Using marketing research in the product development process

Dr Desmond Hill University of Ulster 16th November 2005 Step up Programme Lecture

Format
Introduction Types of marketing research The marketing research process
Defining the problem and research objectives Developing the research plan for collecting information Implementing the research plan Interpreting and reporting the findings

Future trends within the chocolate market

Introduction
Every aspect of marketing (planning, promotion or control) requires information Marketers require information about customers, competitors and the micro and macro-environment Information is now viewed as a strategic asset and valuable marketing tool Large amounts of information received Marketers have to seek out information, rather than wait for it to arrive Many fail to use it effectively

Introduction continued
Managers require formal studies about specific situations They normally do not have the skill or time to obtain the information on their own Companies need to develop effect MIS As a result they require formal marketing research conducted by marketing researchers

Marketing research defined

The systematic design, collection, analysis and reporting of data relevant to a specific marketing situation facing an organisation (Amstrong and Kotler, 2005, p. 254)
The process of gathering, interpreting and reporting information to help marketers solve specific marketing problems or take advantage of marketing opportunities (Dibb et al., 2001, p. 169)

Types of marketing research

Market research and sales research covers:
Estimates the market size of both developed and new markets Identification of market characteristics of the segment Sales forecasting Obtaining information on customers and potential customers Obtaining information on competitors and their importance

Chocolate market and sales research

What are the leading companies in relation to chocolate production? What are the top selling brands of chocolate in the UK?

The main chocolate companies

Company Percentage Market Share

Top selling chocolate bars

2001 2003

Chocolate market and sales research

Women (89.2% ) are only marginally more likely than men (87.3% ) to be consumers of chocolate bars Men however, are more likely to be the heavy users, whereas women dominate the light usage category Chocolate consumption is equal across the social class structure, although C1s are slightly heavier users

Chocolate market and sales research

Heavy users account for 24.6% of the market eat more than twice a week Medium users account for 26.9% of the market - eat once or twice a week Light users account for 35.6% of the market Eat less than once a week Non-users account for 11.9% of the market

Customer and motivational research

Customer and motivational research covers:
Why customers buy and their buying behaviour Why customers do not buy certain products/services

Customer and motivational research

In a recent report on chocolate they have identified two major segments - depressive chocolate lovers and energetic males The depressive lovers were predominately young females who buy fast food and eat chocolate They eat chocolate at anytime, but particularly when depressed, to unwind or when bored in the evening at home and taste is very important They buy expensive products, like boxed chocolates, for themselves, Terrys Chocolate Orange, All Gold, Cadburys Milk Flake and Black Magic

Customer and motivational research

In contrast, energetic males are young disproportionately middle income lads They live at a fast pace, work hard, eat fast food and are reckless shoppers. They eat chocolate in a hurry in the evening, at lunch or at mid-morning or afternoon breaks. Boxed chocolates are not for them, they get their energy fix from products like Mars and Snickers

Customer and motivational research

This examines the reasons people choose to eat Cadburys chocolate and which enables them to position their products to appeal to a particular market segment Crme Egg Dip in the goo to unleash your naughty, playful side Crunchie The fun, feel good chocolate bar Double Decker The zany hunger-buster

Product research
Product research covers:
The generation of new ideas Sources of new products Product concept testing Product testing Test marketing of products

Pricing research
Pricing research covers:
Identification of the relationship between a products price and demand Also includes setting of prices for new and current products Involves sales forecasting and estimating costs

Marketing communication research

Marketing communications research covers:
Research into the effectiveness of marketing communication To determine the viability of advertising in different media Media selection research Sales territory planning

Marketing research process

Defining the problem and research objectives
Developing the research plan for collecting information Implementing the research plan

Interpreting and reporting the findings

Defining the problem and research objectives

Objectives must be turned into specific information needs The problem might be to attract new consumers The research objectives would be to identify groups of consumers Characteristics of the product that appeals to people Other information required e.g scale of project and timetable Case study Coca-Cola

Marketing research objectives

There are three main types of objectives
Exploratory Descriptive Causal

Exploratory
Before carrying out a major piece of work exploratory work is often undertaken For example, the company may wish to attract a different market segment Case Study Baileys

Descriptive
This examines items such as the market potential for a product It may also investigate demographics of the market segment and attitudes towards the product Case study CAMRA

Causal
This will test hypothesis and cause and effect relationships Causal research involves the setting of control procedure to isolate the impact factor The key to success is the elimination of other explanations of changes in the dependent variable It is usual to start with exploratory and descriptive before using causal

Causal continued
The problem with causal is it is not like a laboratory Many things are going on which could have an impact on your research

Developing the research plan

The plan outlines sources of secondary data, sampling plans and instruments to be used Research objectives need to be translated into specific information needs Case study Campbells Soup

Gathering secondary data

The researcher needs to gather secondary data, primary data or both Secondary data is defined by Dibb et al. (2001, p. 177) as: information compiled inside or outside the organisation for some purpose other than the current investigation

Secondary data continued

Marketing managers may need to gather, primary or secondary data or both Researchers usually begin by gathering secondary data This work may be carried out within a trends studio or consumer insight unit Researchers job to bring all the secondary data together

Secondary data continued

Various media are consulted in the gathering of secondary data Internal sources types Government publications types Commercial data types International data types

Secondary data continued

Secondary data is easily sourced and of lower cost than primary data Primary data may take months to collect and cost several thousand pounds The information, however, may not exist and the researcher may have to collect primary data

Primary data
Researchers must take great care to ensure the collection of primary data is accurate, current, and unbiased Primary data is defined by Dibb et al. (2001, p. 177) as Information gathered by observing phenomena or surveying respondents

Primary data collection continued

Methods may be used in the collection of primary data A questionnaire is the most common instrument used It can be structured or unstructured Focus groups can be used Laboratory studies can be carried out

Primary data collection continued

There are several approaches which can be taken: Observational research Survey research Experimental research

Observational research
This is gathering data by observing people Food product manufacturer/retailer sends a researcher into supermarkets to examine other brands, for price, packaging and promotion This can be referred to as comp shop, benchmark shopping or comparative shopping The mystery shopper can also be used Several companies sell information i.e. BARB

Survey research
This is best suited to gathering descriptive information This may have been gathered in a focus group or a personal interview It can use a questionnaire which can be structured or unstructured Could be used in the product development stage

Experimental research
Where observation research is best suited for exploratory research Surveys are best for descriptive research Experimental is best suited to gathering causal information The researcher is trying to explain cause-andeffect relationships Case studies McDonalds and packaging Taste panels can also be used

Implementing the research plan

The researcher then puts the plan into action A pilot study is usually carried out This involves collecting, processing and analysing the information The researcher must be careful in the collection of data so as it is accurate

Interpreting and reporting the findings

The researcher must now report the findings, draw conclusions and possibly make recommendations This must be unbiased as it is on the basis of this information that a product/range may be developed The research is meaningless if the manager does not accept the results of the data Data may have to be analysed quickly as adjustments may have to be made to the product

Future trends
(a) Changing volume into value (b) Increased competition (c) Upholding freedom of choice (d) Changing base (e) Limited space (f) Limited editions and NPD

Future trends changing volume into value

Manufacturers could implement multi-buy strategies to counteract the decline in sales, for example, 3 for 2 offers Consumers seeking to reduce their chocolate intake need to be traded up into higher priced categories The boxed and luxury markets are the best strategies to facilitate this For example, Cadburys Flake Moments, Thorntons Eden range and Mars Celebrations

Future trends increased competition

Displays must be set out in an attractive manner and one which facilitates ease of purchase Retailers need to physically put together items which could be sold in a product bundle For example, Boots and Marks and Spencer have successfully adopted this strategy Using their meal deal at lunchtime sandwich, drink and chocolate bar/crisps

Future trends upholding freedom of choice

Government pressure is mounting on the food industry to improve the nutrient content of their products In addition, there is pressure to introduce healthier versions Government has debated introducing a tax on high fat foods such as chocolate Some manufacturers have removed King sized bars Consumers may however eat other high fat foods

Future trends upholding freedom of choice

Future trends changing base

In addition to Government intervention, the chocolate market faces the problem of an ageing population The over 55s is expected to grow by 1 million by 2007 However, this market segment is the lightest user group consuming chocolate

Future trends limited space

As schools continue to ban chocolate from the tuck shop opportunities to target children are diminishing Chocolate is also being removed from the tuck shop, also restricting opportunities for sale Retailers have also removed chocolate from checkouts, which also has led to a decrease in impulse buys

Future trends limited editions and NPD

Limited edition options have dominated recent product development activity Mintel (2004) suggests however these are of limited interest to consumers While innovation is of importance, you should not overwhelm consumers with too much choice For example, Kit Kat see handout