Calder LaTour Inc. Marketing Research Services

Transcription

1 Calder LaTour Inc. Marketing Research Services 2525 GROSS POINT ROAD EVANSTON, ILLINOIS USA PHONE: TOLL FREE: FAX:

2 An Introduction to Calder LaTour Inc. Calder LaTour Inc. is a full-service marketing research and strategy development firm located in Evanston, Illinois. Founded in 1981, Calder LaTour has expertise in a variety of industries. This brochure describes our marketing research services. A separate brochure provides information about our strategy consulting services. While this brochure describes a variety of different types of research, each study we undertake is client-specific. We do not seek to fit your problem into a pre-determined study methodology. Instead, we discuss with you the issues you face and the questions you have. Then, we work carefully to understand the nature of your marketplace, your products, and your customers needs and preferences. Only after we know you and your marketplace do we suggest a specific marketing research study. Solving the complex puzzles of the marketplace Table of Contents Product Development and Concept Testing 1 Ethnographic (Observational) Ideation Studies Exploratory Concept Testing Usability Studies Demand Estimation for Selected Concepts Using Experimental Designs/Conjoint Analysis Customer Dialogues with Engineering, Scientific, and Medical Personnel Brand Image Assessment/Tracking 4 Image/Positioning Analysis Image Tracking Product Acquisition Analysis 6 Marketplace Assessment Customer Perceptions and Demand Projection Studies

3 Market Segmentation 7 Laddering Investigations Psychographic Segmentation Studies Behavior-based Segmentation Studies International Segmentation Studies Pricing Research 10 Pricing Optimization Studies Diagnostic Assessment of Marketing Communications 11 Cognitive Response Analysis Finished Testing in the Media Environment Evaluation of Marketing Campaigns 14 Experimental and Quasi-experimental Evaluations of the Effects of Marketing Programs on Sales Tracking Evaluations Customer Satisfaction Modeling 15 Satisfaction Model Development Studies Satisfaction Breakpoint Studies Loyalty Studies Predicting Customer Loss Multi-year Marketing Research Planning 18 Assistance with Developing Multi-year Marketing Research Plans 2003 Calder LaTour Inc.

4 Product Development and Concept Testing Effective, growth-oriented companies never stop asking, How can we improve our product offering? The most successful ones regularly explore the possibilities of new features, product line extensions, and new products. Some organizations prefer to develop concepts for new or improved products or services in-house, others prefer to enlist consulting assistance. Regardless, once a concept becomes a serious possibility, testing with potential customers is essential to ensure that the product or service is designed to optimize features and price. Testing by an outside firm is critical for an unbiased assessment of product/service appeal and identification of any required modifications. Some of the techniques we employ also allow demand estimation, which is essential for development of more accurate financial projections. Examples of Questions Answered with Product Development and Concept Testing Research Which features are deal-breakers? that is, without them we won t attract customers, or if we do, we will have to sell the product at a much lower price than we would like. Which features are nice to have but not critical to selection? How are features related to desired benefits? Are there both directly connected benefits and higher-level benefits? At what level should we talk with customers about our product: should we focus on features, what creates the features, benefits, higher-level benefits, or some combination of these? How should research and development efforts be focused to maximize the probability of customer acceptance? Which additional product/service features do customers want? How will our sales be influenced by location, price, product features? Do any of these interact in synergistic ways? What product modifications/line extensions would allow us to access new, highly profitable, segments? The most successful companies regularly explore the possibilities of new features, product line extensions, and new products. 1

5 Approaches to Research Ethnographic (Observational) Ideation Studies Individuals are asked to participate in those activities of their daily lives which are relevant to your services/products. As they go through the activity, their use of currently available products/services is observed and they are asked to verbalize their expectations, ideas about their ideal service/ product, satisfactions, and dissatisfactions. Particular attention is paid to the problems and difficulties customers may face, with an eye to improving products/services. Differences in views about product experience among current customers, competitors customers, and non-users of the product category can be assessed. Exploratory Concept Testing Concept descriptions are prepared on the basis of management thinking, brainstorming sessions, and available research. A visual presentation of the product/service and pertinent features may also be developed. Consumers are exposed to multiple product concepts (up to five or six concepts) in a focus group format or individual interview. Optimal product positioning, preferred distribution channels, and appropriate promotional channels may also be explored. Usability Studies Individuals are observed and asked to state the thoughts that occur to them while using a new product or a product mock-up. This helps uncover preferences for product design as well as unforeseen difficulties with product use. This is particularly valuable for industrial, business, and consumer durable products. Potential customers are sometimes asked to test alternatives which vary according to an underlying experimental design in order to assess the relative impact of different features and their variations on usability and satisfaction. We use both in-depth questioning and quantitative ratings of various aspects of the product to increase the likelihood of finding an optimal product. 2

6 Demand Estimation for Selected Concepts Using Experimental Designs/Conjoint Analysis Quantitative validation of a product/service concept is conducted by presenting individual consumers with the concept (or a prototype) and interviewing them regarding preference, buying intentions, product/service category usage behavior, perceived value, repeat purchasing, etc. Concepts not requiring visual presentation can be tested via telephone survey. If visual presentation is necessary, in some instances materials can be sent to interviewees prior to a telephone survey. Internet surveys can also be employed. Experimental designs, involving use of conjoint analysis where appropriate, as well as random assignment of respondents to different price levels, typically determine the products selected for testing in order to assess sensitivity to various product features and price. Findings result in further refinement of your concepts. In addition, they provide assurance that a concept has market appeal, and may provide new insight into the kinds of customers most likely to purchase the product or service. For many products the results can be analyzed to estimate sales potential for input into financial analysis. For services, this includes demand estimation at different specific sites plus cannibalization estimates, if more than one site is contemplated. Today s customers often exhibit complex decision-making strategies. Customer Dialogues with Engineering, Scientific, and Medical Personnel Although it is technically not a research methodology, we include this technique in this section because of its relevance to product/service development. Organizations with a technically-oriented staff often find that there is insufficient awareness of customers viewpoints among these persons. Direct efforts to encourage a marketing orientation often encounter resistance. Engineering staff, for example, may be more concerned with the technical 3

7 Organizations with a technically-oriented staff often benefit significantly from dialogues with customers about the usability and functionality of their products. elegance of their design than ease of use. Physicians at a tertiary medical center may be more concerned with their technical skill than regular communication with referring physicians. Such thinking reduces an organization s success and in time may threaten its existence. We have developed several strategies for increasing awareness of customer needs and preferences among engineering and scientific staff. These include dialogue sessions, customer forums, and panel discussions. We have had substantial success in enhancing sensitivity to customer concerns and the development of more successful products. Brand Image Assessment/Tracking Our consulting experience has taught us the critical need for an organization to have a clear understanding of both the company s image and positioning, and its products images and positionings. This is the information effective companies use to help refine the positioning of their products, look for holes in the marketplace for possible new products or brand extensions, become alert to potential encroachment of competitors, and track the success of their positioning tactics. Examples of Questions Answered with Brand Image Assessment/Tracking How do non-customers perceive our brand relative to the brands they purchase? How can we encourage them to purchase our products instead? How do our customers perceive our competitors? How susceptible are they to leaving us? How can we increase their loyalty? How are we differentiated in the marketplace? What are our competitive strengths and weaknesses? Approaches to Research Image/Positioning Analysis This analysis examines your customers perceptions of the attributes and benefits of your products/services and those of your competitors, and the 4

8 relative importance of each attribute in product choice/preference. We also assess the image of your company, as research has shown this to have an independent effect on product choice. Since psychological research has demonstrated that customers cannot accurately self-report the importance of product attributes, we use inferential statistics that have been shown to yield a more accurate estimate. This typically involves factor regression or structural equation modeling. Analyses can also explore whether and how your positioning varies among key segments. Our proprietary Competitive Strength Maps TM provide a graphic presentation of your product s strengths and weaknesses versus its major competitors. These maps are useful for understanding how your customers visualize competing brands, identifying the attributes used most in judging companies/products and seeing which brands compete most directly against you. They are also a useful tool for thinking about possible product repositioning. Image Tracking While a customer image analysis provides a detailed picture of how your product/service is perceived by your customers, it is a picture of only one point in time. Images change sometimes across all segments, sometimes only within certain segments. Unless you track your product s image, you may not know when to take action to shore up eroding positive perceptions or to counter negative perceptions. Without tracking, changes in the perceived strengths of competitors may not be recognized or properly interpreted. Tracking also enables you to assess the impact of promotional campaigns and product modifications. 5

9 Product Acquisition Analysis Knowledge of different customer segments allows an organization to develop optimal product strategies. Organizations often respond to the need for product line extensions or new products by purchasing a product/product line or partnering with other companies. Selling companies may make claims about market potential that are unfounded; consequently, it is wise to conduct a study to assess the value of a potential product prior to purchase. Examples of Questions Answered with Product Acquisition Analysis What is the potential demand for/value to us of this product we are being offered? Is the market for this product growing, stable, or declining? Are new developments on the horizon which will affect demand for this product? Is this product compatible with our organization s image, traditional sales/ promotion channels? What pricing strategy is appropriate for this product? Who will our customers be? What are customer perceptions of this product? Who are our competitors? How is this product positioned/how should we position this product against its competitors? Approaches to Research Marketplace Assessment Consideration of a new product often means needing to learn about a new set of customers, a new set of channels of distribution, and new promotional considerations. There is a need to learn how the product and its competitors are perceived (beyond the information that the product s seller is providing). We have experience in conducting both qualitative and quantitative research, 6

10 as well as constructing marketplace scenarios to give you unbiased information about and insight into the world of this new product. Customer Perceptions and Demand Projection Studies We conduct surveys with potential customers to assess the value of a product versus those of competitors. Using experimental designs/conjoint analysis, we also explore the likelihood of purchase at a variety of price points. Market Segmentation Awareness of different customer segments allows an organization to develop strategies for product design, pricing, positioning, and communication directed at those different segments, thereby enhancing profit and customer satisfaction. While there are many different approaches to segmentation, we believe that the best starting point for a segmentation study is to divide customers into groups that behave differently and then develop an understanding of how they differ on the following psychographic dimensions: Benefits sought Values and goals Perceptions of existing products Lifestyles These variables lead very naturally to positioning strategies for each segment. In some cases, there are meaningful psychographic sub-segments within behavioral groups. One can then examine how the segments differ in terms of demographics, geodemographics, and other personal characteristics. Examples of Questions Answered with Market Segmentation Research How do various customer and non-customer segments differ in terms of benefits sought, values, goals, and perceptions of our products and those of our competitors? How does the value associated with our product/service differ among segments? How can we be more effective in selling to our key segments? What key segments are we missing with our product offering? Can we become more successful with these segments? 7

11 Approaches to Research Laddering Investigations Research has shown that an individual s ultimate goals and values are among the most important motivators of buying behavior. Laddering is a technique for determining those goals and values. This is best accomplished through in-person, individual interviews. Representatives of the population of interest are asked to identify the attributes which best differentiate among similar products, brands, etc. Key attributes are identified, and the respondent is asked why each attribute is important to him/her. Responses reveal perceived benefits. For each benefit 8

12 the same inquiry is repeated why is this important? The response will be a more abstract level of benefit. Inquiries about why this is important are repeated until the individual s ultimate goals and values are revealed. Ladders from many participants are analyzed to segment the market according to ultimate goals and values. In addition, diagrams of common sequences of thought that lead to those goals and values are created. This is particularly helpful for development of marketing communications. Psychographic Segmentation Studies Customers are grouped according to benefits sought, product perceptions, values, goals and lifestyles. (It is often helpful to have conducted a prior laddering study so as to be able to understand, qualitatively, the linkages that customers perceive between a product and various benefits that they are seeking.) Latent cluster analysis is typically used as the grouping method. Segments are then related to brand choice and purchase volume, as well as to other purchaser characteristics such as demographics. Behavior-based Segmentation Studies Another approach to segmentation that we commonly use is to group customers according to criteria such as brand choice and/or volume purchased. We then use statistical techniques such as latent segment regression, discriminant analysis, and structural equation modeling to determine how the behavioral groups differ in terms of perceptions, benefits sought, values, etc. This type of study can provide substantial insight into strategies for attracting additional customers and retaining existing customers. International Segmentation Studies It is common in international studies to explore how countries differ from one another in their product preferences: implicitly treating country as a segmentation variable. Recent research has demonstrated, however, that it is more useful to determine benefit segments across countries and then determine how their size varies within countries. Sales potential is greater when products are designed, promoted, and priced for each segment and multiple strategies are applied within a country. Applying strategy 1 in country A and strategy 2 in country B fails to capitalize on the multiple segments within countries, potentially leaving money on the table. 9

13 Pricing Research Pricing is one of the most difficult marketing decisions, and companies increasingly use marketing research to help. Some of the studies discussed elsewhere in this brochure typically test price along with other product attributes. Nonetheless, it is sometimes useful to conduct a pure pricing study for an existing product to determine how an adjustment in price would likely affect sales volume and profitability. Examples of Questions Answered with Pricing Studies Would a price increase result in enhanced revenue? Are customers so price sensitive that a decrease in price would actually increase revenue and total contribution to margin? Are there different segments with differing price sensitivities? Is it feasible to charge different prices to different segments? Will customers spend more with bundled or non-bundled pricing? Can we charge more for a product that includes enhanced service components? Can we charge more for a product that offers a longer warranty and will the higher price more than cover the cost of warranty service? What should our pricing strategy be for different marketing channels? Approaches to Research Pricing Optimization Studies In order to understand customers response to price, it is necessary to assess response to a large number of potential prices. Yet a single respondent cannot be asked to respond to more than a single price for the same product/ service. (It takes no research to predict that customers will prefer the lower of two presented prices.) We have an excellent track record of developing research designs that allow us to assess response to price using complex factorial designs with multiple between-respondent variations. Traditional conjoint studies are not appropriate in this context as they show multiple pricing levels to the same respondents. Additional measures may be used to determine if price sensitivity varies among market segments. 10

14 Diagnostic Assessment of Marketing Communications We have extensive experience in the testing of marketing communications, including: advertising, brochures, Web sites, direct marketing campaigns, and catalogs for both for-profit and non-profit organizations. We do not create advertising, but work with your organization and your advertising agency to develop maximally effective promotions. This is not 11

15 easy to do. Those who develop advertising are sometimes loathe to have it critiqued. We have, however, had considerable success working constructively with creative staff. Our goal is to give you a basis for selecting approaches that are most likely to be effective. We provide specific written recommendations for improving materials, then leave it to creative staff to implement those recommendations. For example, one of our clients wished to encourage use of a diagnostic medical test. The advertising agency suggested that communications to potential users try to attract attention with headlines and opening copy that either established the serious health consequences of failing to test, or provided a list of symptoms suggesting the appropriateness of the test for specific individuals. Our study revealed a large difference in the motivational impact of the two strategies and suggested modifications to enhance the effectiveness of the more powerful approach. While some advertising firms attempt to conduct their own diagnostic studies using in-house research staff, in our experience it is better to have an independent party perform the assessment. Those involved in the development of promotional messages have an inherent conflict of interest in evaluating their success. Examples of Questions Answered with a Diagnostic Assessment of Marketing Communications Which of the brochures/ads developed by our advertising agency is most likely to attract attention/be read/be recalled/elicit the behavior of interest to us? Which of the headlines/graphic elements/fonts/logos/copy points/tag lines that we have to choose among is most effective? How should these be modified to be more effective? How should we modify our promotional materials for use in other countries? How well does our Web site communicate information that is of interest and importance to our customers? How can we make our Web site easier to use? Do current promotional efforts contribute to our desired positioning? Which need to be modified/discontinued? 12

16 Approaches to Research Cognitive Response Analysis We work with your advertising personnel to evaluate alternative message strategies. Focus groups, or in some cases individual interviews, are used to test initial concepts or semi-finished printed advertisements, brochures, radio scripts, or video presentations. We use a special Cognitive Response Analysis which has been demonstrated in published research to correlate highly with the ability of a communication to affect attitudes and behavior. The methodology involves use of a thoughtlisting procedure which elicits cognitive responses including positive thoughts, negative thoughts, counter-arguments, and extraneous thoughts. Particular attention is paid to effects of alternative executions (e.g., variations in headlines and visuals) on positioning and preference. Also examined is the emotional impact of the advertising, including its potential for generating counter-arguing, a major cause of ineffective advertising. Findings identify the elements within each tested alternative which effectively communicate the desired positioning of the product or service. Recommendations for improving less successful elements are also provided. We use a special Cognitive Response Analysis which has been demonstrated in published research to correlate highly with the ability of a communication to affect attitudes and behavior. Finished Testing in the Media Environment This involves quantitative evaluation of advertising in a test version embedded in its normal medium. Research respondents are asked to read/hear/view the medium as they normally would. Number of repetitions, amount of information, specific message, and placement in the medium can be varied experimentally, if desired. Respondents are asked to recall any advertising seen or heard. This, together with a follow-up aided recall question, measures the attention-producing ability of the advertising. The cognitive response methodology outlined above is also employed, with particular attention paid to the ratio of positive to negative thoughts and number of counter-arguments. Belief assessments allow a determination of the extent to which the appropriate positioning has been achieved. Behavioral intention assessments allow a determination of likely impact of the ad on trial of the product or service. 13

17 Evaluation of Marketing Campaigns Our principals have a number of published articles in the areas of evaluation research and promotional strategy. In addition, our past experience in advertising, direct marketing, and sales makes us particularly sensitive to the variety of factors influencing consumer response to promotional campaigns. For example, one of our principals has published a study showing how to best use direct mail and telemarketing to increase donations. Examples of Questions Answered with a Promotional Campaign Evaluation What level of awareness did our campaign generate? How did our campaign affect the positioning of our product in the mind of the customer? How did our campaign influence product/service purchase? Which promotional tactic or combination of tactics (e.g., direct mail/telemarketing/sales calls) is more effective? Which is most cost effective? How can we best allocate sales force visits? Approaches to Research Experimental and Quasi-experimental Evaluations of the Effects of Marketing Programs on Sales We often find it possible to use experimental and quasi-experimental designs to assess the impact of marketing campaigns on sales. Experimental designs are typically possible for direct marketing programs if members of the target market can be randomly selected to receive different communications (or none at all in a control condition). The separate and combined effects of multiple strategies can then be evaluated (e.g., direct mail, telemarketing, and sales calls). We recently conducted an evaluation of various promotional methods which demonstrated that a specific combination of frequency of direct marketing and telemarketing contacts was the most cost-effective promotional method for a pharmaceutical product. In certain situations it may not be possible to use a true experimental design to evaluate a promotional program. We used a quasi-experimental design to examine the effect of a catalog on sales after the catalog had 14

18 been sent to some customers, but not others and the two groups had not been randomly selected. Multivariate analysis of covariance was employed to adjust for prior-year sales differences and other differences between the groups, allowing for a determination of the effect of the catalog in circumstances which would otherwise not have permitted a quantitative assessment. Tracking Evaluations This involves longitudinal research to evaluate the effectiveness of a marketing campaign. When experimental designs are not feasible, time-series research is often the most effective method for evaluating a promotional program. Often it is possible to take advantage of multiple promotional waves to show that with each wave there are further increases in sales or that for some lag period after a wave, sales increase. It is also possible to track competitors as controls to help rule out alternative explanations, such as general economic or industry factors affecting sales. In addition to tracking sales, we collect image data to determine how a campaign is affecting customer decision-making and emotional response. Statistical analyses can be used to determine if the campaign is affecting all targeted segments or only some. Customer Satisfaction Modeling Understanding one s customers and ensuring their satisfaction has assumed great importance over the last 20 years. While many firms assess customer satisfaction, they do not necessarily properly evaluate the relative importance of the different determinants of overall customer satisfaction. In fact, the typical approach of asking directly about the relative importance of various determinants of satisfaction can yield results that are quite misleading. 15

19 There may also be an incomplete understanding of the relationship between satisfaction and customer loyalty and how additional factors, not being measured, may influence loyalty. Without this insight, you may spend dollars improving aspects of your product that have little relationship to customer retention. Our firm specializes in the development of satisfaction models. We ensure that you are measuring the right determinants of satisfaction, that their relative importance is well understood, and that you are aware of important customer segments. We were instrumental in the development of satisfaction assessments for one of the world s largest banks. Examples of Questions Answered with Customer Satisfaction Research What aspects of our product/service are related to customer satisfaction? What aspects are the keys to customer loyalty? On what product/service dimensions are our customers truly satisfied as opposed to merely satisfied or even dissatisfied? How satisfied are our competitors customers with the products/services of our competitors? Where are the weak points in our competitors armor? What do we need to do to improve customer satisfaction? How do we increase a customer s lifetime value? Are there meaningful changes in our customers satisfaction as a result of various programs/changes we have implemented? 16 Approaches to Research Satisfaction Model Development Studies These studies may start with qualitative research to be certain that the potential range of determinants of overall satisfaction is indeed well understood. This can include observational studies in which customers are asked to state their thoughts while using the product or service. This is followed with quantitative

20 surveys involving factor regression or structural equation modeling as well as latent segment analysis. These analyses will help to identify the core dimensions of satisfaction, their relative importance in determining overall satisfaction, and any segment differences. It is typically important in such studies to assess perceptions of competitors, as these can be important determinants of satisfaction and continued purchase behavior. This also allows benchmarking against competitors and best in class. Satisfaction Breakpoint Studies To aid in developing models of customer satisfaction, it is often desirable to conduct a Satisfaction Breakpoint Study. In the customer s mind there can be breakpoints, levels of service/quality where satisfaction shifts strongly from good to bad. There are also levels of performance among which consumers are relatively indifferent. Breakpoints are the places to focus efforts on quality improvement; areas of indifference are opportunities to reduce unnecessary expenditures. We help you distinguish between attributes for which attempting to increase satisfaction by exceeding expectation levels can be quite valuable, and attributes for which little would be gained even with sizeable expenditures. Loyalty Studies As the product cycle proceeds, it is wise to track changes in product loyalty and reasons for any observed reduction in market share. Loyalty studies are designed to examine the characteristics and perceptions of lost customers and new customers. They can also test strength of resistance to switching attempts by competitors, including exploration of price and feature modifications required to induce switching. Such studies can also examine the costs of retaining customers relative to their profitability. Predicting Customer Loss If you have a database of individual purchases over time (e.g., a sales database), it is possible to analyze those data for patterns of purchase that are early predictors of potential customer loss. Such customers can then be targeted for special promotional interventions. 17

21 Multi-year Marketing Research Planning Most organizations have conducted some marketing research, but this is often on an ad hoc basis as questions about a product or the market occur to management. Some research may also have been conducted in the context of new product development and introduction, but little research has been conducted since. If this is true of your organization, you may benefit from our assistance in developing a plan for marketing research. Assistance with Developing Multi-year Marketing Research Plans It is always a pleasure to work with an organization that seeks to plan ahead: to consider the circumstances of the organization and to help plan a set of studies which will provide the most valuable data for decision making. We work with you to develop a plan for research such that when a major marketing decision is required, you already have current, relevant data to guide you. 18

22 2525 Gross Point Road Evanston, IL (fax)