Understand The Process Of Market Research

Market Research To understand the process of market research and assess the information that is most impactful to the plan that is in play. The goal is to look at what information is available and determine how to best apply it to the required decisions. Welcome to Marketing Mini Sims: Using Market Research! Understanding how to use market research and assessing available information is an important first step for being successful in the marketplace. This mission will focus on your ability to extract important information about the market and determine how to use it to best move forward in building a plan to succeed. Basic Simulation Suggested Pre-Requisite: Planning and the Marketing Mix LEARNING OBJECTIVES After completing this simulation you should be able to: * Explain the differences between primary and secondary data sources * Describe common types of market research data * Analyze the requirements of the luxury goods market * Apply research data in support of understanding consumer preferences How You Earn Your Grade Each Marketing Mini Sim is comprised of two parts, each worth 50% of your grade. * Accomplishing a mission goal or set of goals associated with the simulation topic * Answering a series of questions to demonstrate your understanding of the topic Choose your name and avatar image. Player name Student Success Using Market Research Mission Goals Feature Desirability for Luxury Trendfollowers of at least 90% Market Share for Luxury Trendfollowers of at least 85% You have 3 turns to complete this Mission. I've Been Searching For So Long Susan Ian, our Director of Market Research, will be your point person throughout this mission. Before looking at the available market data, Ian will spend time with you on how MARKET RESEARCH can factor into your success. As Susan mentioned, market research provides an important basis for the many necessary decisions required to bring a product to market. Marketers are always looking for information that can help them make better informed decisions. Although market research does not guarantee a successful product, not conducting it will certainly increase the risk of a failed product. Ian We will spend the first part of this mission looking at general data about the LUXURY market to get a sense of what background information is available. This will provide a foundation for looking further into more detailed data to support our decision-making process. Ian General data, harvested from a number of publicly available industry reports, is known as SECONDARY DATA. PRIMARY DATA, which is more detailed data gathered by our own analysts, helps us make better informed decisions that can be critical to meeting our FEATURE DESIRABILITY and MARKET SHARE goals. Ian Click FINISH to begin our look at available market information. FINISH Let's Call Research Ian The luxury goods market is both very large and very profitable. Our backpacks target the LUXURY TRENDFOLLOWER market segment that makes up a part of the entire luxury goods market. The overall luxury market exceeds a trillion dollars. Ian Looking at the distribution of the market geographically, the market for luxury goods in the United States is as large as the combination of the next five countries combined. Due to a very high standard of living, higher disposable incomes, a significant high net worth population and cultural and social norms, luxury goods are well received in the United States. Ian What factors do you think are most important to luxury buyers? Brand Price Quality Label Student Brand The value of a brand is built on many elements, including perceived value. Ian Click on the SEGMENT tab and take some time to navigate through each market segment. Compare the data in each segment with the LUXURY TRENDFOLLOWER market segment. This represents the kind of primary data that is typically collected on customers—in our case, backpack buyers. Ian There are four primary categories of information provided. Let's first focus on DEMOGRAPHICS. What is the total MARKET SIZE for all segments combined? 100,000 90,000 98,000 95,000 Student 98,000 School Children @ 35,000, University Students @ 24,000, Urban Commuters @ 20,000, Outdoor Enthusiasts @ 14,000 and Luxury Trendfollowers @ 5,000 for a total of 98,000 Ian The entire market's total GROWTH RATE is 4.07%. Which of the five segments has the highest GROWTH RATE? School Children Luxury Trendfollowers Urban Commuters University Students Outdoor Enthusiasts Student Luxury Trendfollowers This segment has the highest growth rate at 7%. Ian Although the GROWTH RATE of the LUXURY TRENDFOLLOWER segment is the highest at 7%, the one disadvantage that this segment has is ... It has the smallest market size. It has the lowest purchase rate of all segments. It has the highest average purchase price. Student It has the smallest market size. At 5,000, it only comprises 5% of the total market Ian With a small MARKET SIZE and low PURCHASE BEHAVIOR, why would anyone target this as a segment of interest? The growth rate is still the highest at 7%. The average selling price provides a lot of opportunity. A high selling price should allow for high gross margin with each sale. This in turn will allow for good profit since the higher gross margin per Luxury Trendfollower sale times even a smaller unit volume should still allow for generous profits. Ian Which two of the four pieces of market data provided will be the most important toward properly vetting your backpack? Feature Preferences and Purchase Behavior Feature Preferences and Demographics Price Preference and Feature Preferences Purchase Behavior and Demographics Demographics and Price Preference Student Price Preference and Feature Preferences Feature preferences tell you what customers value the most and price preference data provides guidance on the aggregate value for each segment. Ian Time to see if your understanding of the available research will translate into results. Click FINISH to continue. FINISH Go To Market Ian Time to use all your market research expertise. I have already made optimal CHANNEL and ADVERTISING choices for your target market, so no need to worry about those requirements. Be aware that there is one COMPETITOR that is targeting the same LUXURY TRENDFOLLOWER segment that you are, so you are not alone. You will need to be especially careful when making choices in the BACKPACK and PRICING areas. Ian Remember, we have two goals. The first is to have a FEATURE DESIRABILITY of at least 90%. This means that the features of your backpack must align very closely with the PREFERENCES of the LUXURY TRENDFOLLOWER segment. Second, you must generate a MARKET SHARE of at least 85%. You have one competitor who has targeted the same market you have. Attaining your FEATURE DESIRABILITY goal will help, but setting a correct PRICE will be most important in winning MARKET SHARE against your main COMPETITION. Ian Click on the BACKPACK tab and add any options that you believe will align with the needs of the LUXURY TRENDFOLLOWER segment. You can make any selection in each of the available categories: SHAPE, STRAPS, MATERIAL, FEATURES and COLOR. These choices will drive your FEATURE DESIRABILITY. Notice that as you make choices, your backpack STATS and PRODUCTION COST will change. Ian After you have added any options, click on the PRICE tab. Notice as you move the pricing slider, the COSTS AND MARGINS and available DISTRIBUTOR PROFIT MARGINS change. Remember you have one primary competitor in the LUXURY TRENDFOLLOWER segment. Ian Click FINISH and then END TURN to review your choices. If you are happy, click YES END TURN to see how you did. If you are not happy with your choices, click NO REVISE STRATEGY and make any changes to options or PRICE. After you made your changes, again END TURN and then YES - END TURN to find out how you did. FINSH Shape: Teardrop Rucksack Straps: Basic Material: Luxury The game is finished. You may inspect the game state, but no further changes are allowed. Susan As Chief Marketing Officer, I want to congratulate you on reaching your goal! You realized it was important to build in features that the LUXURY TRENDFOLLOWER needed and wanted based on their PREFERENCES. With all the features you included, you could also charge a lot more than the average purchase price despite having one competitor and get away with it. Consumers will always be willing to pay more for something that perfectly suits their needs. Susan After you click FINISH, take a few minutes to navigate the HQ, COMPETITORS, and SEGMENTS tabs to check out your results. These tabs include a lot of information on how you did such as: What did the other markets think of your backpack? What did your competitors sell into each market? As you progress, other missions will increase in difficulty. Taking a few moments to review how you succeeded here will help your future efforts. Congratulations! Using Market Research YOUR PERFORMANCE Overall Score 100% Goal Success 100/100 Questions Success 50/50 Mission Goals Feature Desirability for Luxury Trendfollowers of at least 90% 99% Market Share for Luxury Trendfollowers of at least 85% 87% Challenge Succeeded!