Market Information Management - Frequently used Market ...srprojects.free.fr/desgest/downloads2/20051206_Mkt... · 12/6/2005 · Market Information Management - Frequently used Market

Market Information Management -Frequently used Market Researchtechniques and course wrap-up

Vincent Geleyns, Philippe Mauchard

Brussels, December 6, 2005

SOLVAY BUSINESS SCHOOL, ULB

BRU_ZWF009_20051004_Quant Mkt Research (Part II)

1Market Information Management

• Additional frequently used market research techniques

–Segmentation

–Measuring value

–Branding and customer perception / loyalty

• Course wrap-up

CONTENTS




–Segmentation

–Measuring value


• Course wrap-up

CONTENTS



6 CONSUMER LENSES CAN BE USED TO CREATETHE OPTIMAL SEGMENTATION

What?

Category /Behavioural

• Categoryusage /volume

• Brand usage/ volume

• Purchasefunnelbehaviour

• Actual choicebehavior

Lens

Variable

Who?

ConsumerDescriptor

• Demo-graphics

• Socio-graphics

• Firmo-graphics

• Geography

• Ethnicity

• Lifestage

When?

• Usage– Time of

day/year– Planned vs.

impulse

• Purchase– Time of day– Planned vs.

impulse

Occasion(Time)

Where?

Occasion(Location/Situation)• Usage

– Location– With

whom

• Purchase– Channel– With

whom

• Situation

Worth?

Value

• Economicvalue

• Life timevalue

• Cost toserve

• Profitability

Why?

Attitudinal /needs

• Categoryattitudes

• Needs / Buyingfactors

• Brandperceptions

• Passions

• Emotions

Carefully check objectiveof the segmentation

before choosing the lense

Carefully check objectiveof the segmentation

before choosing the lense

Source: McKinsey



CRITERIA FOR A "GOOD" SEGMENTATION

Source: McKinsey

…real customer benefits to becreated

…expectations to be over-fulfilled

…relevance and credibility

Criteria for a good segmentation

Can be identifiedRecognizable, separable andhomogenous segments

Can be implementedSegments can be concretelyaddressed in the marketing mix

Can be analyzedSegment attractiveness anddevelopment can be measured

StabilityLong-term sustainability ofsegmentation

... ability to defend

Orientation to need segmentsallows...



MASS MERCHANDISER EXAMPLE OFLIFESTAGE SEGMENTS

Respondentswho are similar

in theirexpenditure onclient productcategories and

life stage

"Grand kids and golf"

"Self-oriented baby boomers"

"Mortgage poor"

"Single and fast cars"

Segmentation outputPotential segmentationapproaches

Expenditures inselected productcategories

Expenditures inselected productcategories

LifestagecharacteristicsLifestagecharacteristics

Shopping attitudesShopping attitudes

DISGUISED EXAMPLE



OVERVIEW OF FREQUENTLY USED ANALYTICAL METHODOLOGIES

Methodology

Dual objective

Responsebased / latentclass

CHAID / CART

Factoranalysis

Most frequent use

• When you do not find your segment to be easilyidentifiable

• When it is not sufficient to build a discriminantprocedure to identify segments

• When your existing segments are not alreadyidentifiable

• Typically used with aggregate choice models asit provides a segmentation basis

• When it is important to understand drivers of acertain behaviour by segment

• For image modelling applications when onewants to link functional, process and relationshipbenefits to preferences of various brands in themarket

• To understand potential interactions• To quickly understand segments• To profile segments with different response

profiles• Useful for CRM applications

• When you believe that a number of attitudinalstatements are highly correlated

Description

• An algorithmic procedure that will optimisethe fit on a needs / value segmentation aswell as the fit on a demographics /behavioural segmentation

• A segmentation scheme based on theresponsiveness that respondents have tocertain marketing inputs – e.g., price,features, advertising. This approachprovides a direct link between marketinglevers and behavioural performance in asegment

• Powerful decision tree algorithm that helpdiscover segments, uncover hiddeninteractions and predict segmentmembership. This approach sequentiallydetermines which variables are mostpowerful discriminators of segments

• An analytic technique, often used tosummarise 20 – 30 attributes into 5 – 6summary variables



SEGMENTATION: DUAL OBJECTIVE

• An algorithmic procedure that will optimise the fit on a needs / value /response segmentation as well as the fit on a demographics /behavioural segmentation

• When you do not find your segment to be easily identifiable• When it is not sufficient to build a discriminant procedure to identify

segments• When your existing segments are not already identifiable

• Run the algorithm after any segmentation algorithm• You need to specify the demographic / behavioural variable on which

you want the segments to differ

• An actionable segmentation that discriminates respondents on needs aswell as demographics / behaviour

What is it?

When doyou use it?

How do youdo it?

What youget out of it?



SEGMENTATION: RESPONSE BASED / LATENT CLASS

• A segmentation scheme based on the responsiveness that respondentshave to certain marketing inputs – e.g., price, features, advertising. Thisapproach provides a direct link between marketing levers andbehavioural performance in a segment

• Typically used with aggregate choice models as it provides asegmentation basis

• When it is important to understand drivers of a certain behaviour bysegment

• For image modelling applications when one wants to link functional,process and relationship benefits to preferences of various brands in themarket

• Need a sophisticated computer program and an expert to run it• Use a firm that has done it several times before

• A powerful segmentation scheme that links stimuli to behaviour. Thiswould be useful in determining has to allocate the marketing budget inorder to get optimal performance in the target segment(s)

What is it?

When doyou use it?

How do youdo it?




SEGMENTATION: CHAID / CART

• Powerful decision tree algorithm that help discover segments, uncoverhidden interactions and predict segment membership. This approachsequentially determines which variables are most powerfuldiscriminators of segments

• To understand potential interactions• To quickly understand segments• To profile segments with different response profiles• Useful for CRM applications

• Several software programs exist – e.g., AnswerTree in SPSS orKnowledge Seeker

• Use CHAID for categorical dependent variable and CART for continuousdependent variable

• A visual description of how segments fall into various buckets based onthe independent variable selected

What is it?

When doyou use it?

How do youdo it?




FACTOR ANALYSIS

• An analytic technique, often used to summarise 20 – 30 attributes into 5– 6 summary variables

• When you believe that a number of attitudinal statements are highlycorrelated

• Collect attitudinal statements• Process statements via research agency or using a software tool like

SPSS• Name new factors to describe the attributes that have been summarised

• A simplified perspective on the variable that describe the imagedimensions of a marketplace

What is it?

When doyou use it?

How do youdo it?





–Segmentation

–Measuring value


• Course wrap-up

• Appendix: other techniques for reference

CONTENTS



MEASURING VALUEContents

• Pricing sensitivity measurement (allother things being equal)

• Purchase likelihood assessment (at agiven price level - Gabor Granger)

• Value proposition managementthrough Conjoint based methodologies



PRICE SENSITIVITY MEASUREMENT (PSM)

• A quantitative tool to determine the optimal price for a product or service

• To be used when a product or service is well defined and an optimal price in the eyes ofthe consumer needs to be determined. It will not determine the competitive reaction tothis pricing or cannibalisation effects (a trade-off exercise is better for this purpose). Itwill also not give information about the relative importance of price versus otherattributes (a conjoint exercise would be better in this case)

• Use a card with 31 prices ranging from an extreme low price to an extreme high price,with small increments. The most likely price is at price level 16. Then ask 4 questions1. Move your finger slowly from the highest price to the lowest price and tell me

at which price do you start to find the product cheap2. Now continue down the scale and tell me at which price do you start to find the

product too cheap, that is so cheap that you doubt the quality and would notconsider buying the product

3. Now move your finger slowly from the lowest price to the highest price and tellme at which price do you start to find the product expensive

4. And finally, continue up the scale and tell me at which price do you start tofind the product too expensive, that is so expensive that you would notconsider buying the product

• Cumulate the percentage respondents for each price point (in different directions) andplot the 4 lines. The intercept of the cheap and expensive line shows the optimum priceand the two intercepts of cheap and too expensive and of expensive and tooexpensive give the range in which the price has to be

• The methodology will give an optimal price and an optimal price range

What is it?

When do youuse it?

How do you doit?

What you getout of it?



0

20

40

60

80

100

120

10FF 13FF 16FF 19FF 22FF 25FF 28FF 31FF 34FF 37FF 40FF

PRICE SENSITIVITY MEASUREMENT (PSM)Percent

Too cheapCheapExpensiveToo expensive

Do not pricebelow this

point

Point of marginal expensiveness(PME)• Do not price above this point

Range ofacceptable

prices

Point ofindifference

(POI)

The higher up the y axis, the more it indicates that one doesnot know at what price the product should be charged

The higher up the y axis, the more it indicates that one doesnot know at what price the product should be charged

“Optimal” price point (OPP). Thisis only a theoretical optimal –

not to be taken literally

Point ofmarginal

cheapness(PMC)



PURCHASE LIKELIHOOD ASSESSMENT: GABORGRANGER

• A simple technique to estimate the purchase likelihood given variousprices

• Useful price estimation technique when in the real world, consumersdo not compare brands when they decide to purchase or when theycannot compare prices at the moment of purchase (i.e., gasolinepurchase)

• After showing the product/service, respondents are asked to indicatetheir likelihood of purchase at a given price, typically on a 5-pointscale (definitely – buy likely – definitely not buy). The response isnoted, and the question is repeated for a second price, and sometimesa third, fourth and fifth (random order or decreasing price points)

• Minimal sample size is 80

• The data can be used to indicate threshold points where interest fallsaway substantially

What is it?

When doyou use it?

How do youdo it?




40 40

20 2015

20

105

5

30

GABOR GRANGERRespondents (not confronted to differentoptions at time of purchase)Percent

USD 1.25 USD 1.50 USD 1.75 USD 2.00USD 1.00

Definitely buy

Probably buy

Key pricethresholdKey pricethreshold

After showing the product /service, respondents are

asked to indicate theirlikelihood of purchase at a

given price (Variety ofmethods of administration)

After showing the product /service, respondents are

asked to indicate theirlikelihood of purchase at a

given price (Variety ofmethods of administration)



GABOR GRANGER – METHODS OF ADMINISTRATION

Sequence of in-troducing prices

• Yes/no scalee.g., would youbuy this product– yes or no?

• Interest inpurchase scale:Definitely buyprobably buynot sure,probably notbuy definitelynot buy

• Interest inpurchase on ascale of 1 to 10e.g., how likelyon a scale of 1-10 would yoube to buy thisproduct

Types ofresponse scale Positives Negatives Positives Negatives

• Simple• Good for lots

of prices

• Industrystandard

• Can beconverted intoreal chance ofpurchase

• Verydiscriminating

• Relativelyquick

• Veryapproximate

• convert intoreal possibilityof purchase

• Slow toadminister

• Cannot beused for morethan 5 prices

• Very difficult toconvert into toreal possibilityof purchasebecause rarelyused in industry

• In order ofdecreasing price$10, $9, $8, etc.

• Randomly $8,$10, $7, $5, $9,etc.

• Split sample sodifferent groupssee prices indifferentsequences e.g.,to understand 3prices A,B,C,split the sampleinto 6 groups,each group arepresented theprices in adifferent order

• Simple

• Simple

• Industrystandard

• Very accurate,eliminate anypossibility ofpeople learningthe game

• People quicklylearn the gameand wait for thelowest price

• Impossible toknow if biasoccurs becauseof the order ofthe prices

• Very compli-cated toadminister formore than 3price points



CONJOINT BASED METHODOLOGIES

• A methodology that allows you to estimate the relative importance of differentattributes (e.g., colour, size, price, brand) and the relative worth of different products– e.g., large, grey, $800 Sony vs. a medium-sized, black, $650 Panasonic) or toestimate the primary demand of a new product in an existing market place

• When you want to optimise a product or a value proposition, measure brand equityor price elasticity, estimate primary demand or market share for a new or changedproduct, service or value proposition

• Conduct a qualitative phase to determine relevant attributes with specific levels tobe used in the conjoint (focus groups, one-on-one interviews or an internalworkshop session)

• Create a conjoint design with a conjoint software tools (the use of a McKinseyMarketing Science specialist or an experienced research agency is highlyrecommended in this phase) and a questionnaire. The questionnaire includes alimited set of trade-off questions between products that contain different sets offeatures

• Calculate the relative worth of each level and each attribute and simulate the valueof different combinations of levels using these relative worths: Utilities Sample sizeno less than 50

• Importance of each level and each attribute. Relative worth of different products,share of preference of hypothetical products in an existing market, estimation ofmarket share

What is it?

When do youuse it?

How do youdo it?

What you getout of it?


19Market Information ManagementSource: McKinsey Marketing Practice

28

17

15

14

10

8

3

3

2

Conjoint:Consider things jointly Price

Quality

Service level

Format of sending

Drop location

Weight

Warning notice

After sales service

Brand

• Assumes rationalchoice behavior ...

• … based onquantification throughtrade-offs …

• … between pre-identified attributes

Simulates purchasingdecision or supplierchoice

INTRODUCTION TO CONJOINT ANALYSES

Key output: utilityPercent of total



• Optimize pricing strategy (e.g., knowledge of expectedevolution customer KeyBuying Factors,...)

• Steer by margin, maximize total margin (elasticity!)

• Grow market (e.g., end-customer KBFs)• Increase market share

• Optimize total supply chain (e.g.,disintermediation,...)

• Reduce working capital, stock (inproduction, sales, distribution, at customer)

• Integrate / coordinate with distribution

• Improve efficiency and effectiveness oforganization, processes and systems (salesforce, sales management,...)

CONJOINT ANALYSIS TO IMPROVE PERFORMANCEACROSS BUSINESS SYSTEM / ROCE

Return onCapitalEmployed

=[(Price x Volume) – Sales & distrib. cost] – [Product(ion) cost]

Capital Employed (commercial & industrial)

Understand well and in aquantitative way the trade-offs made by your customerand your customer'scustomers

Set up organization,processes and systemsaligned with understandingof customer trade-offs andcompetitive dynamics

Derive the implications ofcustomer trade-offs onsales model and supplychain management

• Ensure efficient interfaceswith production (e.g.,planning), R&D, etc.)


21Market Information ManagementSource:Team analysis

3

7

4

2

0

10

20

12

13

17

11

End market knowledge

Market insight

Forward hedging flexibility

Technical support

Response time

Product availability

Surface incidents

Mechanical consistency

Softness of rod

Rod-related breakage

Shape premium

Rod qualityinfluences 62% ofbuying decision

Commercial

Service

Price

Product

NON-FERROUSEXAMPLE

"QUANTIFIED" UNDERSTANDING OF CUSTOMER NEEDSContribution to buying decisionPercent

Customer / segment 1

3

3

6

11

8

16

15

8

6

12

12

Customer / segment 2

Balanced productand service

requirements


22Market Information ManagementSource: Team analysis

Customer segmentProductquality

Technicalsupport

Otherservice Price Key factor for success

High

Low

Value customer gives totop level performance

Excellent quality of productand technical service

Ability to continuallyreduce total cost

Cost to serve in linewith premium expectations

DIFFERENTIATING MARKET APPROACH PERCUSTOMER SEGMENT

NON-FERROUS EXAMPLE

Technologypushers

Production costoptimizers

Total costsoptimizers

Entrepreneurialservice seekers

Opportunistic priceseekers

1.

2.

3.

4.

5.



4035

152

2520

158

3

4035

282625

3230

250

Source: McKinsey Marketing Science

ILLUSTRATIVE

PriceEUR

0.300.350.400.410.42

Collection time

10 pm8 pm3 pm

10 am

Brand name

Brand 1Brand 2Brand 3Brand 4Brand 5

Items per drop

<1000>1000

>10000>50000

• Price is taken as an attribute• All values are on same scale• Therefore, deltas for other

attributes can be translatedinto delta prices

USING CONJOINT RESULTS FOR PRICING PURPOSESUtility to customer

Raw results from conjoint

• Example: price can beincreased from 0.30 to 0.35for retarding collection timefrom 3 pm to 8 pm withoutloss of "utility to thecustomer"



Activities

Endproducts

Phase 1 Phase 3

• Define product attributes• Set levels to be tested per

attribute• Select specific conjoint

methodology• Select customers to

interview and prepareinterviewers

• Questionnaire (conjoint andopen questions)

• List of selected customers

• Conduct interviews in thefield (approximately 2-3 hoursper interview o/w ½ forsoftware based part)

• Make first analysis ofinterviews

• First results from interviews(utilities)

• Better understanding ofcustomers

• Integrate all results• Analyze results• Develop recommendations in

terms of product offering,pricing and commercialapproach

• Overview of results for allcustomers (utilities +qualitative elements)

• Recommendations in terms ofpricing, commercial approach,etc.

Conduct interviewsPrepare conjoint

Phase 2

Analyze results anddevelop recommendations

Iterative loop, potentiallyalso including qualitativeresearch:• Focus groups• Depth interviews

CONDUCTING A CONJOINT ANALYSIS BASED APPROACH



KEY QUESTIONS TO ANSWER WHEN CHOOSING ATTRIBUTES

Questions

What specific productattributes are mostimportant / relevant to themarket?

What are the implicationsof changes to productattributes?

Examples

• What are all the dimensions thatconsumers consider whenchoosing a car?

What is the competitiondoing?

• Does the competition offer importantservice / product attributes which theclient does not?

What product attributescan the client influence?

• Products and services encompassmany dimensions which need tobe identified and prioritised from amarket perspective

Issues

• Need to understand theeconomics of different productattributes and their impact oncosts

• Need to understand thecompetitive context in whichchoices are being made

• Need to understand the tablestakes / antes of the market

• What are the basic expectationsof the marketplace?

• Does changing a product attributehave a disproportionate effect onrevenues/costs?



KEY QUESTIONS TO ANSWER WHEN DETERMINING LEVELS

What product attributelevels are meaningful forconsumers?

How many levels can wedeliver?

• Levels need to be clearlydifferentiated in the minds ofconsumers

• What levels of differentiation /tailoring can the client deliver?

• What are the different levels ofservice between which consumerscan differentiate?

Is the meaning of eachlevel clear?

• Levels need to be as specific /tangible as possible

• Should we use actual priceintervals versus percentageincreases / decreases?

• How many models of car existunder one brand?

What is the consumerwilling to pay for certainattributes?

• The cost to deliver an attributefrequently outweighs the perceivedconsumer value

• High spin speeds on washingmachines carry very highdevelopmental costs but littleperceived value with consumers

Questions ExamplesIssues



SIMPLE EXAMPLE FROM B2B

Attributes To . . .

Price • 10% below average prices

Adviceprovided

From . . .

• 10% above averageprices

Attribute levels

Normaldelivery

• Normal deliveries arrive sameday as order placed

• Scheduled normaldeliveries on same dayeach month

Emergencydelivery

• Emergency orders deliveredwithin 2 hours

• Emergency orders have to bepicked up

Collectionservice

• Nearest retail outlet is 10minutes away

• There is no retail outlet topick goods up from

• No technical / product adviceavailable

• Offers expert technical/product advice



OVERVIEW OF METHODOLOGIES

Methodology

• Adaptiveconjoint (ACA)

Most frequent use

• Large number of attributesrequiring complex designs

Description

• ACA is a computer aided methodof conjoint administration in whichrespondents trade off only thosemost relevant attributes in bundles

• Choice-basedconjoint (CBC)

• To understand the relationshipbetween price and other attributes,particularly brand

• CBC is method of conjoint inwhich respondents choosebetween different completeproduct bundles

• Conjoint valueanalysis (CVA)/

• Discrete conjoint

• CVA is "paper based" method ofconjoint in which consumers areasked to state their preferencebetween two complete productbundles

• When computer based interviewingis not available

• When the product can be explainedusing limited numbers of attributes

+ Other variants in mode ofadministration / analysis of

responses(e.g. card sort, dual stage,...)

+ Other variants in mode ofadministration / analysis of

responses(e.g. card sort, dual stage,...)



MOST ADVANCED METHODOLOGY – ADAPTIVE CONJOINT

Step 1

What is your most preferredlevel? And the next and thenext?

Brand SonyNokiaEricsson

Step 2

How important is a pricedifference from $50–250

Veryimportant

Not importantat all

Step 3

Which of the followingoptions do you prefer?

Nokia$50 large

1 2 3 4 5 6 7 8 9

Ericsson$150 small

Stronglyprefer #1

Stronglyprefer #2

Step 4

How likely are you topurchase a

Sony$150 small

100 %

0%

How does it work?

• ACA works in 4 stages– For each attribute the respondent is asked to rank different levels of this attribute

in order of preference– They are then asked to state how important the difference between the top and bottom level is for

each attribute. The first 2 stages allow for the identification of the most important attributes, whichthe trade-off exercise focuses on

– Respondents rate their preference between two bundled concepts – this step is then repeated fordifferent product bundles

– Finally respondents are asked to indicate likelihood of purchase for the winningproduct bundle

1 2 3 4 5 6 7 8 9



INTRODUCTION TO CONJOINT – DETERMININGPREFERENCE FOR DIFFERENT BUNDLE OF ATTRIBUTESExample of attributes and levels for PC industry

Weight:5 pounds

Price:2000 $

Weight:3 pounds

Price:4000 $

1 2 3 4 5 6 7 8 9

Stronglyprefer left

Stronglyprefer right

Which portable PC would you prefer?

Source: McKinsey Marketing Practice



18

-5

-6

-8

-2

-2

3

0

2

INTRODUCTION TO CONJOINT – SEGMENT CUSTOMER BASEExample of segmentation for PC industryPercent of buying decision as deviation from overall sample mean

Price

Price

Processor

Screen

Brand

Hard disk

Weight

Bundled software

After sales service

CD-Rom

-12

10

2

0

10

-6

-2

-1

-1

Performance

-6

-6

0

0

-3

4

5

3

3

Convenience

HYPOTHETICALEXAMPLE

Source: McKinsey Marketing Practice




–Segmentation

–Measuring value


• Course wrap-up

• Appendix: other techniques for reference

CONTENTS



PURCHASING PROCESS ANALYSIS (FUNNELANALYSIS) FOR BRAND MEASUREMENT

Awareness Familiarity Consider-ation Purchase Loyalty

Process step values

Show what share of the targetgroup have reached therespective target step.In the example, 43%of the target group are familiarwith the brand

Transfer rates

Shows share of customers whochange from one step to the next.In the example, 77% of those whohave considered brand have alsopurchased this brand

46

94 43

70

30

77

23 14

58

Source: McKinsey

Brand A



BRAND A HAS PARTICULAR WEAKNESSES COMPARED TOCOMPETITORS IN THE TRANSITION FROM TRIAL TO PURCHASEPercent

32 26 8 n/a n/a

31 n/a** n/a**

52 46 19 4 1

41 19 25*

91 86 48 6 2

57 12 42*

Weak points inpurchase funnel

* Limited representativeness due to sample size** Sample size too low for representative statements

Source: McKinsey consumer survey (INRA)

Aidedawareness Familiarity

Trial PurchaseLoyal customer

76 69 34 2 1

50 7 42*

83

90

94

92 85 47 12 4

2693 55 35*

90BRAND A



ANALYSIS OF GAPS IN THE PURCHASEPROCESS USING BENCHMARKSPercent

91 86 48 6 2

57 12 42*94

* Loyalty rate not representative due to small sample sizeSource: McKinsey consumer survey (INRA)


Trial PurchaseLoyal customer

Gap compared toApollinaris benchmarkPercentage points

7 54

What share of the gap can be closedby strengthening the brand?

76 69 34 2 1

790 50 42*

–

69 63 31 5 2

49 16 4091Marketaverage

Gap compared toMarket averagePercentage points

_ 91 –

BRAND A



Prioritized brand elements(Drivers)

Importance(Behavior relevance index)

10.07.06.96.55.24.84.13.13.02.4

ANALYSIS OF BRAND DRIVERS: MOST RELEVANTBRAND ELEMENTS FOR ATTRACTING CUSTOMERS

Source: McKinsey consumer survey (INRA)

• Is healthy

• For people like you and me• Good value for money• Makes me feel good when I use this brand• I can get it anywhere• Has consistently good quality• Tastes good

• Recommended by friends• Practical packaging• Bottles/crates are easy to transport


Trial PurchaseLoyalty



FIRST STEP – AXIS DEFINITION ILLUSTRATIVE

Axis 1(72% of the variance

is explained by this axis)

Very high qualityFor women

For older people

For people worried about healthLight beer

Cheap and common

Out of date

In smart restaurantFor style conscious

After a good mealP. Who enjoy drinking

By men under stress



SECOND STEP – 2ND AXIS DEFINITION ILLUSTRATIVE

For men

For young, teenagers

Worth the price

Becoming more and more pop.

Stylish

By men under stressReal beer taste





THIRD STEP – FINAL AXIS DEFINITIONAND BRAND PROJECTION

ILLUSTRATIVE

Axis 1(72% of the variance isexplained by this axis)

Very high qualityFor women

For older people

For people worried about health

Light beer

Cheap and common

Out of date

In smart restaurant

For style conscious

After a good mealP. Who enjoy drinking

By men under stress

For men

For young, teenagers

Worth the price

Becoming more and more pop.

Stylish

Real beer taste

Brand D

Brand A

Brand E

Brand H

Brand F

Brand G

Brand BBrand C





FURTHER POSSIBILITIES – PROJECTION OF SUBGROUPS/ CLUSTERS INTO THE « SPACE FRAME » Segments

ILLUSTRATIVE

Modern appearance

Traditional appearance

Light-weight Serious

Cheap productseekers

Bored pensioners

DINKS

Traditionalists



BRANDING AND CUSTOMER PERCEPTION/ LOYALTYExample – The VW Passat



Utilize fullyDevelopselectively

Use for differentiation

Discontinue

Youthfulness

Briskness

Fun to drive

Identification withcarBrand value

Low maintenance costs

STRATEGIC OPTION MATRIX: THE VW PASSAT BRANDHAS TO BUILD EMOTIONAL BRAND DRIVERS TOIMPROVE ITS POSITION IN THE PURCHASE PROCESS

Rel

evan

cein

pu

rch

ase

pro

cess

Strengths and weaknesses compared to competitors

Low

High

ØWeak Strong

Negative

Source: McKinsey Brand Health Survey; McKinsey/MCM

Exciting car

Sportiness

Manliness



CORRELATION BETWEEN INDIVIDUAL BRANDANALYSIS AND PORTFOLIO ANALYSIS

Source: McKinsey

Fun Sporty Low cost ...

3.77 3.12

4.35 3.79... ...

3.59

3.01...

AusschöpfenSelektivausbauen

Zur Differenzierungnutzen

AbbauenJugendlichkeit

Lebhaftigkeit

Spaß am Fahren

Identifikation mitdem AutoWertschätzung durch Hersteller

Niedrige Unterhaltskosten

Relevanzim Kauf-prozess

Stärken und Schwächen zum Wettbewerb

Niedrig

Hoch

ØSchwach Stark

Negativ

Aufregendes Auto

Sportlichkeit

Männlichkeit

II

Dri

ver

anal

ysis

Strengths / weaknessesprofile

Individual brand optimization

Fun todrive

Low cost/consumption

Sportiness

After-salesservice

Reliability

Manliness/briskness

IIII

Brand portfolio analysis

Statements can also be used to forma positioning space where brands are

allocated according to theirevaluations.



MANAGEMENT OF BRAND PORTFOLIOS: ANALYSIS OF CHANGES ININDIVIDUAL BRAND SPACE ON BRAND POSITIONING IN PORTFOLIO

Source: McKinsey


3.77 3.12

4.35 3.79... ...

3.59

3.01...

II

Aus

Zur Differe

Spaß am Fahren

Identifikation mitdem AutoWertschätzung durc

Niedrige Unte

Øchwach Stark

ufregendes Auto

chkeit

Aus

Zur Differe

Spaß am Fahren

Identifikation mitdem AutoWertschätzung durc

Niedrige Unte

Øchwach Stark

ufregendes Auto

chkeit

IIII

How doesthe branddevelop ifcertainlevers arechanged?

Fun todrive


Sportiness

After-salesservice

Reliability

Manliness/briskness

??

??

?

Dri

ver

anal

ysis




STRATEGIES FROM THE STRATEGIC OPTION MATRIX CAN BE EVALUATEDACCORDING TO THEIR IMPACT IN THE PORTFOLIO POSITIONING SPACE (1/2)

* Increase sportiness +1, fun to drive +0,1Source: McKinsey

C-Klasse

3er BMWAlfa 156

Audi A4

Ford Mondeo

Fun todrive

Low cost/con-sumption

Sportiness

After-sales service

Reliability

Manliness/briskness

Opel Vectra VW Passat

ektivbauen

Jugendlichkeit

Spaß am Fahren

Identifikdem AutWertsch

N

ØSchwach

Aufregendes Auto

Sportlichkeit

Männlichkeit

Idea:VW Passat should become more sporty andbe more fun to drive*

Result:New positioning too close to Audi, i.e. too littledifferentiation in internal competition



STRATEGIES FROM THE STRATEGIC OPTION MATRIX CAN BE EVALUATEDACCORDING TO THEIR IMPACT IN THE PORTFOLIO POSITIONING SPACE (2/2)

C-Klasse

3er BMWAlfa 156

Audi A4

Ford Mondeo

Fun todrive

Low cost/con-sumption

Sportiness

After-salesservice

Reliability

Manliness/briskness

Opel VectraVW Passat

Idea:VW Passat should offer betterafter-sales service*

Ausschöpfen

Zur Differenzierungnutzen

Abbauen

Lebhaftigkeit

hren

Nachkauf

Niedrige Unterhaltskosten

Ø Stark

o

Männlichkeit

* Increase after-sales service +0,5Source: McKinsey

Result:Greater differentiation of Passat from Audialong key purchase criteria



MANAGEMENT OF BRAND PORTFOLIOS: ANALYSIS OF CHANGEDTARGET POSITION IN BRAND PORTFOLIO

Source: McKinsey


3.77 3.12

4.35 3.79... ...

3.59

3.01...

IIII

Fun todrive


Sportiness

After-salesservice

Reliability

Manliness/briskness

Old New

II

What levershave to bechanged toachieve thetargetposition?

Ausscn

Zur Differenzie

Spaß am Fahren

Identifikation mitdem AutoWertschätzung durch H

Niedrige Unterha

ØSchwach Stark

Aufregendes Auto

ortlichkeit?

?Aussc

n

Zur Differenzie

Spaß am Fahren

Identifikation mitdem AutoWertschätzung durch H

Niedrige Unterha

ØSchwach Stark

Aufregendes Auto

ortlichkeit?

?

Dri

ver

anal

ysis




IF THE TARGET POSITIONING IS KNOWN THEN THE NECESSARYIMPLEMENTATION LEVERS CAN BE IDENTIFIED

* E.g., because a high-potential customer segment has been identified in this areaSource: McKinsey

Result:After-sales service and reliability haveto be improved

n

Zur

gendlichkeit

Lebhaf

Wert Nach-kaufservice

Zuverlässigkeit

Niedrige

ØSchwach

Aufregendes Auto

tlichkeit

Männlichkeit

+0,5

+0,5

C-Klasse

3er BMWAlfa 156

Audi A4

Ford Mondeo

Fun todrive

Low cost /consumption

Sportiness

After-salesservice

Reliability

Manliness/briskness

Opel VectraVW Passat

Idea:VW Passat will be differentiated morestrongly from Ford and Opel *



CONTENTS


–Segmentation

–Measuring value


• Course wrap-up



OVERVIEW OF THE MARKET INFORMATIONMANAGEMENT PROCESS

• New productlaunch

• Competitiveofferingspositioning vs.customerexpectations

• Product positioningand communication

• Sales of the new product in thelaunch territory

• Customer perception evolution

Feedback on strategy / results

Company Target

Marketingstrategyimplementation

Marketinformationcollection

Marketingstrategydevelopment




Strategic objectivesdefinition

Issueidentification

Information needsspecification



Marketingstrategydevelopment


Information sourcesassessment






Marketing strategydevelopment


Study / surveyexecution

Informationanalysis

Market researchset-up



• Within each of the marketing issues tree's questions, there existsmore definitive questions that may or may not be of interest on aparticular project. The following pages show how these more definitivequestions relate to the market issues tree, various market researchtechniques, and the potential end products associated with them

• The first question seeks to define the size and value of the current andpotential market, and to identify who the major competitors may be

• The quickest way to do this may be via desk research, using existingclient data, or via a quick telephone / omnibus survey. Theseapproaches will provide an overview of the market

• For complex markets such as food or drink, it may be necessary to doa more thorough evaluation of the market size and definition ofcompetitors. In this instance, a full scale usage survey or diary studymay be necessary

1. 2. 3. 4. 5. 6. 7.



WHAT IS THE SIZE AND SCOPE OF THE MARKETAND WHO ARE THE COMPETITORS?

Key questions

• Who are the main buyers,lapsed buyers and newbuyers?

• What is the value of themarket?

• Who are the maincompetitors?

• What is our share of market?

Possible market researchapproaches

• Quick wins– Omnibus / telephone

interviews– Desk research– Store exit surveys– Focus groups

• In-depth approach– Usage and attitude surveys– Diary panels

Key outputs

• Definition of existing andpotential market size

• Understanding of maincompetitors

1. 2. 3. 4. 5. 6. 7.



• The next question asks what groups comprise the market. In orderto avoid trying to be 'all things to all people', we need to understandwhat types, or 'segment', of customers exist in the market

• An initial step at this early stage is to determine what all the possibleneeds and wants of various customers are. Interviews and focusgroups are the best tools for uncovering these customers' motives.End products of these techniques should include which productattributes and benefits will be used to segment the market

• Once the product attributes and benefits have been identified, theycan be used to divide customers into groups having similar needsand wants. More quantitative techniques such as the ones listedbelow are typically employed to do this segmentation

1. 2. 3. 4. 5. 6. 7.



WHAT IS THE BEST WAY TO SEGMENT THE MARKET / ARETHERE SEGMENTS WHOSE NEEDS ARE NOT BEING MET?

• What is the 'best' needs-basedsegmentation for this market?

• What segments are goingunserved?

• What is the best valueproposition to attract thesesegments?

• What potential volume could becaptured with that valueproposition?

1. 2. 3. 4. 5. 6. 7.

Key questions

• Quick wins– Focus groups– Depth interviews

• In-depth approach– Attitude / psychographic

segmentation– Conjoint analysis– Benefit segmentation– Concept / product tests– Diary survey– Clinical focus groups– Usage and attitudes


• Clear, actionable marketsegmentation

• Product that meets segment'sneeds

• Expected pay-off for targetingand meeting segment's needs

Key outputs



• The next question in the tree is the first of 2 questions which askwhich of "all things" should we be to the various customersegments. The first question considers product features and price

• Very rarely will a company attempt to serve all of its customersegments. A high end, top quality manufacturer of some durablegood could probably not target an extremely price sensitivesegment. Likewise, a company with no skill or expertise in aparticular product area could not attempt to serve a customersegment willing to pay a high premium for total product area

• Another notion that should be considered when deciding whichsegments to serve is the cost to serve. It would probably not bewise to target a segment which values attributes it would takemajor re-tooling to produce, especially if these attributes arecurrently well produced by competitors

1. 2. 3. 4. 5. 6. 7.



DO I OFFER A SUPERIOR PRODUCTAND PRICE VALUE PROPOSITION?

• What specific features arevalued by each segment?

• How well does my branddeliver against thesefeatures?

• How is each product in thecategory positioned in termsof benefits vs. price?

• Is there an opportunity to geta price premium?

• Would a decrease in priceresult in an overall greatershare and profit?

• What would be the shareimpact of– Increasing features?– Decreasing features?

Key questions

• Quick wins– Focus groups– In-depth interviews– Price sensitivity measure /

Gabor Granger– Analysis of continuous

(Nielsen / IRI) data

• In-depth approach– Choice / decision models– Conjoint analysis– Concept / product tests– Simulated test markets– Test markets– Expert panels


• Likely acceptance of alternativeproduct configurations

• Price / volume demand curve• Products that clearly 'win' for

each segment

Key outputs

1. 2. 3. 4. 5. 6. 7.



• Just as we must consider the product attribute and pricing needsof various segments, we must also consider service aspects.Some customer segments may be willing to pay high pricepremiums for superior service or aspects of service

• Again, cost and ability to serve issues surface with this question.It may not be profitable, even in the long run, to retain a largesalesforce to better serve certain segments, for example

1. 2. 3. 4. 5. 6. 7.



DO I OFFER A SUPERIOR SERVICE VALUEPROPOSITION?

• How important is service toeach segment?

• What are the key drivers ofservice for each segment?

• What is the benefit to theclient of improving service?

Key questions

• Quick wins– Focus groups– Mystery shopping– Telephone survey / omnibus

research

• In-depth approach– Conjoint analysis– Customer satisfaction / service

analysis– Survey-based regression

analysis– Diary experience surveys– Problem detection


• Breakpoints for deliveringservice

• Assessment of benefit to clientfor improving service– Increased loyalty– Greater volume / share

• Identification of opportunities toreduce service levels

Key outputs

1. 2. 3. 4. 5. 6. 7.



• Now that we know which segments exist in the market, and what eachof these segments desires in terms of product, price and service, weneed to consider how the brand is positioned. Here the goal is touncover customer perceptions and determine the effect of alteringthese perceptions. Through various quantitative techniques, we canpredict which segments would purchase new product offerings, howmuch a product's market share might change if its attribute mix ofprice changed, and other such "simulations"

1. 2. 3. 4. 5. 6. 7.



IS MY BRAND POSITIONING APPROPRIATE?

• What are my brandstrengths / weaknesses?

• How important is eachaspect of brand image?

• What is the value of myexisting brand?

• What would be the impacton my share of– Changing the image of my

existing product?– Introducing a new brand

with a different image?

Key questions

• Quick wins– Focus groups– Depth interview

• In-depth approach– Usage and attitudes– Perceptual mapping / image

modeling– Image tracking research– Conjoint analysis– Clinical focus groups– Loyalty pyramid– Eyeball movement research– T-scope tests


• Optimal brand positioning

• Drivers of brand image

• Impact on customer preferencefrom changing image

Key outputs

1. 2. 3. 4. 5. 6. 7.



• Now we can determine if our marketing dollars are being spent in anoptimal manner. Are we undertaking R&D for product attributes ourtarget customers do not care about? Are we not advertising,developing or offering attributes which customers strongly desire?

• We can also tell what the major "levers" are for increasing marginsand profits. Are there one or two inexpensive attributes or serviceitems we currently do not offer that would allow us to increase price tomore than compensate for cost if we do?

1. 2. 3. 4. 5. 6. 7.



ARE MY MARKETING EXPENDITURES EFFICIENTLY ANDEFFECTIVELY SPENT?

• What are the rightexpectations from each ofthe marketing mix elements(e.g., awareness,perception, usage trial, pricesupport, sales)?

• What key measures shouldbe monitored?

• How effective is eachelement / program?– Is spending effective?– Is spending profitable?

• How can the allocation ofresources across marketingmix be improved?

Key questions

1. 2. 3. 4. 5. 6. 7.

• Quick wins– Day after recall– Analysis of existing tracking

study data

• In-depth approach– Usage and attitudes– Life / baseline analysis– Sales response models– Purchase funnel analysis– Acquisition / retention

payment analyses– Advertising effectiveness


• Better measurement andmonitoring systems

• Sales / profit response ofmarketing programs

• Better allocation decisions

• More target marketingexpenditure

Key outputs



• Since the business environment is always changing and marketingprograms are expensive, especially if they are off-target, it is crucialto employ tracking systems. Such systems should identify potentialchanges in customer perceptions, competitive activities, and otherenvironmental changes far enough in advance that strategychanges can be devised and implemented before trouble strikes

1. 2. 3. 4. 5. 6. 7.



DO I HAVE SYSTEMS IN PLACE TOMONITOR MY PERFORMANCE?

• What are the relevantmeasures?

• Which measures should befocused on to providemaximum leverage?

• How often and what level ofdetail should they bemonitored?– Key segments– Geographical– Monthly vs. quarterly

• What are the organizationalimplications?

Key questions

1. 2. 3. 4. 5. 6. 7.

• In-depth approach– Customer satisfaction /

service analysis– Purchase funnel analysis– Usage and attitudes– Tracking study

• Awareness• Image

– Volume vs. profit incentives– Customer and prospect

databases


• Well defined goals andobjectives

• Relevant measures ofperformance

• Weaknesses or leverageableareas vis-à-vis competition

• Empowerment of customerservice representatives

Key outputs



MARKETING ISSUES AND RESEARCH TECHNIQUES

Define marketDefine market

• Omnibus / telephone survey desk research• Store exit surveys• Focus groups• Usage and attitude surveys• Diary panels• Desk research

• Omnibus / telephone survey desk research• Store exit surveys• Focus groups• Usage and attitude surveys• Diary panels• Desk research

To identify segments and gapsTo identify segments and gaps

• Clinical focus groups• Focus groups• Depth interviews• Attitude / psychographic segmentation• Conjoint analysis• Usage and attitudes• Benefit segmentation• Concept and product test• Diary survey

• Clinical focus groups• Focus groups• Depth interviews• Attitude / psychographic segmentation• Conjoint analysis• Usage and attitudes• Benefit segmentation• Concept and product test• Diary survey

To understand brand positioningTo understand brand positioning

• Clinical focus groups• Loyalty pyramid• Eyeball movement research• T-scope tests• Focus groups• Depth interviews• Usage and attitudes• Perceptual mapping / image modeling• Image tracking• Conjoint analysis

• Clinical focus groups• Loyalty pyramid• Eyeball movement research• T-scope tests• Focus groups• Depth interviews• Usage and attitudes• Perceptual mapping / image modeling• Image tracking• Conjoint analysis

To understand product value propositionTo understand product value proposition

• Price sensitivity• Gabor Grainger• Simulated test market• Test market• Expert panels• Analysis of continuous (Nielsen / ICI data)• Focus groups• Depth interviews• Choice / decision models• Conjoint analysis• Concept / product tests

• Price sensitivity• Gabor Grainger• Simulated test market• Test market• Expert panels• Analysis of continuous (Nielsen / ICI data)• Focus groups• Depth interviews• Choice / decision models• Conjoint analysis• Concept / product tests

To analyze marketing expenditureTo analyze marketing expenditure

• Usage and attitudes• Life / baseline analysis• Sales responses models• Purchase funnel analysis• Acquisition / retention payment analysis• Day after recall• Analysis of tracking data• Advertising effectiveness• Sales monitoring

• Usage and attitudes• Life / baseline analysis• Sales responses models• Purchase funnel analysis• Acquisition / retention payment analysis• Day after recall• Analysis of tracking data• Advertising effectiveness• Sales monitoring

To understand service value propositionTo understand service value proposition

• Focus groups• Depth interviews• Conjoint analysis• Customer satisfaction / service analysis• Regression analysis• Hybrid conjoint (e.g., SMART)• Mystery shopping• Telephone survey / Omnibus research• Diary experience surveys• Phenomenological interaction control groups• Problem detection

• Focus groups• Depth interviews• Conjoint analysis• Customer satisfaction / service analysis• Regression analysis• Hybrid conjoint (e.g., SMART)• Mystery shopping• Telephone survey / Omnibus research• Diary experience surveys• Phenomenological interaction control groups• Problem detection

To establish monitoring systemsTo establish monitoring systems

• Customer satisfaction / service analysis• Purchase funnel analysis• Usage and attitudes• Tracking studies• Customers proposed database

• Customer satisfaction / service analysis• Purchase funnel analysis• Usage and attitudes• Tracking studies• Customers proposed database



ONE KEY PRINCIPLE TO REMEMBER FOR MIM"Thermodynamic law" 3

G.I.G.O.G.I.G.O.G.I.G.O.• Poor problem

definition• Poor research

set up• Poor

informationsynthesis/conclusions

• ...

€ wasted or

not earned=

Documents

Market Information Management - Frequently used Market ...srprojects.free.fr/desgest/downloads2/20051206_Mkt... · 12/6/2005 · Market Information Management - Frequently used Market