Post on 16-Aug-2015
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Intro to quantitative and qualitative methods with case studies
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Services70.2%
• We strongly believe that customer data and insight is at the heart of today's most successful businesses
• 3 relevant questions:
What product/service should we put in the market?At what price? And for whom?
• Voice of customer
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ProductPricing
Portfolio
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Step 4: Product optimisation + price setting (conjoint + other research)
Step 2: Needs generation. Brainstorm on what benefits consumers are looking for (qual research)
Step 1: Decide on market positioning (desk research)
Step 3: Narrowing down needs list through quantification(max diff research)
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Volume maximisation
Penetration pricing
MASS MARKETMaximum volumeLow pricesDemand highly elasticLarge decrease in cost when volume increasesMass appealTreat of competition
Skim pricing
NICHELow volumeHigh pricesDemand relatively inelasticLarge cost savings not expected at high volume
Profit/Margin
maximisation
Step 1: Deciding on Positioning Before the customer voice
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No idea about where to position yourself in the market (i.e. an A brand vs. B brand)?
Þ identify gaps in market (desk research/market studies)
Why is it important?
Þ It helps to identify which consumers to talk to when doing research (mass market vs. targeted market)
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Step 2: Understanding the Market Needs:
Understanding which features/product benefits might be of useBut how do we get to a list of features to test?
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Qualitatitive research
Focus groups
In Dept interviews
Online communities
Co creation
Traditional Research: Use of Big Data
Online conversations
Blogs, Forums
ACTIVE BRAINSTORMING PASSIVE BRAINSTORMING
Designed data Organic data
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LIMITED NUMBER OF PEOPLE (< 30)
VERY RICH INFORMATION BASED ON A FEW PEOPLE
to understandwhy, what
QUAL RESEARCH QUANT RESEARCH
WIDER SET OF PEOPLE(> 30 – 1000s)
LIMITED INFORMATION FROM MANY PEOPLE
to understand how many
The starting point - generating a list Narrowing down and quantifying
Step 3: Narrowing Down the Needs List Through the Quantification
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• extended battery life• superior materials (eg glass/metal)• faster processing• clearer voice quality• more connectivity (Wi-Fi, 3G, HDMI)• large apps library• large music & movies catalogue• easy connectivity to TV• lighter weight• ergonomic design• secure back up service• greater internal memory• personal data encryption• wireless charging• simple cloud access• enhanced screen quality (Amoled,
Retina etc.)
• sharper screen resolution• brighter screen colours• better navigation / GPS• open system platform for more choice• stronger reception• more responsive touchscreen• better front camera (eg for
photographing self)• better rear camera (eg for
photographing others)• console quality graphics• enhanced ease of use• water-proofing • dustproofing• shock-proofing• simple connectivity to car audio
Another example – The Smartphone
Many potential features
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On the next few screens, we are going to ask you what features are important to you when you are choosing a Smartphone. The features that will be shown are based on a list of things that other people have said are important to them.On each of the screens, you will see 5 features. Each time we will ask which of the 5 features is most important to you and which feature is least important when you are choosing a Smartphone.There will be 12 of these screens. Please note that you will see the same features on several screens, though in different combinations.
maximum differential approach
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hotspotshigher internet speed
discounted smartphonefamily discount
extra sim for tabletloyalty program
smartphone insurancenorton security
cloud applicationgeek squad
setup aid smartphonemusic streaming
call centre privilegesmobile chat
266237
193121
9993
807069
4340
3532
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high interest
interest
(Average score)
low interest
Interest in Mobile Phone Services
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Simple Methods for Price Setting
Willingness To Pay (WTP)PSM•Gabor GrangerMonadic Price Testing
Step 4: Product Optimisation and Price Setting
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Willingness To Pay (WTP)
The most simple quantitative methodology:
Present/demonstrate the product and ask “how much would you be willing to pay for this?”
> mainly used:
1) for a radically new product, with no idea of what the customer will accept
2) for bargaining products (i.e. where bargaining is allowed, e.g. second hand products)
> In other situations: most often too low prices
> Often overestimation of price sensitivity
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The respondent is asked 4 questions (after having seen the concept):
- At what price on this scale (a wide range) would you consider product X as good value (inexpensive or cheap)
PSM (Price Sensitivity Meter)
- At what price on this scale would you say product X is beginning to get expensive, but you would still consider buying it? (expensive)
- At what price on this scale would product X be so expensive you would never consider it? (too expensive)
- At what price on this scale would product X be so inexpensive that you would doubt its quality? (too cheap)
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PSM
Two underlying motivations:
1. Theory of reasonable prices: Given a product, consumers can somehow form an impression of what they would expect it to cost, or at least a range
2. Psychological pricing effects: too low a price signals bad quality and turn people off
So the “reasonable price range” does have a lower end
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PSM
50 75 100
125
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0
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% Looks inexpensive% Too cheap% Looks expensive% Too expensive
Price
% R
esp
on
den
ts
optimum price or penetration price
perceived normal price
defines acceptable price range
highest reasonable price
lowest reasonable price
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Gabor Granger
Customers are shown different prices (about 4 – 5)For each price, they are asked their willigness to buy at different price point (yes, no or 5-point scale).Extension: if no, ask why “Too expensive” or “Too cheap”
•Different ways:-Purely random selection-Random start price, then increase or decrease depending on previous answer
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Gabor Granger
50 75 100 125 150 175 200 225 250 275 300
0
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Price
% R
esp
ond
en
ts
Too Expensive
Yes
Too Cheap
Ideal price range
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Monadic design
•A very simple methodology
•Respondents are presented with a product concept at a specific price and asked how likely they would be to purchase the product at the specific price.
•Independent groups of respondents do get to see differerent prices
•But each groups only sees one price
Gives more accurate estimation of price sensitivity (than WTP, PSM, GG) but need for more respondents
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Conjoint Research
Conjoint research is about
“Which product characteristics do matter?” “What is the willingness to pay?”
Optimises product composition and pricing in one combined method
Assume the product composition is already known and fixed (e.g. a car has been designed and developed, a pharmaceutical drug is ready to be launched, …), but you need identify the ideal price level (i.e. the price leading to biggest revenue)
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Conjoint is based on the trade-off principle:
you can’t have the best product for the lowest price
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Brand
Price
Feature 1
Feature 2
Feature 3 Feature 4 Feature 5
First of all, conjoint analysis will lead to understanding which impact each of the tested elements (attributes) has on the purchase consideration
Example
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Impact Of or On Competition?
Example: when Tesco gives a Samsung Galaxy as free handset, the share of brand X will go down to 6.3% (from 8.8%), while Tesco will grow from 4.4% to 17.1%
MARKET SCENARIO 1 MARKET SCENARIO 2
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Value of features?
Assume current share of volume is 20%, which refers to the current product in the market including a Sony Ericcson handset. The price of this product is £6.50. If we were to offer a Samsung handset (instead of a Sony Ericsson handset), we can increase the price of the product to £11.50 without loosing any share. So consumers are prepared to pay more if we offer the Samsung handset.
Similar charts (or tables) can be used to determine the value of each feature
£0 £5 £10 £15 £20 £25 £30 £35 £400%
10%
20%
30% Samsung Galaxy Y
Blackberry 9300
HTC One V
Samsung Galaxy S II
Nokia C1-01
Sony Ericcson Xperia Ray
HUAWEI Titan
SIM only
Tested bundle prices
Share
of
volu
me
£6.50
£11.50
Price sensitivity of an attribute (handset included in bundle)
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Product / portfolio optimisation?
TOP 5 BEST PRODUCTS
FULL LIST OF ALL PRODUCTS
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PEOPLE PRODUCT PRICE
Segmentation Product development
Market Segmentation
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What is Segmentation?It’s not this… It’s this…
It’s possible to segment the same group in multiple ways!
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