Mr course module 06

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 [email protected]

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 19 inch Screen 512KB RAM

80GB Disk 19 inch Screen 512KB RAM

Card Sort

Conjoint & DCM (Discrete Choice Modelling)

Pair-wise Comparisons (Discrete Choice)



or


Not Buy Def Buy 1 2 3 4 5 6 7 8 9 10 11

Ratings Conjoint



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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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 [email protected]

mailto:[email protected]

© The Future Place, 38 South View Rd, Nottingham, NG4 3QL, UK

Significant Digits and

Decimal Places

Ray Poynter

Extension Material


Significant Digits

• 3 digits?

• 2 digits?

• 1 digit?

• SD ≠ DP


Which is the middle value?


Correlation


R-squared


Money 2SD or 3SD


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


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


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


Thank you

Questions?

Marketing

Mr course module 06