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A short course in Market Research with Ray Poynter
(English language)
Lesson 06 Friday, 25 July Ch. 11, Analyse Quantitative Data Ch. 12, Quantitative Analysis Techniques Ch. 06, Pricing Research
@RayPoynter ray.poynter@thefutureplace.com
Dates and Modules 01
Thu 3 July
Introduction The context for market research Communicating results
02
Tue 8 July
Quantitative research Writing questionnaires
03
Thu 10 July
Qualitative research Analysing qualitative data
04
Tue 15 July
Major applications of research Mobile market research
05
Thu 17 July
Emerging research methods Communities Social media research
06
Tue 22 July
Fri 25 July
How to analyse quantitative data Quantitative analysis techniques Pricing research
07
Thu 24 July
B2B (business to business) International research Political polling
08
Tue 29 July
Research ethics, Guidelines and laws Current areas of sensitivity Questions from new researchers
QUANTITATIVE ANALYSIS & TOOLS Part A
Discovering or Predicting?
In one project you can normally only do one of these.
Discovering (exploring) – For example data about Smartphone habits,
preferences, favourites.
– Discover segments, areas of agreement, areas of difference.
Predicting (confirming/quantifying) – How big are the segments? – To what extent would 1 hour more battery, or $50
off the price, increase intention to buy?
Cross-tabs
Question: Are you enjoying this book?
Age Gender
Total 16-24 25-34 35 + Male Female
Base 300 100 100 100 150 150
Yes 205 50 75 80 100 105
68% 50% 75% 80% 67% 70%
No 95 50 25 20 50 45
32% 50% 25% 20% 33% 30%
Cross-tabs do not exist in the academic or theoretical model of market research!
Where to Start?
1. Look at the total column, get the big picture.
2. Check the data, e.g. the distribution of the data on the scales:
3. Look at the cross-tabs to see who is different from the total, and then explore how and why.
Cross-tabs
Question: Are you enjoying this book?
Age Gender
Total 16-24 25-34 35 + Male Female
Base 300 100 100 100 150 150
Yes 205 50 75 80 100 105
68% 50% 75% 80% 67% 70%
No 95 50 25 20 50 45
32% 50% 25% 20% 33% 30%
Perceptual Map
Correlation
Factor Analysis
USA
What is Segmentation?
• Putting people or things into groups – E.g. Young vs old
Students/workers/unemployed/retired Rock/pop/R&B
• Cluster analysis is one way of making segments – Cluster analysis uses patterns in the data to put
people into clusters
• Other approaches – Perceptual mapping, key metrics (e.g. 80:20),
cross-tabs, decision trees, and latent class
MaxDiff - Consider the following Which attribute of supermarket is most important?
– Wide range of fresh fish
– Wide range of fresh meat
– Wide range of fresh fruit
– Wide range of frozen food
– Plenty of parking
– Packs your bags for you
– Carries bags to the car for you
– Had trolleys that run straight
– Has a loyalty scheme
– Never have to wait more than 5 minutes at the tills
– Bakes its own bread
– Has good air conditioning
– Etc……
Which crime / anti-social activity is the most serious?
– Riding without a ticket on the bus
– Being drunk in a restaurant
– Being drunk whilst driving a car
– Failing to declare your earnings accurately to the tax man
– Stealing a car
– Stealing a bicycle
– Threatening somebody with a gun
– Threatening somebody with a knife
– Etc….
Basic MaxDiff Scaling
1. Wide range of fresh fruit 2. Wide range of frozen food 3. Plenty of parking 4. Packs your bags for you
For each card the respondents indicate which is the Most important and which is the Least important
1. Carries bags to the car for you 2. Had trolleys that run straight 3. Has a loyalty scheme 4. Never have to wait more than 5 minutes at the tills
1. Never have to wait more than 5 minutes at the tills 2. Bakes its own bread 3. Has good air conditioning 4. Wide range of frozen food
1. Has a loyalty scheme 2. Plenty of parking 3. Wide range of fresh fish 4. Bakes its own bread
Produces a scoring of all the features in a way that can be used to compare, say, USA, Japan, Mexico, and France.
Most Likely
Least Likely
100
Max Diff to test and report logos
120GB Disk 15 inch Screen 1MB RAM
120GB Disk 17 inch Screen 2MB RAM
80GB Disk 15 inch Screen 2MB RAM
80GB Disk 17 inch Screen 1MB RAM
120GB Disk 19 inch Screen 512KB RAM
80GB Disk 19 inch Screen 512KB RAM
Card Sort
Conjoint & DCM (Discrete Choice Modelling)
Pair-wise Comparisons (Discrete Choice)
120GB Disk 15 inch Screen 1MB RAM
80GB Disk 17 inch Screen 2MB RAM
or
120GB Disk 15 inch Screen 1MB RAM
Not Buy Def Buy 1 2 3 4 5 6 7 8 9 10 11
Ratings Conjoint
120GB Disk 15 inch Screen 1MB RAM
100GB Disk 17 inch Screen 1MB RAM
or or 80GB Disk 15 inch Screen 2MB RAM
None of these
or Choice Based (Discrete Choice)
Conjoint & DCM
You need an expert on the team
Or, use a specialist third-party
How to find the key findings/story?
• Rely on results that link to the objectives
• Focus on ‘need to know’, not ‘nice to know’
• Look for recurring themes and patterns
• Turn the numbers into words – The best option is segment A
– People using the small branches feel unloved
• Don’t report ALL the data in the presentation – Include it as an appendix
How can I tell correlation from causation?
• Correlation does not mean causation.
• In Tokyo, on the days when more people carry umbrellas it rains more often – The umbrellas do not cause the rain
– The weather forecast causes the umbrellas
– And the forecast is caused by the weather
• You can’t prove causation from a market research study – The cause has to be identified externally
– MR study can quantify the relationship
If you get causation, this is funny
I used to think correlation implied causation, then I went on a course
and now I don’t
So, the course helped then?
Not necessarily.
Questions?
PRICING RESEARCH Part B
Why is pricing research so hard?
• 3 key reasons: 1. Pricing seems rational, but shoppers are mostly
emotional.
2. People find predicting behaviour in hypothetical situations difficult.
3. People are often unaware of current prices.
• If I cut the price of beer by 50%, how much beer would you buy in November? – If I don’t change the price how much beer will you
buy in November?
What do clients typically need from a pricing study?
• Brand price elasticity – If they change the price, how much do sales
change?
• Cross-elasticity – If a competitor changes prices, how does that
affect us?
• Size of the market – If the price is increased, does the market shrink?
– If the price is decreased, does the market grow?
Approaches
• Market – Econometrics, A/B, Test markets
• New Concept – Concept test & Van Westendorp
• Price structure – BPTO
– Conjoint Analysis / DCM (Discrete Choice Modelling)
Purchase likelihood
Likes and dislikes
Product substitution
Use and purchase frequency
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$189.95
Priced Concept Test
Concept A $20
Concept A $25
Concept A $30
200 200 200
van Westendorp Price Sensitivity Meter
Useful for new product launches
4 Questions: – At what price would you say the offering is
INEXPENSIVE/CHEAP/GOOD VALUE?
– At what price would you say the offering is EXPENSIVE BUT WORTH CONSIDERING?
– At what price would you say the offering is TOO EXPENSIVE TO CONSIDER?
– At what price would you say the offering is SO CHEAP YOU WOULD DOUBT THE QUALITY?
Either free format prices, or from a pre-coded list – Usually using some technique to avoid price reversals
van Westendorp Terms
• Indifference Point, equal numbers of people consider the offering cheap and expensive
• Optimum pricing point, maximizes the number of people who would consider the offering – i.e. the point where the too expensive and too cheap lines cross
• Highest reasonable price, equal numbers of people consider the offering too expensive and "not expensive" (the inverse of expensive). At higher prices, decreasing volume overcomes increasing revenue
• Lowest reasonable price, equal numbers of people consider the offering too cheap and "not cheap" (the inverse of inexpensive). At lower prices, decreasing revenue overcomes potential volume increases
• Range of pricing options, is difference between the lowest reasonable price and the highest reasonable price
For your notes
VW Range of Acceptable Prices
BPTO – Brand Price Trade-Off
Douwe Egberts Continental Freeze
Dried 200g
£3.17
Cafe Direct Fairtrade
Original 200g
£3.20
Carte Noire
Coffee 200g
£2.98
Kenco Rich Dark
Roast 200g
£2.81
Nescafe Alta Rica
200g
£3.57
Nescafe Blend 37 Freeze Dried
200g
£3.03
Nescafe Coffee
Granules 200g
£2.27
Sainsbury's Gold Roast
200g
£1.61
Conjoint / DCM
If these were the hotels available to you, which one would you choose?
Marriott
Room service
from 7 to 21
Free high speed
internet
Near airport
$225
Ibis
24 h room
service
No internet
access
Centrally
located
$175
Intercontinental
No room service
Data port in
phone
Near business
destination
$125
Wyndham
24 h room
service
High speed
internet for $20
Near airport
$200
I’d not stay at
any of these
hotels
Which Pricing Technique to Use?
Depends on the objectives and budget
Rule 1 – choose simplest/cheapest technique which answers the problem
Is the price question the main part of the study or is it an add on?
What sort of materials, known products, new concept, ‘outside-the-box’ concept
Don’t over promise!
Questions
And The Quiz
Feedback for the next lessons?
• If you have feedback now, GREAT!
• Or,
– Email it to ray.poynter@thefutureplace.com
© The Future Place, 38 South View Rd, Nottingham, NG4 3QL, UK
Significant Digits and
Decimal Places
Ray Poynter
Extension Material
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Significant Digits
• 3 digits?
• 2 digits?
• 1 digit?
• SD ≠ DP
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Which is the middle value?
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Correlation
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R-squared
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Money 2SD or 3SD
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Spurious Accuracy
Sample size = 100
Agreement = 45.67%
Sample error at 95% = +/- 10%
So – 45.67%
– Could be 55.67%
– Or, 35.67%
The .67 is spurious accuracy
46% would be better
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Preserve accuracy in
calculations
• Display results to 2 or 3 SD
• Try to avoid decimals
• But
– Preserve accuracy in tables and Excel
– Combine data by combining counts, not by
combining percentages
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Key Tips
• Minimise the number of numbers
• Minimise the number of digits
• Don’t repeat symbols unnecessarily (eg % or $)
• Avoid decimal places if possible
• Positive integers between 0 and 100 are good
– Between 0 and 10 is better
© The Future Place, 38 South View Rd, Nottingham, NG4 3QL, UK
Thank you
Questions?
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