The users will not accept the product over a long period of
time.
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5. • They may inflate their intention to buy. Consumers may say Test Marketing
RESEARCH METHODOLOGY
that they will buy the product but may end up not doing so. Test marketing allows the researcher to test the impact of the total
marketing program, with all its interdependence, in a market
Blind-use Testing
context as opposed to the artificial context associated with the
Even though a product may be proved superior in the laboratory,
concept and product tests that have been discussed.
the consumer may not perceive it to be superior. For e.g., Amul
sweets, which was perceived as a superior by the company by all Functions
standards, were introduced in the market. It was supposed to be • To gain information and experience with the marketing
hit during Diwali time and advertisements were released to prop program before making a total commitment to it.
up sales. Unfortunately the consumers perceived the product as a
• To predict the program’s outcome when it is applied to the
premium product and did not substitute their purchases from
total market.
the local Halwai.
Types of Test Market
Predicting Trial Purchase
To predict trial levels of new, frequently purchased consumer • The sell-in test markets are cities in which the product is
products, ESP (Estimating Sales Potential) model has been sold just as it would be in a national launch. The product has
developed. Trial levels were predicted on the basis of three variables: to gain distribution space.
• Product class penetration (PCP), the percentage of • The controlled-distribution scanner markets (CDSM)
households purchasing at least one item in the product class are cities for which distribution is pre-arranged and the
within one year. purchases of a panel of customers are monitored using
scanner data.
• Promotional expenditures-total consumer-directed
promotional expenditures on the product. Certain parameters that have to be looked into while deciding
• Distribution of the product-percentage of stores stocking sell-in test market:
the product (weighted by the store’s total sales volume). • Representativeness: Ideally, the city should be fairly
Once the model is estimated, it can be applied to other new representative of the country in terms of characteristics that
products. The researcher simply estimates the percentage of will affect the test outcome, such as product usage, attitudes
household using the product class, the total expenditures planned and demographics.
for the new product, and the expected distribution level. The • Data Availability: Information about Store audit is helpful
model will then estimate the trial level that will be obtained. in evaluating the test. The selected cities should contain
Trial also can be estimated directly using controlled shopping retailers who will cooperate with store audits.
experience. A respondent is exposed to the new product promotion • Media isolation and Costs: It is desirable to avoid media
and allowed to shop in a simulated store or in an actual store in spill-over. Using media that “spill-out” into nearby cities is
which the product is placed. The respondents then have an wasteful and increases costs. Conversely, “spill-in” media
opportunity to make a “trial” or first purchase of the product. from nearby cities can contaminate a test. Media cost is
another consideration.
Pretest Marketing
Two approaches are used to predict the new brand’s market share: • Product flow: It may be desirable to use cities that don’t
have much “product-spillage” outside the area.
Preference Judgments
• Number: A single city can lead to unreliable results because
Here the preference data are used to predict the proportion of of the variations across cities of both brand sales and
purchases of the new brand that respondents will make given consumer response to marketing programs.
that the new brand is in their response set. These estimates for the
• Implementing and controlling: The test should be
respondents in the study are coupled with an estimate of the
proportion of all people who will have the new brand in their controlled in such a manner that it ensures the marketing
response set., to provide an estimate of market share. This is also program is implemented in the test area so as to reflect the
used to analyse the concomitant market share loses of other brands. national program. The test itself may tend to encourage
If the firm has other brands in the market, such information can those involved to enhance the effectiveness of the marketing
be critical. program. Salespersons may be more aggressive. Retailers
may be more cooperative. The competitors may react by
Trial and repeat purchase levels: This is based on the respondent’s deliberately flooding the test areas with free samples or in-
purchase decisions and intentions-to-buy judgments. A trial store promotions. Even they can retaliate or can also
estimate is based on the percentage of respondents who purchase monitor the results themselves.
the product in the laboratory, plus an estimate of the product’s
• Timing: Normally, a test market should be in existence for
distribution, advertising (which will create product awareness),
and the number of free samples to be given away. The repeat- one year, so that all important seasonal/cultural factors can
purchase rate is based on the proportion of respondents who be observed and estimated.
make a mail order repurchase of the new brand and the buying- • Measurement: The basic measure is sales based on
intentions judgments of those who elected not to make a mail shipments or warehouse withdrawals. Store audit data
order repurchase. The product of the trial estimate and the repeat provide actual sales figures and are not sensitive to inventory
purchase estimate become a second estimate of market share. fluctuations. They also provide information on: distribution,
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6. shelf-facings, and in-store promotional activity. Measures between total revenues and total costs. This implies that the
RESEARCH METHODOLOGY
such as brand awareness, attitude, trial purchase, and repeat researcher’s major tasks are to forecast the costs and the revenues
purchase are obtained directly from the consumer. This over the relevant range of alternative prices.
information helps evaluate the marketing program and can
Research for Penetration Pricing
help interpret sales data. The most useful information
This is based on the concept that average unit of production costs
obtained from consumers is whether they bought the
continue to go down as cumulative output increases. Potential
product at least once, whether they were satisfied with it, and
profits in the early stages of the product life cycle are sacrificed in
whether they repurchased it or plan to.
the expectation that higher volumes in later periods will generate
• Costs: Costs which are quantifiable, include - development sufficiently greater profits to result in overall profit for the product
and implementation of the marketing program; preparation over its life.
of test products; administration of the test and collection of
Following pricing pattern is adopted to increase market share:
data associated with the test. The costs and risks that may
delay the launch of a new product are more difficult to a. Offer a lower price (even below cost) when entering the
quantify. If a new product launch is delayed, an opportunity market.
to gain a substantial market position might be lost. b. Hold that price constant until unit costs produce a desired
percentage markup.
Pricing Research
Research may be used to evaluate alternative price approaches for c. Reduce price as costs fail to maintain markup at the same
new products before launch or for proposed changes in products desired percentage.
already in the market. Despite the ubiquitous nature of the above questions, researchers
commonly encounter four limitations when using this approach
Pricing Approaches
for pricing research:
• Gabor and Grainger Method (Price skimming strategy),
I. it provides no competitive information.
where different prices for a product are presented to
respondents, who then are asked if they would buy. A “buy- II. it relies on price awareness.
response” curve of different prices, with the corresponding III.it is inefficient when evaluating numerous product
number of affirmative purchase intentions, is produced. The specifications.
objective is to generate as much profit as possible in the IV.it relies on aggregate-level analysis.
present period.
Each limitation is discussed below.
• Multibrand-choice Method (Share penetration strategy),
where respondents are shown different sets of brands in the Provides no Competitive Information
same product category, at different prices, and are asked A concept test asks respondents to evaluate how likely they would
which they would buy. This allows the respondents to take be to purchase a specific product without any information about
into account competitors’ brands, as they normally would other products that might be available in the market. When
outside such a test. Thus, this technique represents a form shopping, consumers generally have the chance to see a set of
of simulation of the point of sale. The objective is to competing products and pick one from the set. When presented
capture an increasingly larger market share by offering a lower with a set of products to select from, consumers can make trade-
price. Pricing research for the two different approaches differs offs between features and price to determine their preferred product.
substantially in terms of the information sought. In the absence of this comparative task, respondents may have
difficulty answering reliably.
Following questions are generally asked with regard to pricing
research: Relies on Price Awareness
• At what price would you consider the product to be so
The respondent compares the price presented in the concept to an
expensive that you would not consider buying it? (Too internal reference price to determine if the price is fair or not. This
expensive) determination is based on a respondent’s awareness of the current
pricing in the category.
• At what price would you consider the product to be priced
so low that you would feel the quality couldn’t be very good? Inefficient to Evaluate Various Product Specifications
(Too cheap) Often, a researcher would like to evaluate a small number of
specific product variations at the same time price is being evaluated.
• At what price would you consider the product starting to get
For instance, there might be an interest in the market’s willingness
expensive, so that it is not out of the question, but you
to pay for a specific feature or how the inclusion or exclusion of a
would have to give some thought to buying it? (Expensive)
product characteristic influences purchase likelihood. The concept
• At what price would you consider the product to be a
test can be used to evaluate these various specifications. However,
bargain-a great buy for the money? (Cheap) most researchers would suggest that each respondent only evaluate
Research for Skimming Pricing one concept. Therefore to evaluate various product specifications,
This is based on the concept of pricing the product, at the point at the total sample size must grow. To illustrate, if we wished 200
which profits will be the greatest until market conditions change observations per cell, and we are only testing three prices (three
or supply costs dictate a price change. Under this strategy, the cells), we would require 600 respondents. However, if we have
optimal price is the one that results in the greatest positive difference
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7. three alternative product variations, with each variation at three each territory. An analysis of actual sales versus market
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prices, we now have nine cells and would require 1800 respondents. potential for each sales representative can be made. Also,
Relies on aggregate-level analysis following inferences can be made:
A concept test will rely on aggregate, or at most subgroup-level i. Average market potential is less as per each sales
analysis. That is, this approach will make respondent’s representative
heterogeneity difficult to detect and measure. ii. Territory, which have too many sales representatives
The traditional concept test can be effectively used in pricing iii. Market potential is more but have too few sales
research when the product features are already determined, the representatives
level of price awareness is high, and the competitive context is • Field Experiment approach- is also applicable only after
such that evaluating a single product is not too limiting. the sales program has begun. Experiments are done with the
Distribution Research calls made, to determine the number and location of sales
representatives. This is done in two ways:
Traditionally, the distribution decisions in marketing strategy
involve: i. Making more frequent calls on some prospects and
less frequent calls on others, in order to see the effect
• The number and location of salespersons,
on overall sales, keeping the number of sales
• Retail outlets, representatives unchanged.
• Warehouses, and ii. Increasing the number of representatives in some
• The size of discount to be offered. territories and decreasing them in others to determine
The discount to be offered to the members in the channel of the sales effect.
distribution usually is determined by what existing or similar Promotion Research
products are offered, and also whether the firm wants to follow a Here the focus is on the decisions that are commonly made when
“push” or a “pull” strategy. designing a promotion strategy. The decision for the promotion
Warehouse and Retail Location Research part of a market strategy can be divided into:
Location decisions include: • Advertising decisions, which have long-term effects.
“What costs and delivery time would result, • Sales Promotion decisions, which affect the company in
the short term.
if we choose one location over another?”
Companies spend more time and resources on advertising research
The approximate location (optimal location), that will minimize
than on sales promotion research because of the greater risk and
the distance to customers, weighted by the quantities purchased,
uncertainty in advertising research.
will have to be determined. Chain shops with multiple outlets
and franchise operations must decide on the physical location of Advertising Research: Advertising decisions are more costly and
their outlets. Data about surrounding residential neighbourhood, risky. Advertising research involves generating information for
income levels, and competitive stores would help in choosing making decisions in the:
optimal location. • Awareness stage
Number and location of Sales Representatives • Recognition stage
How many sales representatives should be there in a given territory? • Preference stage, and
Approaches • Purchasing stage
• Sales effort approach- when the product line is first Most often, advertising research decisions are about advertising
introduced and there is no operating history to provide sales copy. Marketing research helps to determine how effective the
data. This is done by: advertisement will be. Research on media decisions is separate
ii. Estimating the number of sales calls required to sell from advertising research.
to, and to service, prospective customers in an area for The effectiveness of an advertisement depends upon the brand
a year. This will the sum of the number of visits involved and its advertising objectives. Four categories are used in
required per year to each prospect (customer) in the advertising research:
territory. • Advertisement recognition
iii. Estimating the average number of sales calls per • Recall of the commercial and its contents
representative that can be made in that territory.
• The measure of commercial persuasion, and
iv. Divide the estimate in step (i) by the estimate in step
• The impact on the purchase behavior.
(ii) to obtain the number of sales representatives
required. Advertising Recognition
• Statistical analysis approach- is used after the sales
The respondents are tested whether they can recognize the
program is under way. Once a sales history is available from advertisement as one they have seen before.
each territory, an analysis can be made to determine if the
appropriate number of sales representatives is being used in
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11.556 95

8. References
RESEARCH METHODOLOGY
Donald R. Cooper – Business Research Methods, Tata McGraw –
Hill Publication
Easterby-Smith M et al- Management Research-an introduction
(Sage Publications, 1991)
Gallagher, J. William, “Report Writing for Management”, Addison-
Wesley
Golen, P. Stevan, “Report Writing for Business and Industry”,
Business Communication Service
Kothari C R – Quantitative Techniques (Vikas Publishing House
3rd ed.)
Levin R I & Rubin DS - Statistics for Management (Prentice Hall
of India, 2002)
Nargundkar R – Marketing Research Text and Cases (Tata McGraw-
Hill 2002)
Miller D C- Handbook of Research Design and Social
Measurement (Sage Publications, 1991)
Paul D. Leedy, Practical Research: Planning & Design, Prentice Hall
R. Lesikar and John Pettit, Report Writing for Business
Notes
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96 11.556