BSBMKG506 - Plan Market Research by Precision Group (Australia)

Trainer Manual & Assessment Plan Market Research

BSBMKG506

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BSBMKG506 Plan Market Research BSB Version Current

Precision Group Updates

Release 1

Current

Jun ‘16

History

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BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Table of Contents 3

About BSB

5 Introduction 7

BSBMKG506/01 Identify Market Research Needs 1.1 Communicate role of market research in enterprise operations to relevant personnel 1.2 Identify contribution of market research to enterprise activity 1.3 Analyse enterprise planning and performance documentation to determine research needs 1.4 Consult relevant personnel to determine research needs 1.5 Develop statement of market research needs

40 41

Key Points ‘True’ or ‘False’ Quiz

43 BSBMKG506/02 Define Market Research Objectives 2.1 Draft research objectives 2.2 Undertake preliminary project scoping 2.3 Consult with relevant personnel on draft research objectives to ensure relevant and useful information is gathered 2.4 Review and finalise draft objectives in light of scoping parameters

60 61

Key Points ‘True’ or ‘False’ Quiz

63 BSBMKG506/03 Define Data Gathering Approaches 3.1 Identify types of data required to inform objectives 3.2 Determine combinations of types of data to best inform objectives 3.3 Identify and evaluate suitable data gathering methods 3.4 Identify data sources 3.5 Quantify required data 3.6 Identify and evaluate suitable data processing methods 3.7 Make decisions on data types, combinations, gathering methods, sources, quantities and processing methods

86 87

Key Points ‘True’ or ‘False’ Quiz

89 BSBMKG506/04 Develop Market Research Plan 4.1 Estimate resources and timelines required for market research projects 4.2 Determine feasibility of market research projects 4.3 Prepare market research plan for approval 4.4 Obtain approval to implement plan from appropriate personnel as required

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Introduction (continued)

110 111

Key Points ‘True’ or ‘False’ Quiz

112 Summary 113 Bibliography 115 Assessment Pack

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

About BSB Business Services Training Package

“The purpose of education is to replace an empty mind with an open one.” Malcolm Forbes

About the Business Services Industry The BSB Business Services Training Package covers a diverse range of industries and occupations. Business Services covers a range of cross-industry functions and services supporting the commercial activities of all industries.

Defining Qualifications When units of competency are grouped into combinations that meet workplace roles, they are called qualifications. These qualifications are aligned to the Australian Qualifications Framework (AQF). Each qualification will have ’packaging rules’ which establish the number of core units, number and source of elective units and overall requirements for delivering the qualification.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

About BSB Business Services Training Package (continued)

Delivery and Assessment of Qualifications RTOs must have the qualifications (or specific units of competency) on their scope to deliver nationally recognised training and assessment. RTOs are governed by and must comply with the requirements established by applicable national frameworks and standards. RTOs must ensure that training and assessment complies with the relevant standards.

Qualification Training Pathways A pathway is the route or course of action taken to get to a destination. A training pathway is the learning required to attain the competencies to achieve career goals. Everyone has different needs and goals, and therefore requires a personalised and individual training pathway.

Foundation Skills Foundation Skills are the non-technical skills that support the individual’s participation in the workplace, in the community and in education and training.

Australian Core Skills Framework (ACSF) This Assessment meets the five ACSF core skills as described in the Foundation Skills mapping.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Introduction

“Knowledge is of no value unless you put it into practice.” Anton Chekhov

This unit standard, BSBMKG506 Plan Market Research, describes the performance outcomes, skills and knowledge required to plan market research by identifying market research needs, defining market research objectives, identifying data gathering approaches and developing a market research plan. This unit applies to individuals in a non-market research organisation who conduct market research planning at a managerial level. While market research planning can be undertaken as part of a broader role, it does require a good general knowledge of market research principles and practices, and a detailed understanding of the organisation’s operations, objectives and the application of market research. This unit applies to managers who allocate responsibility to team members who conduct market research. This manual is broken up into four Elements. They are:

Identify Market Research Needs

Define Market Research Objectives

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Introduction (continued)

3. 4.

Define Data Gathering Approaches

Develop Market Research Plan

There are activities throughout this workbook. These require the Learners to think about their experience or reactions, or to try and complete some research through reading or accessing the Internet. The activities will also help prepare Learners for their Assessment Tasks as they think through the issues raised. Learners will then be asked to complete an Assessment Pack for this unit of competency. The information contained in this workbook will assist them. These tasks can be completed as they work through the workbook, rather than leaving it all to be completed at the end of their study. Finally, at the end of this workbook you will find a list of useful resources that you may use for further information. You will need to have access to an Internet terminal. Throughout the text, there are references to websites for further information and for some activities. This unit contributes towards the attainment of nationally recognised qualifications. Marketing research focuses on understanding the customer, the organisation, and the competition. These relationships are at the core of marketing research. Organisations must understand and respond to what customers want from their products and services. However, this relationship is always influenced by competitors and how their products are received by the market. Market research helps organisations communicate with consumers more effectively. Their experiences are a valuable information source to gauge how well you currently meet their expectations and what the organisation is getting right and more importantly wrong. It can assist in identifying opportunities such as offering a new service and assessing the attitudes people have. Knowing this can allow early assessment of the potential for delivering a new service, but also identify the areas where a marketing message needs to be honed. Market research will minimise risk by identifying what is needed from a new product or service and ensure that the development of a product is highly focused towards demand. Market research creates benchmarks and helps measure progress. Without this measurement, it may not be possible to gauge how well the business is performing. Early research may highlight glaring holes in your service or short falls in your product, regular market research will show if improvements are being made and, if positive, will help motivate a team.

BSBMKG506â&#x20AC;&#x201A; Plan Market Research Trainer Manualâ&#x20AC;&#x201A; ÂŠ Precision Group (Australia) Pty Ltd

ELEMENT 1:

Identify Market Research Needs

Performance Criteria Element 1 1.1

Communicate role of market research in enterprise operations to relevant personnel

1.2 1.3

Identify contribution of market research to enterprise activity

1.4 1.5

Consult relevant personnel to determine research needs

Analyse enterprise planning and performance documentation to determine research needs

Develop statement of market research needs.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Identify Market Research Needs Communicate Role of Market Research in Enterprise Operations to Relevant Personnel Market research is the process of analysing consumer behaviour in order to find out: • Who is buying? • What they are buying? • Where they are buying it? • When people are buying products or services? and then working out • Why are they buying it? Market research can be defined as the systematic collection, analysis and interpretation of information relevant to marketing decisions. Businesses are conducting market research all the time. When they talk to their customers about their business or check the prices of their competitors, they are conducing market research. All business decisions can be improved by undertaking market research.

What is the Role of Market Research? The roles of market research in enterprise operations include: • Providing a business with a detailed view of customers in order to develop products and services that satisfy their needs better than the competition. Decisions need to be based on sound facts. Market research helps to support this process, significantly reducing the level of financial risk attached to investment decisions. • Capturing and analysing customer, competitor and market trend data. This allows a business to more accurately assess the level of demand for its products. It also influences decisions such as whether to open a new store or enter a new market. • Providing customer feedback. It is essential for a business to interact with its customers to gain insight into what they think about its range of products, brands and services. • Helping a business develop a clear and informed strategic business plan • Reducing the risk of decision making.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Market research is all about finding out what a business can do to entice customers to buy their product or service. Market research can identify market trends, demographics, economic shifts, customer’s buying habits and important information on competition. It can help a business maintain its competitiveness and increase sales. Igor Ansoff was a Russian/American mathematician who applied his work to the world of business. His most famous work is the Ansoff Matrix. The purpose of this matrix is to help managers consider how to grow their business through existing or new products or in existing or new markets. Market research has a role in all four situations:

NEW PRODUCTS

Market research can show the likelihood of adoption of new products Market research can

EXISITING PRODUCTS

measure customer satisfaction to find out how to maintain a competitive edge

Market research can show unmet needs and provide an understanding of unfamiliar markets Market research can find new territories for products or services

EXISTING MARKETS

NEW MARKETS

Market research can play a role at each stage in the product or service life cycle: • Introduction/Growth Phase – It can explore the unmet needs for a new product and helps estimate the likely demand • Maturity Phase – It can show how to build a brand and competitive edge and it can identify strengths that can be built on and weaknesses that can be rectified • Decline Phase – It can show ways of rejuvenating a product, perhaps through introducing new features or finding new markets. Market research is important for every business – and should not just be a one-off activity. Successful businesses conduct research on a continual basis to keep up with market trends and to maintain a competitive edge.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

What is the Market Research Process? The market research process consists of a set of defined stages through which marketing information is collected. These steps generally include:

Define the problem or need and develop research objectives Develop research plan and design the best research instrument(s) Collect the data Interpret the data Communicate the findings and make decisions

Communicating this Information It is beneficial for enterprise owners to communicate to its stakeholders the purposes for undertaking market research and how it can benefit the business. The reasons for undertaking market research include the following: • Firstly, it demonstrates to employees that the business is committed to building a culture that is focused on the customer and their needs. Conducting market research is tangible evidence that the company cares about its customers and their requirements and wants employees to do their best to take care of them as well. • Secondly, if all the stakeholders understand how the information generated by market research can benefit the business including contributing to its success and ultimately its longevity, then they can see more clearly how this can also benefit themselves – the ‘what’s in it for me’ aspect. A more competitive business can offer more stable, longer-term employment opportunities, be a business that suppliers are keen to work with and be viewed by consumers as an organisation that is interested and committed to meeting customer’s needs. This will also have an impact on revenue, company stability and the business’s potential to thrive in the future. Encouraging stakeholders to contribute to the process through sharing information, contributing ideas and implementing the outcomes of the research helps ensure they are on board from the planning stage. The way a business gathers, shares and uses market research information can be central to its ability to develop successfully. Communication is fundamental to the effective running of a business. It contributes to the creation of an environment of trust around the business owners that enables them to lead effectively, engage their employees and ultimately deliver results. Stakeholders want management to communicate information about strategic planning and the ‘big picture’ issues to them.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

High-performing, well-respected businesses are ones with an organisational culture that supports open, two-way communication. Managers in these companies provide regular, on-going opportunities for employees to provide feedback, have a say in the running of aspects of the business and encourage discussion around what needs to be done. They make the goals and actions of the organisation clear to employees by communicating key activities, issues and developments and develop policies that facilitate transparency and openness. They create a culture of trust by sharing information quickly and freely, and building relationships with employees and other stakeholders that enables their organisation to thrive. Stakeholders that trust management and really understand what’s happening within the company will be more satisfied, more productive and better able to contribute ideas for improvement. Trust must be built; it must be earned over time by listening, talking, asking questions and ‘walking the talk’. Effective managers win employees, suppliers and other stakeholder’s trust by: communicating openly and often; having a clear and committed communications policy, strategy and processes; initiating formal and informal communications programs; and regularly assessing the effectiveness of their own communication and that of their team. Unless information is shared with the stakeholders involved in a business, the success of any market research may be jeopardised. Sharing information connects everyone involved in the business to a common set of strategies, goals and actions. Explaining the benefits of initiatives such as market research to all stakeholders usually leads to more successful outcomes. This communication must be tailored to different stakeholder groups. A business’s stakeholders could include clients, customers, enterprise owners, managers, supervisors,

employees

and

suppliers.

Many

organisations

have

difficulty

communicating with the correct level of clarity and detail and in the language appropriate to different stakeholder groups. Various stakeholder groups use language differently and consequently communications need to be tailored accordingly.

Identify Contribution of Market Research to Enterprise Activity Market research is one of the most useful tools that a business can use to further develop the way it understands consumers and maximise the potential for profit and growth. It’s essential for businesses of all sizes and benefits everyone from small start-ups through to multinationals, paving the way for data-led success. The truth is that having a fantastic product or service is not a guarantee of success without first knowing why you offer this product, and who you are offering it to.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Market research can provide the information a business needs to make informed business decisions about starting a business, innovating, growth and the Four P’s of marketing: product, price, place and promotion. Product • Market research can test attitudes to products by describing them or showing them in focus groups • Market research can help identify how to improve your product or service based on findings about what your customers really want and need • Market research should focus on aspects like function, appearance and customer service or warranties. Price • Market research can help in setting a price based on popular profit margins, competitors’ prices, financing options, or the price a customer is willing to pay. • Pricing research can vary from simple questions like, How likely are you are to buy this product at this price?” through to more complex questions. Place • Market research can help guide a business in where to locate and how to distribute a product. Research should compare the characteristics of different locations and the value of online or retail sales. Promotion • Market research can determine how to best reach particular market segments (teens, families, students, professionals, etc.) in areas of advertising and publicity, social media, and branding. • Market research helps a business avoid unpleasant surprises. Intuition and experience can be helpful at times, but research and facts often depict a more accurate picture of the market. • By conducting research on a regular basis, a business can keep up with the changing aspects of the economy and demography. It can also adjust to new regulations and technological breakthroughs. • Market research can help in all aspects of promotion from developing ideas for advertisements through to testing which advertisement is more effective. Market research can help a business: • Understand their customers and their preferences (Four P’s) ○ ○ Profile their customers (location, age, gender, income level, etc.) ○ ○ Create more effective marketing campaigns ○ ○ Find the best business location

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

• Identify opportunities to grow and increase profits ○ ○ Recognise changes in demand ○ ○ Offer new products or services for areas of new demand ○ ○ Find new markets within and outside of Australia • Recognise and plan for industry and economic shifts ○ ○ Shift inventory, price and staff levels as needed • Monitor the competition in the same market ○ ○ Identify competitors ○ ○ Get information on how the business’s competitors operate ○ ○ Learn how customers compare your business with your competitors • Reduce risk in business decisions ○ ○ Use information, not just intuition, to drive business decisions. Market research can make a significant contribution to a business in the following ways: • Best practice Best practice means finding the best ways of working to achieve business objectives. A best practice approach looks at ways of changing and improving what a business does, while respecting the various stakeholders. In business, people get comfortable in their roles, form habits, and carry on doing things the way they always have done, without questioning whether a particular activity is still the best use of resources. A best practice approach asks why. It questions what you do and why you do it, both at the strategic and operational level. The goal is to be constantly seeking the most efficient and effective ways of making profit for the business. Evidence is a critical component in best practice. It enables a business to make informed decisions shaped by good research. This is particularly the case with smaller businesses and those just starting out. Conducting some well-targeted, thorough research in the early stages of running a business can save money in the long term. Not understanding your customers will cost much more. Without good, solid evidence, a business is entering unfamiliar territory without the benefit of past experience to base decisions on. Research can provide invaluable insight into new territories and markets, highlighting how you should be adapting your strategy and approach to succeed. It can be used to identify how best to secure finance, how to work out your next steps and stand apart from your competitors. The knowledge that you have the evidence to base decisions on and inform your strategy is extremely valuable for a new business owner.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Through market research, an organisation is able to make more informed business decisions based on facts not intuition. Informed decision-making can contribute to best practice, and can help a business to: ○ ○ Better understand the characteristics and preferences of their customers ○ ○ Identify opportunities to increase sales and grow their business ○ ○ Monitor the level of competition in their market ○ ○ Reduce the risk in making business decisions ○ ○ Develop and complete their business plan ○ ○ Become more competitive ○ ○ Increase sales and develop new markets ○ ○ Reduce costs and become more efficient ○ ○ Improve the skills of their workforce ○ ○ Use technology more effectively ○ ○ Reduce waste and improve quality ○ ○ Respond more quickly to innovations in their sector. Developments in technology have opened up entirely new ways to market and sell products and services. Best practice now involves using the Internet, email and mobile technology to increase the effectiveness of getting products and services to the customer. Even the smallest business can benefit from having a website. Many organisations also use electronic newsletters (often known as e-zines), regular emails and SMS (text) messaging to communicate with their markets. As with all best practice, it is important to get the implementation right. A business’s website needs to be thought out carefully, and updated regularly. • Information about competitors, clients, stakeholders Growing a business without understanding your competitors is risky. Market research can help prepare a business for changing markets and prevent them from being left behind by the competition. A business may discover that its competitors are offering certain promotions or sales that they hadn’t considered, or maybe they have a better online presence. It’s helpful to look into what your competitors are doing and analyse what they are doing better than you: ○ ○ Are their prices lower? ○ ○ Are their products of a higher quality? ○ ○ Is their customer service superior? ○ ○ Is their marketing material more appealing? A business should ask themselves these questions to see where they can improve. Being critical of your own business and taking inspiration from your competitors can help you be more competitive.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Competition is much greater today. In the past a small business had competition from other, locally-based small businesses and their customers were known. Today a small business competes in a much larger field. Not only does it face competition from local as well as international companies, often competitors are much larger and have greater negotiating power to source and sell those same products at cheaper prices. In addition to this, small businesses face competition from e-commerce.

Finding out as much as possible about your competitors through market research is essential, so that you can then determine how to make yourself different. Uncover what makes them stand out. Why should their customers go to them instead of someone else? Traditionally, businesses tend to make themselves stand out by saying that they offer a lower price, better qualifications, superior service etc. However, these issues will only last for a certain amount of time as almost everyone compete on these key issues. The trick is to come up with something that your competitors are not doing at the moment.

The best way to do this is by exploring any gaps they have left. Are there any particular customers that they have not concentrated on? Does your business have a new service to offer that they are not currently providing? Sometimes these gaps can be easy to identify, but sometimes you will also need to have a look at the industry as a whole and the customer requirements to come up with the ideas. Conducting this market research is hard work and time consuming, and to be effective, needs to be carried out on a regular basis. New competitors are starting businesses all the time and old ones are looking for new ways to grow their business. The market continually changes. Often when a business finds a gap in the market, chances are that someone else will find it too and so a business constantly needs to know about this in order to stay ahead. Market research also provides the opportunity to learn more about the most important stakeholder – the consumer or client. Having a great product is not enough in the digital age as competitors will always find ways to steal market share. Market research can help management understand more about: ○ ○ Potential new customers › › Who is likely to use your product/service? › › What is their age and sex? › › What is their marital status? › › Do they have children? › › Where do they live? › › What level of education do they have? ○ ○ Existing customers › › Why do customers choose your product over your competitors? › › What is the key factor in their decision making? Is it service, product quality or prestige?

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

› › What appeals to them most about your product/service? › › Who influences their buying decision? › › What websites do they visit? › › What magazines do they read? Market research can help a business better understand their customers and their preferences, build a profile of their customers, create more effective marketing campaigns or help identify the best business location. Enterprise owners also need to evaluate and understand the precise needs of potential customers and develop their products and services accordingly. Even existing products and services can be suitably modified based on the results of such market research. Market research can lead to improved communications between a business and its target customers. By having an accurate understanding of customer needs and meeting them effectively, leads to enhanced customer satisfaction. Risk is minimised through precise analysis of customers’ demands. Products and services that can be matched perfectly can then be developed, thus reducing errors and failures. • Information to enable predictions for ○ ○ Strategic Planning Businesses contemplating significant changes, such as business expansion and relocation, can benefit from using market research to support their decisions. Examples of situations that might call for market research include: › › New advertising campaigns › › Opening a new location or changing business locations › › Increasing production levels › › Introducing new lines of products or services. Market research should be part of every organisation’s business strategy. Market research can help identify new business opportunities, as well as changing market trends such as population shifts. The data, obtained through research, feeds into a number of areas of the business plan, including: › › Identifying where existing customers live › › Selecting the appropriate business location › › Setting the price for your products and services › › Attracting customers to your business › › Ensuring advertising is on target › › Selling to customers and earning repeat business › › Setting realistic targets for areas such as growth and sales.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Business plans and market research are not solely for new businesses. Accurate assessment of the market and development of an effective plan is critical to the success of both new and existing businesses. The kind of information gathered through market research during the planning and growth stages of a business can also be very useful in its day-to-day operation. A regular flow of market research information can help a business maximise the potential of its current business. The information collected through research can assist a business in setting realistic expectations and making appropriate estimations about sales forecasting, market share, growth rate and other such critical factors. ○ ○ Policy Making Feedback from market research provides information that can be used to initiate new or adjust existing policies in an organisation. Market research can also uncover aspects of a business which are not covered by policies or where existing policies are outdated. ○ ○ Service Development and Delivery Mystery shopping programs together with customer satisfaction surveys are types of market research that can be used to help a business design and monitor the performance of its customer service delivery processes. Market research can also help a business improve its service delivery. The owner of a small pest control business was looking for ways to set his company apart from others operating in his local area. He wanted prospective customers to consider more than just price when deciding which company to engage. He decided to enlist the help of a market research company to work out how to distinguish his company from the competition. The market research company immediately implemented a system to obtain feedback from clients, through the use of customer satisfaction surveys conducted over the phone and online. After each appointment, customers were given the opportunity to provide feedback in return for a discount on their next service appointment. The business owner specifically wanted to know what services and behaviours his customers valued the most. The customer satisfaction research turned up a rather surprising result. The company owner had assumed his customers would value efficient technicians who did their job and got out of the way as quickly as possible. The surveys told a different story. In fact, they found that when technicians spent more time in a home, the homeowners reported higher customer satisfaction. Essentially, his customers indicated that they appreciated personal attention more highly than efficient service. Based on the feedback received, the company increased the amount of time technicians spent with each client, which enabled them to spend more time answering a customer’s questions and offering advice. It also developed its advertising campaign around the personal service it offered and set up a new scheduling system to ensure that the same technicians were assigned to do

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

repeat visits. This new strategy encouraged the development of the kind of personal attention and relationships that the market research suggested was most effective. Six months later, the customer satisfaction ratings for the company had improved by more than 30%, and the amount of referrals from happy customers had increased by nearly 3% per month despite the fact that the service was more expensive than most of the other businesses in town. In this case, market research helped the business identify an aspect of their service that was valued most by its customers but which the company had not been aware of. This one vital piece of information told the owner how to improve his service and increase customer satisfaction. Service delivery is one of the factors which has a direct and measurable effect on profitable growth. By improving customer service delivery, organisations can make significant and sustainable gains in the market. Both mystery shopping programs and customer satisfaction market research are useful tools for determining how to best satisfy customers so they become loyal supporters. Mystery shopping is about measuring the actual performance of the service delivery process. That is, whether the performance meets or exceeds customer expectations. Customer satisfaction research is about understanding customers’ attitudes, opinions, and perceptions after their experience of the service delivery process. As well as contributing to the design of service delivery processes and standards, customer satisfaction research measures process outcomes and their impact. Linking findings from mystery shopping programs and customer satisfaction research will highlight where satisfaction or dissatisfaction needs to be addressed. Conversely, mystery-shopping data will point to where service performance is likely to cause dissatisfaction and allow for proactive measures to be taken. ○ ○ Marketing More informed marketing decisions can be made about how to price a product or service, how to distribute that product/service, which media channels to use to promote the product, or whether to develop a new product/service, on the basis of information obtained through market research. Market research can: › › Measure the performance of a business’s marketing campaigns › › Help a business measure its marketing return on investment. For example, simple tracking mechanisms, such as coded advertising coupons allow a business to identify which publications are generating the best enquiries › › Help a business plan its marketing strategy and methods, when used in combination with benchmarking

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

› › Help a business assess the effectiveness of its marketing strategy at a strategic level. For example, a business might want to research whether they are charging the right prices or compare different distribution channels. A business can also use brand research to analyse the cumulative impact of its marketing campaigns in terms of brand recognition and reputation. Or it might want to carry out a benchmarking exercise, comparing how a business markets and how much it should spend against competitors and industry norms › › Help a business test which versions of a mailing work best in terms of encouraging sales. Knowing which marketing messages and media work best helps a business spend its marketing budget more effectively in the future › › Help identify where a business’s brand stands compared to the competition, what metrics it should track over time, and what brand benefits matter most to the business’s target market. Quantitative and qualitative market research can assist with this › › Identify the best market or target demographic for a product or service. By focusing the business’s efforts on the right markets, they can see faster results, improved efficiency, and greater overall performance from their marketing campaigns. In addition, if the target market is already defined, they can use market research to better understand their business’s target consumer and uncover critical behaviour drivers and attitudes that inform their purchase decisions.

Other common marketing metrics that can be analysed through market research include measures of customer satisfaction, sales per customer, response per campaign and dollars invested, loyalty levels, percentage of market share and new customer acquisition, as well as the volume and type of customers that leave. All this should be measured against what they and their competitors are doing, to see how they tie together.

Analyse Enterprise Planning and Performance Documentation to Determine Research Needs Enterprise planning and performance documentation may include: • Correspondence Correspondence is any written or digital communication exchanged by two or more parties. Correspondence may come in the form of letters, emails, text messages, voicemails, notes, or postcards. Correspondence is important for most businesses because it serves as a paper trail of events from point A to point B.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

• Financial Reports Financial statements, produced regularly and correctly, provide vital information to help a business continually improve. Financial statements are also important for setting goals and making sound business decisions. It is helpful for a business to conduct a financial analysis of its business. This entails analysing its current financial statements, and looking for trends, such as declining sales, that may put the business at risk. Regularly reviewing actual performance against forecasts is important. When conducting a financial analysis, it’s important to consider: ○ ○ Trends in cash flow, revenue and expenses ○ ○ Current sales of various products or services ○ ○ Level and turnover of stock ○ ○ How the business services debt.

Businesses have a great deal of data on the cost of producing, storing, transporting and marketing each of its products and product lines. Such data has many uses in market research including allowing measurement of the efficiency of marketing operations. It can also be used to estimate the costs attached to new products under consideration.

Benchmarking is a way of measuring a business’s performance (i.e. income, expenses and profitability) against similar-sized businesses in the same industry. Benchmarking data can be obtained from business and industry associations or a commercial benchmarking business. Financial ratios are ratios that can be extracted from financial statements, and can be used to compare the business’s performance during different time periods. They can also be used to compare the performance of the business with the performance of other businesses. The key financial reports that can help with research and planning include: ○ ○ Cash-flow forecast A cash flow statement tracks all the money flowing in and out of your business and can reveal payment cycles or seasonal trends that require additional cash to cover payments. This cycle or pattern can help a business plan ahead and make sure that they always have money to cover payments. ○ ○ Profit and loss A profit and loss or income statement lists a business’s sales and expenses. A profit and loss statement can help when developing sales targets and an appropriate sales price for goods/services using tools like the break-even, profit margin and mark up calculators. ○ ○ Balance sheet A balance sheet can help a business work out how much money is needed to fund day-to-day operations and how quickly current debts can be paid.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

• Information about Sales and Sales Force Performance A business can use its sales history and market research to forecast the number and value of sales it expects to make. The business can then set targets for the sales they would like to make and figure out ways of achieving that target. To assist with this process, it is helpful to record the business’s yearly sales performance by product sales. This allows the business to determine its performance and make improvements to its sales strategies over time.

The business’s sales history can be used to forecast month-by-month predictions of the sales they expect to achieve. To enable the data to be easily extracted, it is helpful to list them by product or product line and market segment. Forecasts could include: ○ ○ How many new customers the business gains each year ○ ○ How many customers the business loses each year ○ ○ What the average volume of sales is to each customer ○ ○ Particular months where the business gains or loses more customers than usual ○ ○ How many products the business sells per year or per month ○ ○ How many sales the business makes to each market segment per year or per month ○ ○ How many sales per month the business expects to achieve by product or product line ○ ○ How many sales per month the business expects to achieve by market segment.

The business’s sales targets indicate the sales the business needs to make in a given period to break even and make a profit. It is helpful to identify the sales targets the business wishes to achieve in the coming year, listing in order of product and product line.

A sales target is the number of products you need to sell to make a desired profit. Sales targets allow a business and its sales staff to: ○ ○ Set clear goals ○ ○ Offer incentives and bonuses that motivate and reward ○ ○ Keep measuring, challenging and improving sales performance.

Reliable sales targets help a business track its sales progress within each period, and adjust sales goals to meet the market and business needs. Sales targets can be set by market segment, by region and for each member of the sales team.

• Internal Reports Every department within an organisation will have its own records that represent a potential source of valuable data. Businesses generate a tremendous amount of internal secondary data from their day-to-day operations. One of the most useful pieces of information businesses have at their disposal is detailed customer information and purchase history. However, it can be difficult to make

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

sense of the millions of pieces of individual data. For this reason, businesses find it necessary to use data mining techniques to extract valuable information from their databases. Some retailers try to customise the products and services they offer by matching offerings to meet the needs of their customers. For instance, the U.K. grocer Tesco uses its loyalty card to collect large amounts of information about individual customers. Every time a loyalty card member buys something, the card is scanned and captures the purchased data. By analysing this date, they are able to identify three distinct income groups: high income, middle income, and less affluent buyers Tesco has created products for each group, according to their preferences, and is able to target promotions to each customer according to his or her income classification. Since 2000, Tesco’s market share has grown by over 20%. Internal sources of data should always be considered as a first line of enquiry for any investigation because they are usually the quickest, cheapest and most convenient source of information available. Internal data will also be exclusive to the organisation that generated it, so that rival firms will not have access to it. Other sources of internal data include: ○ ○ Sales data: e.g. sales force staff’s customer calling sheets, records of returned goods from customers, enquiries about products not stocked, information contained on sales orders and invoices. › › Sales by territory › › Sales by customer type › › Prices and discounts › › Average size of order by customer, customer type, geographical area › › Average sales by sales person › › Sales by pack size and pack type, etc.

This type of data is useful for identifying an organisation’s most profitable product and customers. It can also serve to track trends within the enterprise’s existing customer group. ○ ○ Transport data: Companies that keep good records relating to their transport operations are able to establish which are the most profitable routes and loads. Good data on transport operations enables a business to determine whether it makes economic sense to own or hire vehicles, or the point at which a balance of the two gives the best financial outcome.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Consult Relevant Personnel to Determine Research Needs Consultation is the process through which businesses and their stakeholders share information and exchange views. Effective consultation can lead to: • More informed management decisions that take into account a wider range of views • Stronger commitment to decisions because everyone is involved in reaching them • More openness, respect and trust. Communicating is a two-way process. In addition to sharing information with stakeholders about the reason for conducting market research, it’s also vital to listen to the ideas of people both inside and outside the organisation. This could include suppliers, employees, sales staff, board members, customers, peers, colleagues and market researchers to gain their insights and perspectives on various aspects of the business. Obtaining data about competitors should also be part of this process. Stakeholder concerns and feedback can be used to inform market research. Sharing information about market research plans with these various groups, and seeking their opinions and impressions of how the organisation is performing can bring to light valuable information. There is no better way to communicate to employees that they have a voice than to engage employees in the business’s decision-making process. Not only does this empower employees to be involved in guiding the future direction of the business, it ensures they know — and are aligned around — the company’s vision. Involving employees in the development of the business can generate increased profits and improved employee satisfaction, at virtually no cost to the organisation. Employees are often in a position to see where improvements could be made or when market demands are changing. Production staff will be aware of inefficient production processes, while customer service staff will know common sources of complaints. Encouraging contributions and ideas from staff is likely to make them feel valued, can help gain employee trust and commitment, and will help ensure buy-in should changes be implemented as a result of market research. Employees can often bring insights and perspectives to the table which managers may not be aware of. By drawing on employees’ knowledge and experience, better decisions can often be made. Regular meetings, innovation workshops or brainstorming sessions where staff are given the freedom and encouragement to think of ways in which the business could improve, can also inform market research needs. A business may be able to develop mutually beneficial knowledge-sharing relationships with customers by talking to them about their future requirements, and discussing how they might be better able to develop products or services which meet their needs.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Engaging with online communities through social media can also form part of a company’s overall communication strategy. For example, forums on a website, where particular groups (e.g. parents) can exchange ideas, share tips and give advice may highlight issues which warrant further investigation through market research. Listening to customers is an inherent part of taking care of them. It’s difficult to know how you can improve the customer’s experience if you don’t have an attentive feedback system in place, regularly conduct meaningful customer surveys or have ongoing chats with current customers. While customers can’t single-handedly steer a business’s product(s) towards innovation, a truly customer-centric company will take advantage of the fact that their customers often do know what they want.  Market researchers can help a business identify their research needs and clarify their research objectives. The research purpose comprises a shared understanding between the enterprise owner and the researcher of the problems or opportunities to be investigated, which problems or opportunities are anticipated, what the scope of the problems are and the possible reasons for this. As a business tries to understand its target market, it can tap into social networks to get free feedback. Many people in a business’s extended network will likely be willing to take the time to give their opinions and advice. It’s important for a business not to assume that they can think like their target market. Only by asking them and talking to them can a business really understand what customers are looking for. This is an ongoing process – changes can occur in some industries quite rapidly, so businesses need to ensure that they are on top of what is happening. Businesses should get to know their customers extremely well. This means moving beyond simple conversations. It requires more than just asking them what they want in a new product or service. Asking them why they’re buying or not buying a product, what they may want to buy in the future and asking what other needs they have can give a valuable picture of what’s important to them. Getting to know your customers, their requirements and blind spots are aspects that are often overlooked. Consulting potential customers can help identify research needs as well. Chances are a business’s potential customers are already buying something similar to your product or service from someone else. Before you can sell to a potential customer, you need to know who their current supplier is, if the customer is happy with their current supplier and if buying from your business would offer the customer any benefits. Finding out what benefits they’re looking for, gives a business a better chance of being able to sell to them. The benefits may be related to price or levels of service, for example. Are there any benefits your business can offer that are better than those the potential customer already receives? If there are, these should form the basis of any sales approach you make. Most social media platforms, such as Twitter or Facebook, offer numerous ways to analyse trends and conduct market research. By simply searching the latest posts and popular terms, a business can gain insights into emerging trends and see what customers are talking about in real-time. One example of this is conducting hashtag

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

searches on Twitter. By setting up a few searches with hashtags related to your brand, industry or product, you can receive instant notifications when customers, clients or competitors use these key terms. By analysing social media exchanges about your product or service, you can learn what factors customers use to determine value as well as the way that they speak about your product, service or brand. By utilising these factors and terms within your own marketing, you can speak directly to consumers and improve the effectiveness of your marketing efforts. With the broad scope and interactive nature of social media, information is gained through interaction and observation. Instead of leading the discussions, you can simply observe or join in as an equal. This can result in a variety of answers and discoveries that might have remained hidden using other research methods.

Develop Statement of Market Research Needs There are a variety of reasons why research is initiated. Some of these include: • Research on Competition: ○ ○ Comparing Consumer Attitudes to an Organisation’s Services and Those of Competitors Such comparisons are used to make better marketing campaigns. By understanding that consumers are more receptive to food advertising when they are hungry, scheduling snack advertisements late in the afternoon is effective. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually to the rest of the population, it is learned that organisations that introduce new products must be well financed so that they can stay afloat until their products become a commercial success. It is important to please initial consumers, since they will in turn influence many subsequent consumers’ brand choices. ○ ○ Identifying Frequency of Use of Competitors’ Products and Services It will be challenging, but discovering your competitors sales figures will allow assessment of where the organisation that you represent stands in the market. The Annual Reports for public companies will give clues, but there are rarely specific facts. Read about your competitors. Look for articles or ads in the trade press or mainstream publications. Read their marketing literature. Check their entries in directories and phone books. If they are an online business, ask for a trial of their service. At exhibitions and trade fairs check which competitors are also exhibiting. Look at their stands and promotional activities. Note how busy they are and who visits them.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Look at competitors’ websites. Find out how they compare to yours. Check any interactive parts of the site to see if you could improve on it for your own website. Is the information free of charge? Is it easy to find? Business websites often give more information that businesses have traditionally revealed – from the history of the company to biographies of the staff. Use a search engine to track down similar products. Find out who else offers them and how they go about it. Websites can give you good tips on what businesses around the globe are doing in your industry sector. Organisations and reference sources include: › › Your trade or professional association, if applicable. › › The Chambers of Commerce. › › Directories and survey reports in any business reference library. Speak to your competitors. Phone them to ask for a copy of their brochure or get one of your staff or a friend to drop by and pick up their marketing literature. You could ask for a price list or enquire what an off-the-shelf item might cost and if there’s a discount for volume. This will let you know at which point a competitor will discount and at what volume. Phone and face-to-face contacts will also give you an idea of the style of the company, the quality of their literature and the initial impressions they make on consumers. It’s also likely you’ll meet competitors at social and business events. Talk to them. Be friendly - they’re competitors not enemies. You’ll get a better picture of them - and you might need each other one day, for example in collaborating to grow a new market for a new product. Make the most of contacts with your consumers. Don’t just ask how well you’re performing - ask which of your competitors they buy from and how you compare. Use meetings with your suppliers to ask what their other consumers are doing. They may not tell you everything you want to know, but it’s a useful start. Use your judgement with any information they volunteer. For instance, when consumers say your prices are higher than the competition they may just be trying to negotiate a better deal. ○ ○ Identifying Key Competitors and Their Strengths Evaluate the information you find about your competitors. This should tell you whether there are gaps in the market you can exploit. It should also indicate whether there is a saturation of suppliers in certain areas of your market, which might lead you to focus on less competitive areas. Draw up a list of everything that you’ve found out about your competitors, however small.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Put the information into three categories: › › What you can learn from and do better › › What they’re doing worse than you › › What they’re doing the same as you If you’re sure your competitors are doing something better than you, you need to respond and make some changes. It could be anything from improving consumer service, assessing your prices and updating your products, to changing the way you market yourself, redesigning your literature and website and changing your suppliers. Try to innovate not imitate. Now you’ve got the idea, can you do it even better, add more value? Your competitors might not have rights over their actual ideas, but remember the rules on patents, copyright and design rights. You can also exploit the gaps you’ve identified. These may be in their product range or service, marketing or distribution, even the way they recruit and retain employees. Consumer service reputation can often be the deciding factor between businesses that operate in a very competitive market. Renew your efforts in these areas to exploit the deficiencies you’ve discovered in your competitors. But don’t be complacent about your current strengths. Your current offerings may still need improving and your competitors may also be assessing you. They may adopt and enhance your good ideas. ○ ○ Measuring Awareness The purpose of any branding campaign is to raise awareness of a business, cause, product, or idea. While it’s incredibly important to pursue brand awareness and engagement tactics, all of that falls flat if you have no way to track and measure just how much users are aware of your brand or product. Track and measure: › › Impressions

–

Impression

measurement

incredibly

important

for

companies that regularly use display ads to bolster their brand awareness campaign. Impression measurement tells you exactly how many consumers or users view your display ad. More sophisticated impression measurement tools will tell you very specific information about users - location, preferred search engine, social media habits, etc. › › Consumer Engagement – This includes everything from brand recognition to brand-specific web searches to content resonance. However you want to go about it, consumer engagement measurement is a direct reflection of how effective your brand awareness campaign is. It shows exactly if users are responding to content that you’re using to engage with them. › › Reach – Reach metrics are perhaps the least complex in your brand awareness measurement tools. Reach simply refers to the sheer amount of consumers, users or prospects that you are reaching with your content.

BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

After you’ve gathered all of the appropriate brand awareness data, it’s time to take action. What does action look like? Well, this is usually specific to your company. But the big idea is to use this data to change your strategy. Ask the hard questions. What could you do better to turn negative social engagement into positive social engagement? What content pieces just aren’t working? Is your site copy strong enough? Are you posting too much? Are you posting too little? Brand awareness data pushes you to get on the street level with your brand awareness campaign and make the necessary changes to move your company forward. • Research on Consumers: ○ ○ Developing Detailed Consumer Profiles

A consumer profile is a description of the type of consumer likely to purchase your product. Most organisations constantly update the profile of their consumers. A consumer profile may vary from one product to another. Developing a consumer profile will help you target your advertising and marketing and is an essential analysis tool. This will cut your advertising costs and allow you to concentrate on real potential consumers rather than too wide a range of people. Concentrating on potential consumers will save you time and money.

○ ○ Identifying Changes in Attitudes and Behaviour Patterns Attitude is a learned tendency to behave in a consistently favourable or unfavourable manner with respect to a given object. Individuals have attitudes toward many things – to people, products, advertisements, ideas and more. Attitude is made up of three components:

1. Cognitive

– The knowledge and perceptions that are acquired by a

combination of direct experiences with the object of the attitude and related information sources.

2. Affective – The consumer’s emotions or feelings about a particular product or brand.

3. Conative

– The likelihood or tendency that an individual will undertake a

specific action or behave in a particular way with regard to the object of the attitude. To change consumer behaviour, attitude must be changed first. Monitoring consumer purchasing trends from an attitude and behavioural perspective is important to stay at the forefront of consumer needs. Strategies to change the consumer attitude and beliefs include: › › Adjusting positioning › › Enhancing product attributes › › Enhancing consumer benefits › › Enhancing intangible attributes › › Adjusting price

Element 1: Identify Market Research Needs

› › Enhancing application › › Introducing a brand user › › Using celebrity recognition › › Enhancing brand personality › › Product category. ○ ○ Identifying Existing, Potential or Lapsed Consumers Because your individual consumers have differing needs, it will be easier to give them what they want if you divide them into groups sharing similar needs, and treat each group differently. You can then: › › Customise your products and services for each segment › › Aim your marketing at each particular group, saving you time and money › › Focus on your most profitable consumers › › Reconnect with lapsed consumers. • Research on Place: ○ ○ Identifying Attitudes Towards Location The advent of Internet and social media shopping has radically altered since it first became available. More and more people are buying from home rather than shopping in stores. In the case of high ticket items such as cars, consumers still adopt a hands-on approach. There is still a lingering concern by consumers that some products from some countries may be sub-standard while goods from other countries are seen as a bargain or of higher quality. ○ ○ Identifying Cooperative Opportunities for Distribution of Information or Services Sharing costs is an innovative way for retailers to reduce overheads through delivery costs. ○ ○ Identifying Demand for Products or Services at Other Locations

Market research is very good for assessing the demand for products or services in other locations. This can be done through addressing potential consumers directly, or via telephone, email surveys or focus groups.

• Research on Pricing: ○ ○ Identifying Attitudes Towards Prices Is the pricing strategy in line with the expectations of consumers? How does it line up with the competition’s products or services? While consumers will often pay more for what they consider to be a premium product, the life cycle of the item, the external financial forces or new products may force this to be reconsidered.

Element 1: Identify Market Research Needs

○ ○ Identifying Costs Market research to identify costs is also known as a documented investigation of a market that is used to inform a firm’s planning activities, particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of an organisation. ○ ○ Testing Alternative Pricing Strategies

The test market ideally aims to duplicate ‘everything’ - promotion and distribution as well as ‘product’ - on a smaller scale. The technique replicates, typically in one area, what is planned to occur in a national launch; and the results are very carefully monitored, so that they can be extrapolated to projected national results.

Element 1: Identify Market Research Needs

• Research on Products and Services: ○ ○ Evaluating Competitors’ Products Competitors are evaluated by placing them in strategic groups according to how directly they compete for a share of the consumer’s dollar. For each competitor or strategic group, list their product or service, its profitability, growth pattern, marketing objectives and assumptions, current and past strategies, organisational and cost structure, strengths and weaknesses, and size (in sales) of the competitor’s business. ○ ○ Evaluating Consumer Attitudes Towards Presentation and Packaging Consumers are strongly influenced by the presentation and packaging of products. It serves to enhance a brand’s image, along with other marketing communications tools. It performs marketing functions beyond the traditional role of protection. Essentially, an effective package design has only a few seconds to make an impact. In this time, it should catch the shopper’s eye, break through competitive clutter at the point-of-purchase, draw attention to the brand, promote brand features, communicate the right message and ultimately convince them that it is the optimum proposition on the shelf. Market research is conducted to discover the impact of presentation and packaging. ○ ○ Identifying Potential New Products or Services or Ones which may be at the End of Their Life Cycle Understanding whether the organisation’s product or service is nearing the end of its life cycle or facing new and exciting competition is important to strategic planning. Market research can reassure the organisation or raise alerts that changes are necessary. Market research can be used at all stages in the product life cycle: › › Pre-birth – establishing needs › › Youth – stimulating product take-up › › Maturity – improving product performance › › Old age – determining the future. New product research lets a business understand what customers really want, allowing them to tailor their product offerings to meet the needs of consumers to give them a competitive edge. New product research helps a business refine product designs and plans before committing to expensive product development costs. Product research is a vital part of new product development. At every stage of the process, product research can help a business identify key issues and avoid expensive mistakes. Product research helps identify the key factors that matter to customers and highlights the aspects they should focus on. Concept testing for new products can be challenging. Questionnaires and focus groups are often used but can be misleading - the way people react to new products in theory can be very different from the reality. Customers may say they like a new idea, but in practice are reluctant to switch products or decide that it is not worth the price. BSBMKG506 Plan Market Research Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Identify Market Research Needs

Product research using actual product samples or prototypes can overcome some of these problems. For example, the classic ‘taste test’ can be used to assess how customers compare the performance of different products.

While carrying out market research, a large television manufacturer uncovered the problem that people regularly misplace their remote control. Customers didn’t identify this as a problem that needed solving, but it was a common issue. By listening to the customers’ problem, the company was able to develop a feature that appealed to its target market - a remote-control finder button on the TV itself.

Using this outside-in approach allows a business to concentrate on and solve their target market’s problems. It removes the guesswork from product development. Listening to the market is the best research you can do to ensure that you build the right solutions. Market research can also be helpful in identifying when a product has reached the end of its life cycle. Not all products necessarily ‘die’, as there are often opportunities for modifications and improvements which can result in a rejuvenation of the life cycle. Opportunities for revitalising a product can be uncovered through market research. Market research can help a business seek new markets for its ageing products. For example, car plants have been sold by Fiat and Renault to Russia and China to produce models that are perfectly acceptable in these developing markets but which were seen as outdated in the US. ○ ○ Measuring Attitudes Towards Existing Products or Services… One of the fundamental purposes of market research is to understand the target audience. More specifically, many firms want to understand the basic attitudes of existing or prospective customers. Attitudes are based on the information respondents have, perceptions, past experience, their feelings (liking and disliking) and their intended behaviour. Depending on the problem or need being investigated, consumer attitudes can be gauged in a number of reliable and valid ways. Three different types of scales which assess people’s attitudes about a product or service include: › › Ranking scales – these require respondents to place a number of items in a list in a sequence based on their attitudes to a characteristic of the product. For example, you could show a group of respondents a list of six retailers and ask them to rank them from best to worst in terms of the quality of service they provide. To make the results more reliable, the number of items you ask a respondent to rank should be limited. › › Rating scales – these require respondents to estimate the importance of a characteristic that an object possesses. For example, you could provide a respondent with a statement such as, “This mobile phone presents the best value for the money” and ask them to agree or disagree with that statement on a scale of 1-7, where 1 is strongly agree and 7 is strongly disagree. › › Likert scales – A Likert item is a statement that the respondent is asked to evaluate. For example:

Element 1: Identify Market Research Needs

• I prefer watching a rented DVD at home than going to the movies ○ ○ Strongly agree ○ ○ Agree ○ ○ Neither agree nor disagree ○ ○ Disagree ○ ○ Strongly disagree.

Likert questions are useful to use when you want to get an overall measurement of a particular topic, opinion or experience. Measuring the satisfaction of a recent shopping experience is a common use. It should not be used when the items in the question are unrelated to each other or when the options are not in the form of a scale.

• Research on Promotion: ○ ○ Measuring Advertising and Promotion Effectiveness No one can be certain how an advertising campaign will be received over time in the real world. Even when the advertising is tested before airing, it’s virtually impossible to predict its long-term effects. Distortions can occur due to such things as the mixture of one company’s advertisement with that of their competition which can confuse consumers and blur the messages they receive. However businesses who want to measure the success of an advertising campaign can obtain a rough idea of whether their advertising is hitting the mark. This can be achieved through monitoring sales, new customers, requests for information, phone enquiries, retail store or website traffic, through methods such as: › › Counting the people who enter the store, both before and after the campaign › › Asking new customers how they heard about the business › › Comparing sales before, during and after an advertising campaign › › Offering an incentive for customers if they respond to an advertisement, e.g. Mention this ad and get a 10% discount on your first order. Research companies have online advertising tracking systems which can monitor the effectiveness of a business’s advertising over time, compared with major competitors. It can identify when a campaign begins to wear out and which advertisements are doing the best job. Their research can answer questions such as: › › Is your advertising attracting attention? › › Are the key messages getting through? › › Is your brand’s image improving?

Representative samples of the target audience are randomly selected from the research company’s Internet panel and invited to participate in the advertising tracking survey.

Element 1: Identify Market Research Needs

○ ○ Testing Alternative Messages Research companies are able to evaluate their creative concept in the early stages of developing an advertisement through testing a representative sample of the target audience. A creative concept can be tested via a rough execution before the expense of the final production. The research can provide an estimate of an advertisement’s probable effectiveness and provides insightful feedback including consumer responses to open-ended questions. Consumers’ feedback is extremely helpful to agency creative staff in guiding creative development as the advertising moves into final production. Questioning of consumers covers open-ended questions such as: › › Will the brand name be noticed and remembered? › › Does the advertising increase interest in buying the brand? › › Which ideas are played back as central to the advertisement? › › What else would viewers like to know? › › What did viewers not like about the ad? › › How could the ad be improved? There are two main ways to test the effectiveness of an advertising message. Evaluative market research, commonly known as copy-testing, is where produced ads are tested with consumers to really understand the motivational power of the ads. This form of pre-testing will help indicate whether an ad carries a strong enough message to be deemed useable by the company, and if not, where the ad’s effectiveness can be increased via editing. Developmental research. Early on in the creative process, different messaging components are tested before money is spent on production. The output of a developmental research platform allows the creative team to actually develop messaging that has predictive power in terms of motivating consumers. ○ ○ Testing and Comparing Different Media Options Testing the reaction of consumers to different media options can help to determine target markets and ensure that the promotion is effective. Market research can provide guidance here. Before commencing any research, the organisation’s marketing information needs will need to be understood. The best way to achieve this is via a market research audit, which is simply a systematic review of the information which is already held, along with the gaps in the information that might be needed in order to implement the research. A market research audit involves answering the following questions: • Do we already have, somewhere in the organisation, the data to support the measurements now selected? • Do we also have the more detailed information that will be needed to answer questions about variances in the measurements?

Element 1: Identify Market Research Needs

• What other information do we regularly receive through tracking studies or surveys? • What are the lowest costs to obtain what we now need? • How does the resulting overall cost compare with whatever yardstick we deem appropriate and with the cost of providing the internal measurements? When it is time to translate a problem into a need statement, define need criteria to guide the next stage of the market research planning process.

1. Translate Problem into a Need Statement • What to Cover

Begin the process of translating problems into needs by asking a series of probing questions to reduce each problem to a simple, causal factor that results in an undesirable outcome. Next, evaluate what change in outcome or practice the problem calls for from the target user’s perspective and determine how it can be measured. Then, capture the essence of the need in a one-sentence statement that defines the specific issue that requires a solution with a focus on the goal or desired endpoint. Writing an effective need statement may take several revisions. Make every word count. • Where to Look ○ ○ Primary Research – Perform more primary research with target users to validate desired outcomes (and the changes they necessitate). ○ ○ Business Publications – Review business publications to understand what is new and changing, and for help thinking about the consumer’s perspective. ○ ○ Networking – Network with others in the industry and community and review their need statements.

2. Verify the Accuracy of the Need Statement Against the Problem • What to Cover

Carefully evaluate every word in the proposed need statement to ensure that it has been validated by observations and supporting research. Make sure each element of the need statement can be traced back to the critical problem that was observed and needed solving. Innovators should also challenge themselves to be certain that no assumptions, inferences, or other forms of judgment have found their way into the need statement. Try to trace the cascade of events leading to the need statement to ensure that a good understanding of all related needs at levels above and below the need are identified. Mitigate the risk of superseding needs by determining whether there are superior needs that may be more appropriate to pursue. If a superior need is subsequently chosen, follow the same process to verify the accuracy of the new need statement.

Element 1: Identify Market Research Needs

• Where to Look

Revisit the original problem and review notes to be sure the need statement captures the critical aspects of the problem(s) observed. Clarify the language of the need with the staff, consumers, and other stakeholders who helped identify it. Confirm the need by getting other opinions from individuals at different centres or geographic locations.

3. Confirm that the Need Is Solution Independent • What to Cover

Evaluate the need statement to confirm that there is no solution embedded within it, unless it is a fundamental component of an incremental need. This includes references to current solutions, as well as emerging possibilities. • Where to Look

There are few external resources to assist in this exercise. The initiator must rely on their personal critical analysis skills to perform this assessment.

4. Validate that the Scope of the Need Is Appropriate • What to Cover

Evaluate the need statement on a word-by-word basis to ensure that every word is necessary. Too often, superfluous words included within the need statement end up making a need too narrow and limiting the range of possible solutions (and the market opportunity). Next, evaluate the need statement on a word-by-word basis to ensure that it has not been defined too broadly. A need that has been over-generalised can result in a solution that does not effectively address the needs of the true target audience. It can also cause initiators to overestimate the size of the market opportunity later in the process. Carefully confirm each word in the need statement to ensure that it can be verified with data and that nothing has been assumed. • Where to Look

Initiators should refer back to observations and secondary research to perform this step. If necessary, additional observations can be scheduled.

5. Define the Need Criteria and Classify the Need • What to Cover

Use the detailed information collected to define criteria that will meet the requirements of the people most likely to use the solution. Consider issues such as where, when, and by whom the solution is most likely to be used, as well as ease of use, time of use, duration of use, cost, and other factors that could potentially affect its adoption. These assessments should be made based on the behaviours directly observed through the observation process. The need can also be classified as incremental, blue sky, or mixed to help raise the initiator’s awareness of some of the characteristics of the need they are seeking to address. Depending on the initiator’s strategic focus, there may be other categories that can be used to help bring organisational clarity and direction in seeking to address the identified needs.

Element 1: Identify Market Research Needs

• Where to Look

Initiators should refer back to observations and secondary research for need criteria. The need statement must be directly evaluated to classify the type of need being addressed.

Element 1: Identify Market Research Needs

Notes

Element 1: Identify Market Research Needs

Activity One The iPhone has a vast range of functions including: voice recorder, data storage, MP3 player, camera, video camera, GPS, capacity to block pesky callers, siri, internet connection, media player (music and video), Bluetooth, and many more. Create a consumer profile that outlines the type of person you think is likely to purchase this type of mobile phone. For each point of your profile write a brief explanation. Criteria

Answer

Explanation

Age

Occupation

Income

Location

Hobby

Media

Likes

Dislikes

Trainer’s Notes for Activity One As a group, compare the answers and explanations of the Learners ensuring they understand the targeting concept.

Element 1: Identify Market Research Needs

Key Points Element 1 • The role of market research in enterprise operations must be communicated to relevant personnel. • The contribution of market research to enterprise activity must be identified. • The enterprise planning and performance documentation must be analysed to determine research needs. • Relevant personnel must be consulted to determine research needs. • A statement of market research needs must be developed.

Element 1: Identify Market Research Needs

Element 1 – ‘True’ or ‘False’ Quiz True

Market research is one of the most useful tools that a business can use to further develop the way it understands consumers and maximise the potential for profit and growth.

The truth is that having a fantastic product or service is a guarantee of success even without knowing why you offer this product, and who you are offering it to.

False

The truth is that having a fantastic product or service is not a guarantee of success without first knowing why you offer this product, and who you are offering it to.

Communication is fundamental to the effective running of a business. It contributes to the creation of an environment of trust around the business owners that enables them to lead effectively, engage their employees and ultimately deliver results.

The purpose of any branding campaign is to raise awareness of a business, cause, product, or idea.

Feedback from market research provides little information that can be used to initiate new or adjust existing policies in an organisation. Feedback from market research provides information that can be used to initiate new or adjust existing policies in an organisation.

Mystery shopping programs together with customer satisfaction surveys are types of market research that can be used to help a business design and monitor the performance of its customer service delivery processes.

Market research can also be helpful in identifying when a product has reached the end of its life cycle. Not all products necessarily ‘die’, as there are often opportunities for modifications and improvements which can result in a rejuvenation of the life cycle. Opportunities for revitalising a product can be uncovered through market research.

When it is time to translate a problem into a need statement, write a sentence that says what you want. When it is time to translate a problem into a need statement, define need criteria to guide the next stage of the market research planning process.

Market research is a key factor in maintaining the competitiveness of an organisation over their competitors.