Market Research I: A preliminary short survey page 2
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1 September 15, 2010 Attachment: Market research report We have conducted the following four market research activities toward commercialization of MPBWCP and summarized our activities and findings as follows: Market Research I: A preliminary short survey page 2 Market Research II: Focus Groups page 3 Market Research III: A short survey page 4 Market Research IV: Conjoint Analysis pages 5-8 Dr. Sungchul Choi Dr. Alex Ng 1
2 Market Research I: A preliminary short survey 1. When: Spring Where: the National Green Builders Products Expo in Las Vegas 3. Who: 46 Industrial (e.g., home builders and designers) and Professional (e.g., home contractors and renovators) consumers 4. How: conduct a short survey about MPBWCP at the trade booth 5. Why: to solicit maximum green industry feedback on Wood Concrete products 6. Findings (a 7 point scale: 1= strongly disagree, 7= strongly agree): I think MPBWCP (Mountain Pine beetle Wood Concrete Product) is a marketable product: mean = 5.06 I think MPBWCP is an environmentally friendly product: mean = 5.17 I think MPBWCP is an economically sustainable product for communities: mean = 4.90 I would switch from my usual brands and buy MPBWCP: mean = 3.79 I would often compare package label information about the environmental friendliness of the MPBWCP: mean = 4.88 I would often compare package label information about the economic community sustainability of the MPBWCP: mean = 4.69 I would travel further in order to purchase MPBWCP: mean = 3.51 I would pay attention to advertisements about MPBWCP: mean = 5.22 How willing would you be to pay for MPBWCP? (Check mark the premium or discount in percent: 1= -15%, 7= +15%): mean = 0-5% Average age: 39.9 Average income: $249,642 2
3 Market Research II: Focus Groups 1. When: Fall Where: Vancouver, Prince George, and Los Angeles 3. Who: Randomly recruited 76 participants of Industrial consumers (e.g., home builders and designers), Professional consumers (e.g., home contractors and renovators), do-it-yourself home renovators, and environmental organizations 4. Why: To explore reactions to Wood Concrete, a product derived from the combination of concrete with wood that has been destroyed by the pine beetle 5. How: 12 focus groups by a marketing research firm 6. Findings: General perception: Most participants were very positively responded to this product. However, industrial/professional consumers wanted to know more about its technical specs. Greenness: It has green properties such as employing an otherwise unusable component. However, there is skepticism because of the energy used to produce concrete. Potential applications: flooring or patio tiles, garden blocks, countertops, and furniture Pricing: People might consider this product if it were 10% higher or lower than what it is replacing 3
4 Market Research III: A short survey 1. When: Fall Where: Vancouver, Prince George, and Los Angeles 3. Who: Randomly recruited 219 participants of Industrial consumers (e.g., home builders and designers), Professional consumers (e.g., home contractors and renovators), do-it-yourself home renovators, and environmental organizations 4. How: conduct an online survey (after watching a video clip about MPBWCP) 5. Why: To explore detailed reactions to Wood Concrete products 6. Findings (a 7 point scale: 1= strongly disagree, 7= strongly agree) (2009 Spring results in parentheses): I think MPBWCP (Mountain Pine beetle Wood Concrete Product) is a marketable product: mean = 6.05 (mean = 5.06) I think MPBWCP is an environmentally friendly product: mean = 5.80 (mean = 5.17) I think MPBWCP is an economically sustainable product for communities: mean = 5.73 (mean = 4.90) I would switch from my usual brands and buy MPBWCP: mean = 5.12 (mean = 3.79) I would often compare package label information about the environmental friendliness of the MPBWCP: mean = 5.45 (mean = 4.88) I would often compare package label information about the economic community sustainability of the MPBWCP: mean = 5.30 (mean = 4.69) I would travel further in order to purchase MPBWCP: mean = 4.71 (mean = 3.51) I would pay attention to advertisements about MPBWCP: mean = 5.80 (mean = 5.22) How willing would you be to pay for MPBWCP? (Check mark the premium or discount in percent: 1= -15%, 7= +15%): mean = 0-5% (mean = 0-5%) Average age: (39.9) Median income: $70,000-$80,000 ($249,642) City: PG (42), Vancouver (108), and LA (69) Segment: Industrial consumers (67), Professional consumers (50), DIY consumers (51), and Environmental Groups (51) 4
5 Market Research IV: Conjoint Analysis 1. When: Spring Where: Vancouver, Prince George, and Los Angeles 3. Who: Randomly recruited 151 participants of do-it-yourself home consumers 4. Why: To explore consumers attitudes toward product attributes (e.g., price level, color, wood chip size, green certification, and location of production) of three major applications (countertops, floor tiles, and garden blocks) suggested by focus groups 5. How: Provided participants with 20 product bundles (with different levels of product attributes) for each of the three applications and asked them to rate each bundle according to their preference on a scale (see an example below). a. Each label depicts a different bundle of five attributes (each attribute has two or three levels): i. Relative price (low/moderate/high) ii. Colour (bright/natural/dark) iii. Wood chip size (small/mixed/large) iv. Green certification (yes/no) v. Location of production (locally/n.a./abroad) b. An example of Countertop bundles 6. Findings: Overall, location of production is rated as the most important attribute (importance scores are 35.8 for countertops, 35.9 for floor tiles, and 38.1 for garden blocks, respectfully). Wood chip size is rated as the least important attribute (importance scores are 5.3 for countertops, 10.6 for floor tiles, and 3.8 for garden blocks, respectfully). Figure 1 shows the averaged importance values of the various attributes provided by the conjoint analysis. 5
6 Relative Price Colour Wood Chip Size Green Certification Location of Production 3.8 Countertops Floor Tiles Garden Figure 1. Averaged importance of attributes for countertops, floor tiles, and garden Although useful, the aggregate results provided by the conjoint analysis (CJA) do not provide all the potential information about product purchasing decisions. CJA used in conjunction with cluster analysis can tell us whether all respondents value the product values the product attributes in a similar fashion. Unlike other statistical methods, cluster analysis does not provide precise rules for choosing a cluster solution (Dress and Davis 1984). In this study, utility values were clustered or classified using K-means clustering analysis technique. Three, four, five, six cluster solutions were all considered. Finally, a five-cluster solution (of which number is identical to the number of attributes) was chosen because the five cluster solution is the best to compare the derived clusters across the three product types. ANOVA technique was used to test the hypothesis of no difference between the utility values across the five clusters. All of the attributes for each product type provided to be statistically different (α=.001) across the five clusters. Table 1. Relative utility values for the five clusters (countertops) Attribute Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Relative Price Colour
7 Wood Chip Size Green Certification Location of Production The number of sample Percent of sample Table 2. Relative utility values for the five clusters (floor) Attribute Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Relative Price Colour Wood Chip Size Green Certification Location of Production The number of sample Percent of sample Table 3. Relative utility values for the five clusters (garden) Attribute Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Relative Price Colour Wood Chip Size Green Certification Location of Production The number of sample Percent of sample Table 1-Table 3 provides the results for the five-cluster solution from the cluster analysis procedure. Included are the relative utility values for each of the five clusters on each 7
8 attribute, and the sample size (and percent of sample) for each cluster. As the most important product attribute, Cluster 1 rates wood chip size, Cluster 2 rates relative price, Cluster 3 rates colour, Cluster 5 rates location of production. In contrast, Cluster 4 considers green certification more seriously than the other clusters. The preferences are not different across the three product types, even though percent of sample is different to each other. Demographic information collected in the questionnaire can be used to develop a profile of an average individual in each of the clusters. To do this, the clusters were compared on the basis of a range of demographic variables using ANOVA and Chi-Square Test. Table 4-Table 6 presents the mean value or the percentage of each cluster on each demographic variable along with the F-statistic of ANOVA and 2 -statistic statistic. No variable is found to be statistically significant for countertops, however, gender for floor and education level for garden are found to be statistically significant (α=.1). Table 4. Clusters compared on demographic characteristics (countertops) Characteristic CLS 1 CLS 2 CLS 3 CLS 4 CLS 5 Statistics p Age b Income a b Education a b Gender (% male) c Marital Status (% married) c a Income level and education level were asked as categorical variables, an increase in the number indicates an increase in income level or education level of respondent. b F-statistic. c 2 -statistic. 8
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