2. About market Linking market Case study
research research to business
strategy
2
3. About market Linking market Case study
research research to business
strategy
3
4. Market research is gathering information
about customers, or markets.
• Good information is a tool that can be
used to support business decisions.
4
5. Market research can help businesses make
decisions associated with:
Identifying and evaluating
opportunities in the market P
Understanding potential and
existing customers P
Setting strategies and
targets P
Monitoring performance P
5
6. There are two main categories of market
research.
• Secondary • Primary
– Information that – Information gathered first-hand
already exists from the source
6
7. Secondary data is available from a variety
of internal and external sources.
• Internal sources:
– Internal organisational data and reports
• External sources:
– Business source corporate database (available to all AIM WA
Professional Members)
– Other online databases
– Libraries
• Journals
• Other publications
– The Australian Bureau of Statistics (ABS)
– Business or industry associations
– Government departments
7
8. Primary data is gathered directly from the
market to address an organisation’s specific
needs.
• Sources of primary data include:
– In-depth interviews
– Field visits
• Observation
• Customer intercepts
– Focus groups
– Surveys
8
9. Market research may be exploratory or
confirmatory.
Exploratory Confirmatory
Generating options Selecting the best option
(Tends to be more qualitative) (Tends to be more quantitative)
9
10. As with decision-making, the exploratory
phase precedes the confirmatory phase.
Exploratory Confirmatory
Scan environment Generate options Select option Evaluate outcomes
• Secondary • In-depth • Surveys • Surveys
research interviews • Secondary
• Focus groups research
BUSINESS DECISION CYCLE 10
11. About market
Linking market Case study
research research to business
strategy
11
12. Good market research should help an
organisation fulfil its purpose, or reason for
existence.
12
13. All organisations (regardless of whether they are for-
profit or not-for-profit) exist to create value by producing
something that the market wants or needs.
Value = Benefits - Costs
13
14. Organisations strive to produce value by
operating their value chain.
Value = Benefits - Costs
• Organisations succeed by making a winning offer to valuable
segments of the contestable market.
14
15. In the for-profit sector, the value that the organisation
creates is split between customers and shareholders.
• This model is known as shareholder capitalism, and it is
fundamentally flawed – it defines value and its recipients far too
narrowly and assumes an infinite supply of natural resources. 15
16. Shareholder capitalism fails to recognise that
organisations are embedded in and depend upon a
massively complex system that is far more than just the
economy.
• Any strategy that weakens the total system is bad strategy.
16
17. The great opportunity of our time is to
recalibrate business as a total system
contributor.
Environment
Society
Economy
To achieve this, businesses must reimagine themselves as vehicles for
delivering true social and environmental value, in addition to customer value.
In other words, businesses must identify their transcendent purpose.
18. Businesses with a transcendent purpose tend to
look something like this:
19. Market research cannot help your
organisation find its transcendent purpose
• Market research is not useful when conceiving an idea’s soul.
• But it CAN help good organisations succeed.
19
20. Organisations that succeed over the longer term
tend to excel in the following areas:
Measures of Performance
Vision
Value
proposition
Value chain Culture
Purpose
20
21. Market research can help organisations make
decisions associated with most of these factors.
Measures of Performance
Vision
P P
Value
proposition P P
P P
Value chain Culture
Purpose
O 21
22. About market Linking market Case study
research research to business
strategy
22
23. The Ethical Toy Company is an
organisation with a transcendent
purpose.
• The Ethical Toy Company exists to:
Provide ethical toys and games that are simply awesome for
children, families, society and our planet.
• Our most important measures of performance are:
– Total funds donated to growing the common good (50% of profit)
– Net Promoter Score (NPS) and outcomes-based evaluation
23
24. Its values form the basis of its
culture.
• Creative nature
– We nurture and emulate the creative power
of nature.
• Liberation
– Our products explore young people’s
possibilities, and reject stereotypes,
especially around gender.
• Virtuousity
– Our products celebrate and reinforce the
diverse array of human virtues.
24
25. Like its purpose, The Ethical Toy
Company’s vision focuses on “system
level” value creation.
• Long-term vision:
Through our success, for “growing the common good” to become
the common goal of toy and game companies world-wide.
25
26. The different components of the strategy
fit together and reinforce each other.
Sharing our
wisdom
Ethical,
efficient
value chain
Nurturing & Irresistible
creative culture offer &
brand
26
27. Market research will help the company set
its targets, achieve its goals and monitor its Internal &
performance. partner surveys
Benchmarking
/ secondary
research Sharing our
wisdom
Ethical,
efficient
value chain
Benchmarking
/ secondary Market &
research customer
research
Nurturing & Irresistible
creative culture offer &
brand
Culture surveys
27
28. The Ethical Toy Company’s
strategy is reflected in its
scorecard.
Factor Metric 2013 2015 2018
$ invested in growing
Financial common good (50% of
profit)
Customer NPS
Outcomes (customer Need a direct line to customers
survey)
Growth Market share
Growth of category
Process Waste
Culture Internal NPS
Transparency Internal survey
Partner survey
28
29. Today we will focus mostly on market research associated
with delivering a winning offer to valuable segments of
the market.
Sharing our
wisdom
Ethical,
efficient
value chain
Market &
customer
research
Nurturing & Irresistible
creative culture offer &
brand
29
30. The market research planning process always begins with
identifying and articulating the underlying decision
problem.
Set the research Identify Identify sources of Choose research
objective information needs information method
Identify the decision What information do we How do we get the What research
problem need? information? techniques?
· Why are we · What is relevant? · Can we find the · One research
conducting this · How much do we people we seek? technique or several?
research? need? · Do we have the skills · Qualitative,
· What are the · How accurate must to collect and quantitative or some
questions we want the information be? analyse the combination?
answered? information
internally?
• Market research techniques should be selected to match the
research objective and the information needs.
30
31. When setting your market research objective, start with a
global objective stated in one or two sentences, and then
expand these to a list of specific information goals.
• The following questions may be useful when developing your
market research objective:
– What is the marketing problem we are trying to solve?
– What is already known that relates to the subject?
– What are the consequences of making a wrong
decision?
– What are the alternative courses of action
available to us?
– What do we expect the results of the study to
tell us?
– How accurate must the information be?
– What hypotheses are there to test on the
subject?
– What assumptions are being made?
31
32. Identifying and evaluating
opportunities in the market P
Understanding potential and
existing customers P
Setting strategies and targets P
Monitoring performance P
32
33. Let’s imagine that the CEO and
marketing manager at the Ethical Toy
Company are deciding whether to launch
in the Australian market.
Set the research Understand the size and structure of the Australian toys
objective and games market
• What is the value of the market for toys and games?
Identify • Is the market in growth or decline?
information • What are the main categories and what is their share?
needs • Which channels are the most important?
• What are the key trends?
Identify sources • Industry reports Set the research Identify Identify sources of Choose research
objective information needs information method
of information • Journal articles
Identify the decision What information do we How do we get the What research
problem need? information? techniques?
· Why are we · What is relevant? · Can we find the · One research
conducting this · How much do we people we seek? technique or several?
Choose research ·
research?
What are the ·
need?
How accurate must
· Do we have the skills
to collect and
· Qualitative,
quantitative or some
Secondary research questions we want
answered?
the information be? analyse the
information
combination?
method internally?
33
39. Identifying and evaluating
opportunities in the market P
Understanding potential and
existing customers P
Setting strategies and targets P
Monitoring performance P
39
41. Market segmentation is the selection of groups
who will be most receptive to our existing or
potential value proposition.
• The goal of segmentation is to identify clusters of people with
distinct buying preferences.
• This enables us to more specifically and efficiently tailor our offer
to win customers.
• Different segments will respond differently to strategies associated
with:
– Product
– Price
– Promotion
– Channel
41
42. Segmentation is based on factors that vary
between groups within a market, but that are
consistent within groups.
• Typical segmentation bases for consumer markets include:
– Geographic
• Region, population density
– Demographic
• Age, gender, income, education, household status
– Psychographic
• Values, attitudes, life-style
– Behavioural
• Product usage,
– Occasions/purpose
• Price sensitivity
• Brand loyalty
• Benefits sought
• Frequently a combination of
methods is used.
42
43. The market segmentation process can initially
be undertaken using qualitative techniques and
managerial judgement
• The segmentation process is as follows:
– Undertake a broad enquiry using exploratory techniques, e.g.
• Analyse internal data
• Use secondary research to identify possible segmentation schemes
proposed by industry analysts or actually in use by competitors.
• Observation to explore behavioural differences between groups, e.g. CSFs
• Use focus groups to explore psychological differences, e.g. values.
– Identify linkages between these
differences and behaviours of
interest.
– Decide one or more bases upon
which to segment
– Test the segments’ viability using
the questions on the following slide
43
44. The following questions can help an
organisation test whether an identified segment
is viable:
• Is the segment measurable?
• Do the members of the segment exhibit similar buying preferences
and responses to the marketing mix?
• Can we serve the segment competitively (by targeting our offer to
their requirements), or become competent at serving them in the
future?
– Can we develop superiority versus competitors against one or more of
this segment’s critical success factors.
• Is the segment attractive?
– Is it large enough to warrant
targeting?
– Can a profit be made from this
segment?
– Is the segment in growth or decline?
• Do we have access to the right
distribution and communication
channels to reach this segment? 44
45. Now let’s imagine that the Ethical Toy
Company is established in the Australian
market, and has decided to segment the
market for toys and games.
Identify a method of segmentation that matches our
Set the research
business strategy & requirements, market trends and
objective
managerial judgement
Identify • How do competitors segment the market?
information • What are the important market trends?
needs • What criteria should we use to segment the market?
• Industry reports
Identify sources • Competitors’ segmentation
of information • ABS
• Existing and potential customers
• Secondary research – marketing manager
Choose research • In-depth interviews with retailers
method • Managerial judgement
• Focus group – market research firm
45
46. The Ethical Toy Company’s research has
revealed four segments of interest:
• Parents buying for under 12s
• Teenagers influencing purchases for themselves and friends
• Parents buying for primary school birthday parties
• Parents buying for toddlers
• This segmentation uses a combination of demographic (life stage)
and behavioural (product usage / purchase occasion / benefits
sought) variables.
46
47. Identifying and evaluating
opportunities in the market P
Understanding potential and
existing customers P
Formulating strategies and
targets P
Monitoring performance P
47
48. Successful strategy relies on targeting the most
valuable segments of the contestable market
with a tailored value proposition that
outperforms competitors on a few key criteria.
Segment Tailoring the
Prioritisation Customer Value
Proposition (CVP)
48
50. A common decision problem for organisations is
understanding which segments of the market they
should pursue.
• Because we cannot afford to pursue every segment, we must
prioritise our effort towards those segments that are most
attractive and that we can serve most competitively.
• The Directional Policy Matrix (DPM) is used to identify priority
segments and develop strategies for targeting them.
• To use the DPM, the organisation must assess:
– The determinants of segment attractiveness.
– The critical success factors used by different segments to make
decisions.
– The performance of our value proposition against these critical
success factors versus the best competitor.
50
51. Segments are plotted on a matrix according to
size, attractiveness and the organisation’s
competitiveness in serving them.
• A segment’s attractiveness is determined by its performance against key
criteria including:
– Profit
– Potential for growth
– Strategic alignment
– Risk
– Entry cost
• An organisation’s competitiveness in serving a segment is assessed by
identifying the critical success factors that the members of that segment use
when deciding between competitive offerings, for example:
– Price
– Convenience
– Brand/reputation
– Service
• For each critical success factor the organisation must then assess whether its
offering is less competitive, equal to, or more competitive than the best
competitor in the market.
51
52. The matrix clearly shows segment priority
and assists with identifying strategy.
Segment 1
Segment 2
High
Segment 1 Segment 3
Market Attractiveness
Segment 3 Segment 4
Segment 4
Strategy:
Segment 2 • Grow and protect our
Low
share of segment 3.
• Increase our
competitiveness in serving
segments 1 and 4.
80 85 90 95 100 105 110 115 120
Uncompetitive Parity Competitive
Competitiveness 52
53. Now that it has identified four segments
of interest, the Ethical Toy Company
wants to use the DPM to understand
which are the most valuable.
Set the research
Identify the market segments that we should target
objective
Identify • Which segments are most attractive?
information • Which segments can we serve most competitively?
needs
Identify sources • Managerial judgement
of information • Existing and potential customers
• Secondary research – marketing manager
Choose research
• Customer intercepts – marketing manager
method
53
54. Market map
Parents buying for under 12s
Teenagers influencing purchases
for themselves and friends
High
Parents buying for
under 12s Parents buying for primary school
birthday parties
Market Attractiveness
Parents buying for toddlers
Toddlers
Primary
school b’day
parties
Teenagers
Low
80 85 90 95 100 105 110 115 120
Uncompetitive Parity Competitive
Competitiveness 54
55. DPM results
• Based on the DPM analysis, the Ethical Toy Company decides to
target the following segment:
– Parents buying for under 12s
55
56. Segment validation is best undertaken by a
professional market research organisation.
• After the exploratory research has been done, it may be
appropriate to seek expert assistance validating the segments that
have been identified using formal research and statistical analysis
techniques.
• A qualified market researcher could also:
– Formally investigate segment size,
– Conduct a conjoint analysis to understand how CSFs differ across
segments of interest, and
– Assess how your organisation’s value proposition is placed versus
competitors.
56
58. Target markets make decisions and choose between
competitors on the basis of their selection criteria, which
are essentially a list of critical success factors (CSFs).
• Customers weigh up an organisation’s value proposition against
that list and assess the ratio of benefits to costs.
• Different segments typically have different CSFs.
• Market research can help an organisation understand what these
critical success factors are, and how it fares on these criteria
versus the best competitor.
• Outperforming competitors on some focused
combination of these critical success
factors, supported by a tailored value chain,
gives a competitive advantage.
58
59. The Ethical Toy company has decided to
launch a new product that targets
parents buying for under 12s.
What are the range of values that parents most want to
Set the research
instil in their children? (To support the design of a new
objective
product.)
Identify
• Which values are considered most important by
information
parents.
needs
Identify sources
• Parents of under 12s
of information
Choose research
Focus groups
method
59
60. Results
• The focus group reveals that the values parents are most
interested in are:
Kindness Perseverance Respect
60
61. Finally, the Ethical Toy Company decides
to conduct a survey to understand which
of these options should be incorporated
into their new product development.
Set the research Choose the value that will be the focus of our next
objective product
Identify
• Which of the three values (kindness, perseverance and
information
respect) is considered the most important by parents?
needs
Identify sources
• Parents of under 12s within our customer database
of information
Choose research
Survey
method
61
62. Conducting in-house surveys can be a useful way
to gather information about the market.
• However this method also brings risks associated with the
reliability and interpretation of the data.
• The risks of conducting an online survey in-house can be reduced
by:
– Using a captive sample, e.g.:
• A database of customers
• Staff
• Partners
– Checking that survey respondent composition is representative of the
population being sampled
– Correcting for any bias in the sample
– Generating enough responses to make the sample statistically valid
– Deriving key insights via simple cross-tabulations
62
63. The survey implementation process is a natural
continuation of the market research planning
process.
Set the research Identify information Identify sources of Choose research
objective needs information method
Sampling Gather data Data analysis Interpretation
· Ensure the sample is · Pre-test the method. · Correct any biases · Check results for
representative of the · Administer the process · Analyse using statistical accuracy.
population percentages, averages · Interpret findings in the
cross-tabulations context of the decision
problem
63
64. Survey design usually occurs in the
following sequence:
• Determine question response format
• Develop question wording
• Decide flow and layout
• Develop introduction, conclusion, covering email, reminder email and
prize draw details, including:
– Closing date
– Details of department authorising the survey
• Pre-test
64
65. Survey design guidelines
• Shorter is better
• Cluster the related content and seek a natural flow
• Ensure question order does not bias subsequent responses
• Keep questions simple and specific
• Ensure questions or statements are unambiguous
• Ask mostly closed-ended questions
• Avoid loaded questions
• Lead with questions that are clearly
relevant, interesting and non-threatening
• Place demographic and other classification
questions last
65
66. Tips for designing response scales
• The options must be mutually exclusive
• There must be a logical sequence to the answer options in a scale –
they must flow in descending or ascending order
• All scales should flow in the same direction
• Where possible, avoid defining answer categories with subjective
words like “sometimes” or “often”
66
67. Survey Monkey capabilities
• Responses can be anonymous, or can be set up to record the
respondent’s email address.
• Surveys can be limited to one response per IP address to prevent
multiple responses.
• Surveys can include quotas against certain responses, preventing a
sample from becoming biased by too many respondents from a
particular category.
• People who have already responded to your survey can be excluded
from reminder emails.
67
68. Additional tips
• A single reminder email to those who are yet to respond is an
effective way to increase response rates.
• Expect a response rate of between 5% and 30% depending on level
of engagement.
• Expect a drop-out rate of around 10% for surveys approaching 35
questions in length.
• Survey Sampling International (SSI) asked the members of their
huge internet panel SurveySpot “what is the ideal survey length?”
and received the following feedback:
– 2 to 5 minutes 21%
– 6 to 10 minutes 44%
– 11 to 15 minutes 21%
68
69. Additional tips cont’d
• Remember that surveys are a communication tool. They should be
consistent with your brand and can be used to build awareness of
your organisation’s value proposition – within reason.
• Be aware that offering a prize for survey completion will increase
response rates, but might also skew results or diminish response
quality.
• Wherever possible, keep questions consistent from one survey to
the next to allow for the comparison of data.
69
70. Sample size
• Use the following table to calculate the number of respondents
required at margins of error of ±3%, ±5%, ±10%.
Population Size +/-3% +/-5% +/-10%
500 345 220 80
1,000 525 285 90
3,000 810 350 100
5,000 910 370 100
10,000 1,000 400 100
100,000 1,100 400 100
1,000,000 1,100 400 100
10,000,000 1,100 400 100
• As a general rule, aim for 100 respondents in each major subgroup
to be analysed. 70
71. Data Analysis
• Cross-tabulation can be performed using pivot tables in Excel.
• Look for differences in the data, e.g. are people in Group A more
likely to feel strongly about a product attribute than people in
Group B.
• Assess which apparent differences in the data are real, and which
are not.
• An apparent difference is accepted as a real difference if
statistical analysis reveals that it would arise by chance in fewer
than 5 out of 100 cases.
• These statistical analyses can be performed in programs such as
SPSS or SAS.
• It is recommended that these be outsourced to a professional
researcher, an academic or a Ph.D student.
71
72. A qualified researcher can perform the
following tests when analysing data:
• Z‐Test
– To determine if the proportions of a variable in two independent
samples are significantly different.
• T‐Test
– To determine if the means of a variable in two independent or two
dependent samples are significantly different.
• Chi Square
– To determine if two variables are related by more than chance alone.
72
73. The Ethical Toy Company’s survey reveals that
the value parents most want to instil in their
children is “kindness”.
• This information is used to inspire the company’s latest family
game, Play it Forward.
73
74. Here at the Ethical Toy Company we’re all about
Play it Forward growing the common good. We exist to provide
ethical toys and games that are simply awesome
for children, families, society and our planet.
Our decisions are guided by the following values:
Get to know someone
new & then choose a Creative nature
• We nurture and emulate the creative power
packet of seeds just of nature.
for them. Liberation
• Our products explore young people’s
possibilities, and reject stereotypes.
“Virtuousity”
• Our products celebrate and reinforce the
diverse array of human virtues.
This challenge is best for:
This card uses 70% recycled paper and 50% of our profits are donated to
the protection and restoration of the natural world. For more details,
Small people
Big people please drop in and say hi at www.ethicaltoycompany.com.au
75. Identifying and evaluating
opportunities in the market P
Understanding potential and
existing customers P
Setting strategies and targets P
Monitoring performance
P
75
76. Market research can assist with populating
organisational scorecards that are used to
monitor performance.
• A typical scorecard is provided below:
Factor Metric 2013 2015 2018
Financial Profit
Revenue
Customer Net Promoter Score (NPS)
Outcomes (customer
survey)
Growth Market share
Growth of category
Process Waste
Culture Internal NPS
76
77. Target setting and monitoring performance
often requires market research techniques.
• If we have an understanding of market size, and market share,
setting targets becomes a more rational process than when it is
done in the absence of information.
• One measure that is particularly well-suited to in-house market
research is the Net Promoter Score (NPS).
• NPS can be used externally to monitor customer or partner
satisfaction, and internally to monitor staff satisfaction.
• NPS is a very effective measure to set
targets against as it is easy to track and
is highly correlated with organisational
growth.
• More information is provided overleaf.
77
78. The Net Promoter Score (NPS) can be useful in
determining satisfaction levels, which relate
loyalty and to reputation.
• NPS is based on the fundamental perspective that every company's
customers can be divided into three categories: Promoters, Passives, and
Detractors. By asking one simple question — How likely is it that you
would recommend [Company X] to a friend or colleague? — you can track
these groups and get a clear measure of your company's performance
through your customers' eyes. Customers respond on a 0-to-10 point rating
scale and are categorized as follows:
– Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer
others, fuelling growth.
– Passives (score 7-8) are satisfied but unenthusiastic customers who are
vulnerable to competitive offerings.
– Detractors (score 0-6) are unhappy customers who can damage your brand and
impede growth through negative word-of-mouth.
• To calculate your company's Net Promoter Score, subtract the percentage
of customers who are Detractors from the percentage who are Promoters.
• Companies with a better ratio of Promoters to Detractors tend to grow
more rapidly than competitors.
78
79. Play it Forward NPS Results
Total by
Category Score Tally %
category
0
1
2
Detractors 3
4
5
6
7
Passives
8
9
Promoters
10
TOTAL NPS =
79
