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Students, now we have covered various theoretical concepts inmarketing research. We have dealt how to marketing research.Now today, we will discuss the various applications of marketingresearch.1. Product Research2. Price Research3. Distribution Research4. Promotion Research

Product ResearchThe main product decisions that need to be considered are thephysical design of the product and its demand potential. Manycompanies spend millions of rupees onR & D in order to comeup with a new product that will satisfy consumer needs. We covervarious information requirements and techniques used for thispurpose.A managerial decision to use a pretest market analysis is justifiedif sufficiently accurate predictions can be achieved, the timing ofthe analysis is before large investment commitments are necessary,useful diagnostics for improvement are generated, and the cost ofthe analysis is reasonable. In these situations failures can bereduced, time-to-market can be shortened, and products improvedto increase customer satisfaction

New Product ResearchNew product development is critical to the life of mostorganizations as there will be uncertainties associated with them.Thus, the purpose of marketing research for them would reducethe uncertainties associated with the new products. Four stages ofnew product development could be seen:• Generating New-Product Concepts• Evaluating and Developing those Concepts• Evaluating and developing the actual products• Testing in a Marketing Programme

Concept GenerationThere are two types of concept generation research:• Need identification research:• Concept Identification

Need Identification ResearchThe emphasis in need research is on identifying unfilled needs inthe market. Following are some examples:a. Perceptual Maps, in which products are positioned along the

dimensions by which users perceive and evaluate, can suggestgaps into which new products might fit. Perceptual mappingis a graphics technique used by marketers that attempts tovisually display the perceptions of customers or potentialcustomers. Typically the position of a product, product line,brand, or company is displayed relative to their competition.

Perceptual maps can have any number of dimensions but themost common is two dimensions. Any more is a challenge todraw and confusing to interpret. The first perceptual map belowshows consumer perceptions of various automobiles on the twodimensions of sportiness/conservative and classy/affordable. Thissample of consumers felt Porsche was the sportiest and classiestof the cars in the study (top right corner). They felt Plymouth wasmost practical and conservative (bottom left corner).

Perceptual Map of Competing ProductsCars that are positioned close to each other are seen as similar onthe relevant dimensions by the consumer. For example consumerssee Buick, Chrysler, and Oldsmobile as similar. They are closecompetitors and form a competitive grouping. A companyconsidering the introduction of a new model will look for an areaon the map free from competitors. Some perceptual maps usedifferent size circles to indicate the sales volume or market shareof the various competing products.Displaying consumers’ perceptions of related products is onlyhalf the story. Many perceptual maps also display consumers’ideal points. These points reflect ideal combinations of the twodimensions as seen by a consumer. The next diagram shows astudy of consumers’ ideal points in the alcohol/spirits productspace. Each dot represents one respondents ideal combination ofthe two dimensions. Areas where there is a cluster of ideal points(such as A) indicates a market segment. Areas without ideal pointsare sometimes referred to as demand voids.

Perceptual Map of Ideal Points and ClustersA company considering introducing a new product will look forareas with a high density of ideal points. They will also look forareas without competitive rivals. Placing both the ideal points andthe competing products on the same map best does this.Some maps plot ideal vectors instead of ideal points. The mapbelow, displays various aspirin products as seen on the dimensionsof effectiveness and gentleness. It also shows two ideal vectors.The slope of the ideal vector indicates the preferred ratio of thetwo dimensions by those consumers within that segment. Thisstudy indicates there is one segment that is more concerned witheffectiveness than harshness, and another segment that is moreinterested in gentleness than strength.

Perceptual Map of Competing Products with IdealVectors

a. Perceptual maps need not come from a detailed study. Thereare also intuitive maps (also called judgmental maps orconsensus maps) that are created by marketers based on theirunderstanding of their industry. Management uses its bestjudgement. It is questionable how valuable this type of mapis. Often they just give the appearance of credibility tomanagement’s preconceptions.

LESSON 15:APPLICATIONS OF MARKET RESEARCH

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When detailed marketing research studies are donemethodological problems can arise, but at least theinformation is coming directly from the consumer. There isan assortment of statistical procedures that can be used toconvert the raw data collected in a survey into a perceptualmap. Preference regression will produce ideal vectors. Multidimensional scaling will produce either ideal points orcompetitor positions. Factor analysis, discriminant analysis,cluster analysis, and logit analysis can also be used. Sometechniques are constructed from perceived differencesbetween products, others are constructed from perceivedsimilarities. Still others are constructed from cross priceelasticity of demand data from electronic scanners.

b. Social and environment trends can be analyzed.c. An approach termed benefit structure analysis has product

users identify the benefits desired and the extent to whichthe product delivers those benefits, for specific applications.The result is an identification of benefits sought that currentproducts do not deliver.

d. Product users might be asked to keep a diary of a relevantportion of their activities. Analysing such diaries can providean understanding of unsolved problems associated with aparticular task.

e. In focus-group interviews, product users might discussproblems associated with product-use situations. A focusgroup is a form of qualitative research in which a group ofpeople, are asked about their attitude towards a product,concept, advertisement, idea, or packaging. Questions areasked in an interactive group setting where participants arefree to talk with other group members. In the world ofmarketing, focus groups are an important tool for acquiringfeedback regarding new products.

In particular, focus groups allow companies wishing to develop,package, name, or test market a new product, to discuss, view,and/or test the new product before it is made available to thepublic. This can provide invaluable information about the potentialmarket acceptance of the product.In traditional focus groups, a pre-screened (pre-qualified) groupof respondents gathers in the same room. They are pre-screenedto ensure that group members are part of the relevent targetmarket and that the group is a representative subgroup of thismarket segment. There are usually 8 to 12 members in the group,and the session usually lasts for 1 to 2 hours. A moderator guidesthe group through a discussion that probes attitudes about aclient’s proposed products or services. The discussion isunstructured (or loosely structured), and the moderator encouragesthe free flow of ideas. Although the moderater is seldom givenspecific questions to ask, he/she is often given a list of objectivesor an anticipated outline.Client representatives observe the discussion from behind a one-way mirror. Participants cannot see out, but the researchers andtheir clients can see in. Usually, a video camera records the meetingso that it can be seen by others who were not able to travel to thefocus group site. Researchers are examining more than the spokenwords. They also try to interpret facial expressions, body language,

and group dynamics. Transcripts are also created from the videotape.Respondents often feel a group pressure to conform and this cancontaminate the results. But group dynamics is useful indeveloping new streams of thought and covering an issuethoroughly.

Types of Focus GroupsTwo-way focus group - one focus group watches another focusgroup and discusses the observed interactions and conclusionsDual moderator focus group - one moderator ensures the sessionprogresses smoothly, while another ensures that all the topics arecoveredDueling moderator focus group - two moderators deliberatelytake opposite sides on the issue under discussionRespondent moderator focus group - one or more of therespondents are asked to act as the moderator temporarilyClient participant focus groups - one or more clientrepresentatives participate in the discussion, either covertly or overtlyMini focus groups - groups are comprised of 4 / 5 members.Telesession (or teleconference) focus groups - telephonenetwork is usedOn-line focus groups - computers and internet network is usedTraditional focus groups can provide accurate information, andare less expensive than other forms of traditional marketingresearch. There can be significant costs however : if a product is tobe marketed on a nation-wide basis, it would be critical to gatherrespondents from various locales throughout the country sinceattitudes about a new product may vary due to geographicalconsiderations. This would require a considerable expenditure intravel and lodging expenses. Additionally, the site of a traditionalfocus group may or may not be in a locale convenient to a specificclient, so client representatives may have to incur travel and lodgingexpenses as well.

Online Focus GroupsWith the advent of large scale computer networks, such as theInternet, it is now possible to link respondents electronically.Respondents share images, data, and their responses on theircomputer screens. This avoids a significant amount of travelexpenses. For instance, NFO Research, a large market researchcompany, has a system of on-line focus groups which allowsrespondents from all over the country to gather, electronically,while avoiding countless logistical headaches. Online groups areusually limited to 6 or 8 participants. The biggest problem withonline focus groups is ensuring that the respondents arerepresentative of the broader population (including computernon-users).While such a system does eliminate some of the logistical headachesand travel expenses associated with conducting focus groups, itstill requires one or more representatives from a client to bephysically located with the moderator conducting the focus group.Only in this way can questions be added in real time to furtherprobe a particular response. Thus, even the online system incurssome travel expenses since a client representative will need to travelto a research site or vice versa.

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Accordingly, there is a need for a system and method of conductingfocus groups using remotely located participants, including oneor more moderators, one or more clients and one or morerespondents, who are all physically remote from each other. Inorder to do this, such a system must allow for the implementationof at least two separate chat discussions to be conductedsimultaneously between the three classes of focus groupparticipants to provide an electronic analog to a one-way mirrorsegregating clients from respondents. In addition, such a systemmust allow and prohibit participation in the different chatdiscussions based on the class of the participant.f. In Lead user analysis, instead of just asking users what they

have done, their solutions are collected more formally. Leadusers are those who face needs early that later will be general ina market place; they are positioned to benefit significantly bysolving problems associated with these needs. Once a lead useris identified, the concepts that company or person generates aretested.

Lead users are an extremely valuable cluster of customers andpotential customers who can contribute to identification of futureopportunities and evaluation of emerging concepts. Understandingthese users can provide richness of information relatively efficiently.Eric von Hippel introduced the concept of ‘Lead Users’ in themid 1980s. He defined the lead user as those users who displaythe following two characteristics:They face the needs that will be general in the market place, but facethem months or years before the bulk of that marketplaceencounters themThey are positioned to benefit significantly by obtaining a solutionto those needs Where a company has experience within a marketplace, it should be relatively straight forward to identify thosecustomers who demand special solutions, push existing solutionsto the limit or who have customized standard products to satisfytheir own desires.Von Hippel suggests that a key element in identifying lead users isto first identify the underlying trends, which result in these usersor customers having a leading position. The lead users are thosewho are at the leading edge of these trends.Where possible, lead users should not necessarily be sought fromwithin the usual customer base, it can be useful to look beyondexisting customers perhaps to users of complementary orsubstitute goods or in analogous markets. In addition, the leadusers may only have an interest in improvements or changes tospecific elements or attributes of a product.There are few industries of product types where there are no leadusers who have requirements or demands ahead of the rest. Bytargeting these clusters, it is possible to identify opportunities forfuture products and evaluate emerging concepts. Where possible,if lead users are sufficiently interested, then they can be consideredas a part of the extended product design team. They may even beprepared to share the burden of investment in order to find asuitable solution.Furthermore, if today’s lead users do not find appropriatesolutions from existing suppliers, then they could well turn intotomorrow’s competitors.

Concept IdentificationDuring a New-product development process there is usually apoint where a concept is formed but there is no tangible usableproduct that can be tested. The concept should be defined wellenough so that it is communicable. There may be simply a verbaldescription, or there may be a rough idea for a name, a package, oran advertising approach. The aim is to determine if the conceptwarrants further development and to provide guidance on how itmight be improved and refined. Conjoint analysis typically is usedto obtain an ideal combination of the concept’s various features.Thus, research questions might include:• Are there any major flaws in the concept?• What consumer segments might be attracted to it?• Is there enough interest to warrant developing it further?• How might it be altered or developed further?Most concept testing, however, involves exposing people to theconcept and getting their reactions. In exposing people to theconcept, the market researcher needs to address a series ofquestions:• How are the concepts exposed?• To whom are the concepts exposed?• To what are they compared?• What questions are asked?It is important to make a distinction between the different typesof testing applied at different stages of the development process.This helps the development team to understand the purpose ofeach test and consider how data is to be captured.Different testing methods will have different objectives, approachesand types of modeling. Four general types of testing are describedin more detail:• Exploratory tests• Assessment tests• Validation tests• Comparison testsISO 9000 tests are also briefly summarised.

Exploratory TestsCarried out early in the development process during the fuzzyfront end, when the problem is still being defined and potentialsolutions are being considered, preferably once the developmentteam has a good understanding of the user profile and customerneeds. The objective of the exploratory test is to examine andexplore the potential of preliminary design concepts and answersome basic questions, including:• What do the users think about using the concept?• Does the basic functionality have value to the user?• Is the user interface appropriate and operable?• How does the user feel about the concept?• Are our assumptions about customer requirements correct?• Have we misunderstood any requirements?This type of early analysis of concepts is potentially the mostcritical of all types of prototyping and evaluation, for if thedevelopment is based on faulty assumptions or misunderstanding

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about the needs of the users, then problems are almost inevitablelater on. Data collection will tend to be qualitative based onobservation, interview and discussion with the target audience.Ideally, the customer should be asked to use the product withouttraining or prompting, to assess the intuitiveness of controls andinstructions. Some quantitative measures may be appropriate, suchas time to perform tasks, number of failures or errors.

Assessment TestsWhile the exploratory test aims to explore the appropriateness ofa number of potentially competing solutions, the assessmenttest digs into more detail with a preferred solution at a slightlylater stage of development. The main aim of an assessment testis to ensure that assumptions remain relevant and that moredetailed and specific design choices are appropriate. The assessmenttest will tend to focus on the usability or level of functionalityoffered and in some cases, may be appropriate for evaluating earlylevels of performance. Assuming that the right concept has beenchosen, then the assessment test aims to ensure that it has beenimplemented effectively and answer more detailed questions, suchas:• Is the concept usable?• Does the concept satisfy all user needs?• How does the user use the product and could it be more

effective?• How will it be assembled and tested and could this be

achieved in a better way?• Can the user complete all tasks as intended?Assessment testing typically requires more complex or detailedmodels than the exploratory test. A combination of analyticalmodels, simulations and working mock ups (not necessarily withfinal appearance or full tooling) will be used.The evaluation process is likely to be relatively informal, includingboth internal and external stakeholders. Data will typically bequalitative and based on observation, discussion and structuredinterview. The study should aim to understand why users respondin the way that they do to the concept.

Validation TestsThe validation test is normally conducted late in the developmentprocess to ensure that all of the product design goals have beenmet. This may include usability, performance, reliability,maintainability, assembly methods and robustness. Validationtests normally aim to evaluate actual functionality and performance,as is expected in the production version and so activities shouldbe performed in full and not simply walked through.It is probable that the validation test is the first opportunity toevaluate all of the component elements of the product together,although elements may have been tested individually already. Thus,the product should be as near to representing the final item aspossible, including packaging, documentation and productionprocesses. Also included within validation tests will be any formalevaluation required for certification, safety or legislative purposes.Compared to an assessment test, there is a much greater emphasison experimental rigour and consistency. It may be preferable forevaluation to be carried out independently from the design team,

but with team input on developing standards and measurementcriteria.Data from a validation test is likely to be quantitative, based onmeasurement of performance. Normally, this is carried out againstsome benchmark of expected performance. Usability issues maybe scored in terms of speed, accuracy or rate of use, but shouldalways be quantified. Issues such as desirability may be measuredin terms of preference or user ranking. Data should also be formallyrecorded, with any failures to comply with expected performancelogged and appropriate corrective action determined.

Comparison TestsA comparison test may be performed at any stage of the designprocess, to compare a concept, product or product element againstsome alternative. This alternative could be an existing solution, acompetitive offering or an alternative design solution. Comparisontesting could include the capturing of both performance andpreference data for each solution. The comparison test is used toestablish a preference, determine superiority or understand theadvantages and disadvantages of different designs.ISO 9000 testsISO 9000 defines a number of test activities:

Design ReviewA design review is a set of activities whose purpose is to evaluatehow well the results of a design will meet all quality requirements.During the course of this review, problems must be identifiedand necessary actions proposed.

Design VerificationDesign verification is a process whose purpose is to examine designand development outputs and to use objective evidence to confirmthat outputs meet design and development input requirements.

Design Validation

Design validation is a process whose purpose is to examine resultingproducts and to use objective evidence to confirm that theseproducts meet user needs.

Product Evaluations and DevelopmentThe aim is to predict market response to determine whether ornot the product should be carried forward.

Use TestingThis gives the users a reasonable time to feel the product andinquires their reactions and their intentions to buy it. Researcherscan contact respondents in shopping centers, by personal visits totheir homes or offices, or on telephone.

Limitations

• Due to unclear instructions, a misunderstanding, or lack ofcooperation, the respondents may nor use the productcorrectly and may therefore report a negative opinion.

• The fact that they were given a free sample and areparticipating in a test may distort their impressions.

• Even when repurchase opportunities were made available,such decisions may be quite different than when they aremade in a more realistic store situation.

• The users will not accept the product over a long period oftime.

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• They may inflate their intention to buy. Consumers may saythat they will buy the product but may end up not doing so.

Blind-use TestingEven though a product may be proved superior in the laboratory,the consumer may not perceive it to be superior. For e.g., Amulsweets, which was perceived as a superior by the company by allstandards, were introduced in the market. It was supposed to behit during Diwali time and advertisements were released to propup sales. Unfortunately the consumers perceived the product as apremium product and did not substitute their purchases fromthe local Halwai.

Predicting Trial PurchaseTo predict trial levels of new, frequently purchased consumerproducts, ESP (Estimating Sales Potential) model has beendeveloped. Trial levels were predicted on the basis of three variables:• Product class penetration (PCP), the percentage of

households purchasing at least one item in the product classwithin one year.

• Promotional expenditures-total consumer-directedpromotional expenditures on the product.

• Distribution of the product-percentage of stores stockingthe product (weighted by the store’s total sales volume).

Once the model is estimated, it can be applied to other newproducts. The researcher simply estimates the percentage ofhousehold using the product class, the total expenditures plannedfor the new product, and the expected distribution level. Themodel will then estimate the trial level that will be obtained.Trial also can be estimated directly using controlled shoppingexperience. A respondent is exposed to the new product promotionand allowed to shop in a simulated store or in an actual store inwhich the product is placed. The respondents then have anopportunity to make a “trial” or first purchase of the product.

Pretest MarketingTwo approaches are used to predict the new brand’s market share:

Preference Judgments

Here the preference data are used to predict the proportion ofpurchases of the new brand that respondents will make giventhat the new brand is in their response set. These estimates for therespondents in the study are coupled with an estimate of theproportion of all people who will have the new brand in theirresponse set., to provide an estimate of market share. This is alsoused to analyse the concomitant market share loses of other brands.If the firm has other brands in the market, such information canbe critical.Trial and repeat purchase levels: This is based on the respondent’spurchase decisions and intentions-to-buy judgments. A trialestimate is based on the percentage of respondents who purchasethe product in the laboratory, plus an estimate of the product’sdistribution, advertising (which will create product awareness),and the number of free samples to be given away. The repeat-purchase rate is based on the proportion of respondents whomake a mail order repurchase of the new brand and the buying-intentions judgments of those who elected not to make a mailorder repurchase. The product of the trial estimate and the repeatpurchase estimate become a second estimate of market share.

Test MarketingTest marketing allows the researcher to test the impact of the totalmarketing program, with all its interdependence, in a marketcontext as opposed to the artificial context associated with theconcept and product tests that have been discussed.

Functions

• To gain information and experience with the marketingprogram before making a total commitment to it.

• To predict the program’s outcome when it is applied to thetotal market.

Types of Test Market

• The sell-in test markets are cities in which the product issold just as it would be in a national launch. The product hasto gain distribution space.

• The controlled-distribution scanner markets (CDSM)are cities for which distribution is pre-arranged and thepurchases of a panel of customers are monitored usingscanner data.

Certain parameters that have to be looked into while decidingsell-in test market:• Representativeness: Ideally, the city should be fairly

representative of the country in terms of characteristics thatwill affect the test outcome, such as product usage, attitudesand demographics.

• Data Availability: Information about Store audit is helpfulin evaluating the test. The selected cities should containretailers who will cooperate with store audits.

• Media isolation and Costs: It is desirable to avoid mediaspill-over. Using media that “spill-out” into nearby cities iswasteful and increases costs. Conversely, “spill-in” mediafrom nearby cities can contaminate a test. Media cost isanother consideration.

• Product flow: It may be desirable to use cities that don’thave much “product-spillage” outside the area.

• Number: A single city can lead to unreliable results becauseof the variations across cities of both brand sales andconsumer response to marketing programs.

• Implementing and controlling: The test should becontrolled in such a manner that it ensures the marketingprogram is implemented in the test area so as to reflect thenational program. The test itself may tend to encouragethose involved to enhance the effectiveness of the marketingprogram. Salespersons may be more aggressive. Retailersmay be more cooperative. The competitors may react bydeliberately flooding the test areas with free samples or in-store promotions. Even they can retaliate or can alsomonitor the results themselves.

• Timing: Normally, a test market should be in existence forone year, so that all important seasonal/cultural factors canbe observed and estimated.

• Measurement: The basic measure is sales based onshipments or warehouse withdrawals. Store audit dataprovide actual sales figures and are not sensitive to inventoryfluctuations. They also provide information on: distribution,

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shelf-facings, and in-store promotional activity. Measuressuch as brand awareness, attitude, trial purchase, and repeatpurchase are obtained directly from the consumer. Thisinformation helps evaluate the marketing program and canhelp interpret sales data. The most useful informationobtained from consumers is whether they bought theproduct at least once, whether they were satisfied with it, andwhether they repurchased it or plan to.

• Costs: Costs which are quantifiable, include - developmentand implementation of the marketing program; preparationof test products; administration of the test and collection ofdata associated with the test. The costs and risks that maydelay the launch of a new product are more difficult toquantify. If a new product launch is delayed, an opportunityto gain a substantial market position might be lost.

Pricing ResearchResearch may be used to evaluate alternative price approaches fornew products before launch or for proposed changes in productsalready in the market.

Pricing Approaches

• Gabor and Grainger Method (Price skimming strategy),where different prices for a product are presented torespondents, who then are asked if they would buy. A “buy-response” curve of different prices, with the correspondingnumber of affirmative purchase intentions, is produced. Theobjective is to generate as much profit as possible in thepresent period.

• Multibrand-choice Method (Share penetration strategy),where respondents are shown different sets of brands in thesame product category, at different prices, and are askedwhich they would buy. This allows the respondents to takeinto account competitors’ brands, as they normally wouldoutside such a test. Thus, this technique represents a formof simulation of the point of sale. The objective is tocapture an increasingly larger market share by offering a lowerprice. Pricing research for the two different approaches differssubstantially in terms of the information sought.

Following questions are generally asked with regard to pricingresearch:• At what price would you consider the product to be so

expensive that you would not consider buying it? (Tooexpensive)

• At what price would you consider the product to be pricedso low that you would feel the quality couldn’t be very good?(Too cheap)

• At what price would you consider the product starting to getexpensive, so that it is not out of the question, but youwould have to give some thought to buying it? (Expensive)

• At what price would you consider the product to be abargain-a great buy for the money? (Cheap)

Research for Skimming PricingThis is based on the concept of pricing the product, at the point atwhich profits will be the greatest until market conditions changeor supply costs dictate a price change. Under this strategy, theoptimal price is the one that results in the greatest positive difference

between total revenues and total costs. This implies that theresearcher’s major tasks are to forecast the costs and the revenuesover the relevant range of alternative prices.

Research for Penetration PricingThis is based on the concept that average unit of production costscontinue to go down as cumulative output increases. Potentialprofits in the early stages of the product life cycle are sacrificed inthe expectation that higher volumes in later periods will generatesufficiently greater profits to result in overall profit for the productover its life.Following pricing pattern is adopted to increase market share:a. Offer a lower price (even below cost) when entering the

market.b. Hold that price constant until unit costs produce a desired

percentage markup.c. Reduce price as costs fail to maintain markup at the same

desired percentage.Despite the ubiquitous nature of the above questions, researcherscommonly encounter four limitations when using this approachfor pricing research:I. it provides no competitive information.II. it relies on price awareness.III.it is inefficient when evaluating numerous product

specifications.IV.it relies on aggregate-level analysis.Each limitation is discussed below.

Provides no Competitive InformationA concept test asks respondents to evaluate how likely they wouldbe to purchase a specific product without any information aboutother products that might be available in the market. Whenshopping, consumers generally have the chance to see a set ofcompeting products and pick one from the set. When presentedwith a set of products to select from, consumers can make trade-offs between features and price to determine their preferred product.In the absence of this comparative task, respondents may havedifficulty answering reliably.

Relies on Price AwarenessThe respondent compares the price presented in the concept to aninternal reference price to determine if the price is fair or not. Thisdetermination is based on a respondent’s awareness of the currentpricing in the category.

Inefficient to Evaluate Various Product SpecificationsOften, a researcher would like to evaluate a small number ofspecific product variations at the same time price is being evaluated.For instance, there might be an interest in the market’s willingnessto pay for a specific feature or how the inclusion or exclusion of aproduct characteristic influences purchase likelihood. The concepttest can be used to evaluate these various specifications. However,most researchers would suggest that each respondent only evaluateone concept. Therefore to evaluate various product specifications,the total sample size must grow. To illustrate, if we wished 200observations per cell, and we are only testing three prices (threecells), we would require 600 respondents. However, if we have

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three alternative product variations, with each variation at threeprices, we now have nine cells and would require 1800 respondents.Relies on aggregate-level analysisA concept test will rely on aggregate, or at most subgroup-levelanalysis. That is, this approach will make respondent’sheterogeneity difficult to detect and measure.The traditional concept test can be effectively used in pricingresearch when the product features are already determined, thelevel of price awareness is high, and the competitive context issuch that evaluating a single product is not too limiting.

Distribution Research

Traditionally, the distribution decisions in marketing strategyinvolve:• The number and location of salespersons,• Retail outlets,• Warehouses, and• The size of discount to be offered.The discount to be offered to the members in the channel ofdistribution usually is determined by what existing or similarproducts are offered, and also whether the firm wants to follow a“push” or a “pull” strategy.

Warehouse and Retail Location Research

Location decisions include:“What costs and delivery time would result,if we choose one location over another?”The approximate location (optimal location), that will minimizethe distance to customers, weighted by the quantities purchased,will have to be determined. Chain shops with multiple outletsand franchise operations must decide on the physical location oftheir outlets. Data about surrounding residential neighbourhood,income levels, and competitive stores would help in choosingoptimal location.

Number and location of Sales RepresentativesHow many sales representatives should be there in a given territory?

Approaches

• Sales effort approach- when the product line is firstintroduced and there is no operating history to provide salesdata. This is done by:

ii. Estimating the number of sales calls required to sellto, and to service, prospective customers in an area fora year. This will the sum of the number of visitsrequired per year to each prospect (customer) in theterritory.

iii. Estimating the average number of sales calls perrepresentative that can be made in that territory.

iv. Divide the estimate in step (i) by the estimate in step(ii) to obtain the number of sales representativesrequired.

• Statistical analysis approach- is used after the salesprogram is under way. Once a sales history is available fromeach territory, an analysis can be made to determine if theappropriate number of sales representatives is being used in

each territory. An analysis of actual sales versus marketpotential for each sales representative can be made. Also,following inferences can be made:

i. Average market potential is less as per each salesrepresentative

ii. Territory, which have too many sales representativesiii. Market potential is more but have too few sales

representatives• Field Experiment approach- is also applicable only after

the sales program has begun. Experiments are done with thecalls made, to determine the number and location of salesrepresentatives. This is done in two ways:

i. Making more frequent calls on some prospects andless frequent calls on others, in order to see the effecton overall sales, keeping the number of salesrepresentatives unchanged.

ii. Increasing the number of representatives in someterritories and decreasing them in others to determinethe sales effect.

Promotion ResearchHere the focus is on the decisions that are commonly made whendesigning a promotion strategy. The decision for the promotionpart of a market strategy can be divided into:• Advertising decisions, which have long-term effects.• Sales Promotion decisions, which affect the company in

the short term.Companies spend more time and resources on advertising researchthan on sales promotion research because of the greater risk anduncertainty in advertising research.Advertising Research: Advertising decisions are more costly andrisky. Advertising research involves generating information formaking decisions in the:• Awareness stage• Recognition stage• Preference stage, and• Purchasing stageMost often, advertising research decisions are about advertisingcopy. Marketing research helps to determine how effective theadvertisement will be. Research on media decisions is separatefrom advertising research.The effectiveness of an advertisement depends upon the brandinvolved and its advertising objectives. Four categories are used inadvertising research:• Advertisement recognition• Recall of the commercial and its contents• The measure of commercial persuasion, and• The impact on the purchase behavior.

Advertising RecognitionThe respondents are tested whether they can recognize theadvertisement as one they have seen before.

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ReferencesDonald R. Cooper – Business Research Methods, Tata McGraw –Hill PublicationEasterby-Smith M et al- Management Research-an introduction(Sage Publications, 1991)Gallagher, J. William, “Report Writing for Management”, Addison-WesleyGolen, P. Stevan, “Report Writing for Business and Industry”,Business Communication ServiceKothari C R – Quantitative Techniques (Vikas Publishing House3rd ed.)Levin R I & Rubin DS - Statistics for Management (Prentice Hallof India, 2002)Nargundkar R – Marketing Research Text and Cases (Tata McGraw-Hill 2002)Miller D C- Handbook of Research Design and SocialMeasurement (Sage Publications, 1991)Paul D. Leedy, Practical Research: Planning & Design, Prentice HallR. Lesikar and John Pettit, Report Writing for Business

Notes