Consumer Research and Market Segmentation

LEARNING OBJECTIVES
Compare the differences between customer research and marketing research. Describe the differences between quantitative research and qualitative research. Understand the use of positivist and interpretivist research.

 Describe the steps in the consumer research process. Explain the difference between primary and secondary research. Discuss the differences between qualitative and quantitative research designs and why you would choose one over the other. Discuss the differences between qualitative and quantitative data collection instruments or methods.

 Identify the various probability and nonprobability sampling methods. Segmentation- definition, types Viability of segments

Segmentation
Market Segmentation is the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.

WHY SEGMENTATION?
Rather than trying to compete with an entire market, company must identify parts of market that can serve better than competition Segmentation helps sellers develop the right product and adjust prices, set distribution channels and advertising & promotions strategies effectively

WHY SEGMENT (..contd)

Segmentation strategy differentiates offerings through styling, packaging, promo appeals, method of distribution Segmentation helps sellers develop the right product and adjust prices, set distribution channels and advertising & promotions strategies effectively

HOW MARKET SEGMENTATION WORKS

Segmentation studies - to discover needs/wants on specific consumer gaps - to guide repositioning of existing products and add new market segment

HOW MARKET SEGMENTATION WORKS (..contd)

Segmentation research - to determine most appropriate media to place ads through surveys and analysis of data - i.e AC Nielsen, Acorn, Roy Morgan research

Nokia

Types of Segmentation
Geographic Segmentation Demographic Segmentation Psychological Segmentation Psychographic Segmentation Socio-cultural Segmentation Use-Related Segmentation Usage-Situation Segmentation Benefit Segmentation

Hybrid Segmentation

BASE FOR SEGMENTATION

9 factors to consider on segmentation Demographic segmentation - identifiable, measurable stats of a population i.e age, sex, marital stats etc - easier to measure, to assess size of target market

BASE FOR SEGMENTATION (..contd)

Geographic segmentation - market divided by location/localizing the marketing strategy - usually people in the same area share the same needs and wants - different spending patterns/demands

BASE FOR SEGMENTATION (..contd)

Psychological segmentation - intrinsic qualities of the individuals desires: motivations, attitude, level of involvement, etc

BASE FOR SEGMENTATION (..contd)

Psychographic segmentation - lifestyle analysis - to identify a consumers personality, buying motives, opinions on events and issues/ reaction to a product

BASE FOR SEGMENTATION (..contd)

Socio-cultural segmentation - family life cycle i.e passing through similar phases in their formation - social class: education, occupation, income - culture/subculture and cross-culture affiliation

BASE FOR SEGMENTATION (..contd)

Use-related segmentation - categorizes consumers in term of product, brand or service usage characteristics, i.e rate of usage/awareness/degree of brand loyalty

BASE FOR SEGMENTATION (..contd)

User-situation segmentation - Usage of product depends on occasion; i.e greeting cards, drinks, airlines

BASE FOR SEGMENTATION ..contd)

Benefit segmentation - Rewarding consumers with product benefits i.e microwave that requires less time to prepare meals

BASE FOR SEGMENTATION (..contd)

Hybrid segmentation - Combination of two or more exciting segmentation variables, commonly done by marketers

Hybrid Segmentation
Marketers commonly segment markets by combining several segmentations variables rather than relying on a single segmentation base. Types of Hybrid segmentation covered

Psychographic-Demographic Profile Geo-demographics VALS

Psychographic-Demographic Segmentation
Widely used in advertising campaigns to answer three questions
Whom should we target What should we say and When should we say it. E.g.. Newsweek audience profile-Newsweek Asia .doc
offering media buyers such carefully defined dual profiles of their audiences, mass media publishers and broadcasters make it possible for advertisers to select media whose audiences most closely resemble their target markets.

Geo-Demographic Segmentation
This type of hybrid segmentation scheme based on the notion that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles,a and consumption habits.

Clusters are created based on consumer lifestyles, and a specific cluster includes pin codes that are composed of people with similar lifestyles widely scattered throughout the country. This cluster data is useful for direct mail campaigns, selecting retail sites, appropriate merchandise mixes, to locate banks and restaurants, designing marketing strategies. Claritas-pioneers of clustering

Clustering is most useful when an advertisers or marketers best prospects can be isolated in terms of where they live

VALS
Draws on Maslows Need Hierarchy and concept of social character Three major self-orientations Principle oriented consumers whose choices are driven by their beliefs rather than their desires Status oriented- consumers whose choices are guided by the actions, approvals and opinion of others

Action oriented-consumers who are driven by a desire for social or physical activity, variety and risk taking

 Each of these selforientations represent distinct attitudes,and lifestyles, decision making style. Resources include the range of psychological, physical, demographic and material means the consumer has to draw upon.

Criteria for Effective Targeting of Marketing Segments

Identifiable Sufficient Stable or growing Accessible (reachable)in terms of both media and cost.

Consumer Research
The field of consumer research was developed as an extension of the field of marketing research. Studying consumer behavior enables marketers to predict how consumers will react to promotional messages and to understand why they make the purchase decisions they do.

CONSUMER RESEARCH PARADIGMS

The early consumer researchers gave little thought to the impact of mood, emotion, or situation on consumer decisions. Researchers thought that consumers were logical problem solvers who objectively evaluated the goods and services available to them and selected those that gave them the highest utility at the lowest cost.

 Soon they realized that consumers were not always consciously aware of why they made the decisions they did. In 1939, a Viennese psychoanalyst named Ernest Dichter began to use Freudian psychoanalytic techniques to uncover the hidden motivations of consumers.

 As a result of Dichters work and subsequent research designed to search deep within the consumers psyche, consumer researchers today use two different types of research methodology to study consumer behavior quantitative research and qualitative research.

Quantitative Research
Quantitative research is descriptive in nature, and is used by researchers to understand the effects of various promotional inputs on the consumer, thus enabling marketers to predict consumer behavior. approach is known as positivism, and consumer researchers primarily concerned with predicting consumer behavior are known as positivists.

 The research methods used in positivist research are borrowed primarily from the natural sciences and consist of experiments, survey techniques, and observation. The findings are descriptive, empirical, and if collected randomly can be generalized to larger populations.

Qualitative Research Qualitative research methods consist of depth interviews, focus groups, metaphor analysis, collage research, and projective techniques. Because sample sizes are necessarily small, findings cannot be generalized to larger populations.

 Interest in understanding consumer experiences has led to the term interpretivism; the researchers who adopt this paradigm are known as interpretivists.

 Combining Qualitative and Quantitative Research Findings Some marketers use a combination of quantitative and qualitative research. They use qualitative research findings to discover new ideas and to develop promotional strategy, and quantitative research findings to predict consumer reactions to various promotional inputs

Neutrogena is a manufacturer of personal care products for young adults. The company would like to extend its facial cleansers product line. Design a (a) qualitative and (b) quantitative research design for the company focused on this objective.

Consumer Research -Process

1. Defining the Area 6. Analyze, test the data and formulate 2. Defining the Objective conclusions 3. Collection and evaluation of secondary data 4. Designing appropriate Primary Research 5. Conduct primary research and collect primary data

 Quantitative Research Designs

Three basic designs are used in quantitative research: observation, experimentation, or survey.

Quantitative Research Data Collection Instruments Data collection instruments are developed as part of a studys total research design to systematize the collection of data and to ensure that all respondents are asked the same questions in the same order.

 Data collection instruments include questionnaires, personal inventories, attitude scales, and, for qualitative data, discussion guides.

Qualitative Research Designs and Data Collection Methods

In selecting the appropriate research format for a qualitative study, the researcher has to take into consideration the purpose of the study and the types of data needed.

 Although the research methods used may differ in composition, they all have roots in psychoanalytic and clinical aspects of psychology, and they stress open-ended and free-response types of questions to stimulate responses to reveal their innermost thoughts and beliefs.

The choice of data collection techniques for qualitative studies include depth interviews, focus groups, projective techniques, and metaphor analysis.

Sampling and Data Collection

A sample is a subset of the population that is used to estimate the characteristics of the entire population. In a probability sample, respondents are selected in such a way that every member of the population studied has a known, nonzero chance of being selected.

 In a nonprobability sample, specific elements from the population under study have been pre-determined in a nonrandom fashion on the basis of the researchers judgment or decision to select a given number of respondents from a particular group.

 Consumer researchers must ensure that studies are objective and free of bias.
Some studies are commissioned by organizations seeking to justify a particular position.

ETHICS IN CONSUMER RESEARCH

 Researchers seeking to support a predetermined conclusion often do so by using biased samples, biased questions, manipulating statistical analysis or ignoring relevant information. Mistreating respondents is another ethical problem.