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module 4

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MKT 100
Paul Finlayson

Module 4: Understanding Buyer Behaviour Researching Customers • private information - firm profits f/ unique info and insights it has about production techniques and trade secrets • trade secret - insight a business has about the behaviour of customers not common knowledge (Internet) = driver of competitive success and profitability • imp consumer research activity is track customer saftisf survey, research studies • learning about demand = market efficiency • The Typical Market Research Process o Problem Definition/ Question to be Answered o Research Design Exploratory research • wants additional information (internal records, customer complaints, financial analysis trends and discussion with distributors and suppliers) before undertaking further research. • The entrepreneur who launched the OXO Good Grips line of kitchen tools presented in Module 6 undertook exploratory research. He talked to retail buyers about their satisfaction with existing kitchen tools. Descriptive Research • used to describe customers, either small numbers of customers in- depth (qualitative research), or large numbers by survey research (quantitative research). This research gathers descriptive profiles of customers and measures customer satisfaction, studies product use, and segments customers. • Repeated study of the same customers over time is called longitudinal research. This is best for measuring changing demand (changing customer preferences as discussed in Module 1). Cause and Effect Research • Used to explore the question “Does X cause Y?” • For example: the effects of price decreases on sales o the effect of a customer relationship campaign on o increasing customer profitability, or o the effect of TV advertising campaign spending on sales (such as presented in Module 9 Advertising.xls and next slide) Qualitative Research – designer research faster and better • Customer Visits o In B2B the customer visit needs to be arranged by the sales representative so they lead the initiative. No going behind the back of sales. Their commissions depend on customer trust and goodwill. o 10 to 20 random chosen customers should be visited including those who are leaders in adopting new Module 4: Understanding Buyer Behaviour technology. 10-20 reduces an extreme atypical customer opinion having too much influence in later decisions. o Listen to how the customer talks about the product or service. It tells you how they think about the benefits, what problems they have, and how to improve product features and design. You should adopt the customers’ words and metaphors. o Do not treat the visit as a sales call. Do not engage in disparaging the competition. Instead, be open to their innovations that can be quickly imitated. o Observe the product in use in every situation. Photograph innovative customer adaptation of your product, package, or service to improve its performance in a particular usage situation. This may suggest a new design feature. o Two or three team members should make the visit together. In the car or on the plane back, time spent talking while the memory is fresh is invaluable. Shared expectations, perceptions, and insights are best when made soon after the customer visit. Team members will discover what they did not notice and thus learn from each other to become better listeners and observers. Focus groups • most common consumer research method used today. It consists of a group of six to 12 people who focus on a particular question or issue in a free-wheeling discussion for about two hours. • It is used to test products, product concepts and ad campaigns. • Bank of America got the “Keep the Change” name for its new product from a focus group (see M6). • It is good to have other management in attendance as new questions can be passed to the moderator. • If you can, conduct focus groups until no new insights surface: this usually takes about 3-4 focus groups. • Take the concept of focus groups a step further with experts recruited to participate in high level product development focus groups. o Consumer surveys A Probability Sample • A probability sample is a sample where all respondents in the population or segment to be studied have a known (nonzero) chance of being chosen from the population/segment being studied. • A random sample is a probability sample where respondents are randomly chosen from a complete list of the population. Typical samples range in size from 400 to 1,000 participants. Module 4: Understanding Buyer Behaviour • The primary advantage of random samples is that they greatly reduce the potential for sampling error in the results. • In addition, sampling is much more cost effective
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