Insomnia Cookies Marketing Research Project Bannon Bobber Bretz Coughlin Eide Houska
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1. Formulate Problem Since we are aware that the most important key of marketing research is to ask the correct question, we must first define the problem our questions will solve. This definition involves two dimensions: a decision problem and a research problem. The textbook offers six key steps of problem formation, but this process is best suited for a marketing research firm working directly with a client. We can formulate our own problems within the parameters of this project, so going through these six steps may not be the best fit for us. Instead, we can skip ahead to presenting the research problem and decision problem we have agreed upon:
Decision problem: •
Should Insomnia Cookies open a store on Eddy Street?
Research problems: •
Which Eddy Street businesses are currently performing well?
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How have Insomnia Cookies stores performed in college towns similar to South Bend?
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Would the habits and the demographics of the Notre Dame student population generate sufficient business for Insomnia Cookies?
Insomnia Cookies is a cookie-specialty bakery offering late night delivery. Since the business’ multiple locations are exclusively in college towns and cities, our group wonders, why not South Bend? Consequently, we have formulated our decision problem to discover if Insomnia Cookies should open up a branch in Eddy Street Commons. A few factors come into play here, and we address them in our research problems.
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First, are certain Eddy Street businesses performing well in relation to others? Chipotle, Hot Box and Five Guys are the food options that appeal most to college students; are they noting success, especially during any late-night hours? Additionally, we want to research if Insomnia Cookies stores have performed well in all its locations or only some. Later in this report we will delve into detail, but generally we are curious if an urban/suburban environment or a type of student have a statistically significant effect on Insomnia Cookies’ business. The last—arguably most important—research question asks if the Notre Dame student population would generate business for Insomnia Cookies. Certainly, there is more to South Bend than just Notre Dame students, other people could be supporting Insomnia Cookies’ business, such as South Bend residents or Notre Dame parents. We think there is great potential for business in these spheres, especially from Notre Dame parents, who might buy dozens of cookies for tailgates or for their children’s birthdays. However, for feasibility purposes we are choosing only to study the Notre Dame student body population. Moreover, Insomnia Cookies’ target consumers are primarily college students. We do want to note, though, that if a marketing research firm were to complete this project to fruition, it would need to study more than one population.
2. Determine Research Design After formulating the problem, the next step to tackle is determining research design. Three types of research design are possible. The first, exploratory research, is best when little is known about the situation, or the problem is extremely vague. The two other
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choices, descriptive and causal, are best when problems are more clearly defined. Descriptive research looks to describe a population, and causal research detects cause-and-effect relationships between variables. The primary aspect of our project is discovering if the population characteristics of Notre Dame students would generate substantial business for an Insomnia Cookies store. Therefore, our research design will be primarily descriptive, as we want to discover if these population characteristics might relate to cookie purchase or consumption. However, part of research does involve learning about Insomnia Cookies’ pre-existing locations, and this type of research is exploratory in nature. Therefore, our project will involve some degree of exploratory but mainly descriptive research. To acquire the info needed via exploratory research, it is best that our team use indepth interviews to tap the knowledge and experience of Insomnia Cookies employees. Ideally, we could use sales information to supplement these interviews, but Insomnia Cookies is not a publically owned company, and therefore it is not required to release such information. If we were to pursue this project we would certainly try to obtain this data, but we are not banking on it. Therefore, we have chosen to conduct in-depth interviews. These interviews are relatively flexible, so we will select interviewees based on their availability. Since interviews are very time-consuming (and in theory, extremely expensive), we hope to get as much information as possible from as few interviews as possible. This will involve asking the correct questions and keeping the interviewee on track as he or she answers. From these interviews we hope to get a better understanding of typical Insomnia Cookies customers and purchases.
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For the remainder of our project, we will employ descriptive research. We wish to describe group characteristics, determine the proportion of people who behave in a certain way, and make specific predictions—all of which we can do through descriptive research. There are two types of descriptive studies, cross-sectional and longitudinal. For our project, a cross-sectional study is more appropriate, as we will be able to study a varied sample of elements at one point in time. The easiest way for us to do this is through a sample questionnaire. Through a questionnaire, we can select a sample that represents our population of interest—Notre Dame students. This sample’s responses will be representative of the entire population’s, so we can make broad generalizations of our findings. Consequently, we will be able to determine if Insomnia Cookies could sustain business here on Notre Dame’s campus.
3. Determine Data Collection Method In order to collect the proper data for this project, we have chosen to use primary data from the student body. Although observation might be able to tell us about the ordering for delivery or cookie consumption habits of students, observation is unrealistically timeconsuming and would be unreliable in our case. We would collect this data through communication by email questionnaire. Each item would be fixed alternative. Because the content and aim in this study is not related to sensitive information, the level of disguise will be small and unimportant. There will be Likert scale questions, frequency questions, and dichotomous “yes or no” questions.
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4. Design Data Collection Forms Secondary Research Before conducting primary research, we would want to do some secondary research in the form of phone calls to the owners or managers of other Insomnia Cookies stores. All Insomnia Cookies locations are either on or near college campuses, so we would want to look at those schools most similar to Notre Dame on a number of different factors. We would then compare the profits of those similar schools with the profits of very different schools to see if it would be worth Insomnia Cookies’ while to open an Eddy Street location or if the company should be looking at those dissimilar school locations. As a location similar to Notre Dame, we would want to contact the owner or managers of the Yale location. Both Notre Dame and Yale have extremely high academic ratings (84 and 96, respectively), have similarly sized student bodies (around 12,000 students total), have a high number of students living on campus (81% and 88%, respectively), are located in similarly sized towns (pop. 75,000-299,999), and are rated as top value private schools. Financial information from the Yale location will be a good indicator of whether an Insomnia Cookies store would do well near Notre Dame, as Yale attracts a very similar student and has a similar campus structure. Other locations to contact include Cornell University, Harvard University, and the University of Michigan locations, as students who apply to Notre Dame often apply to these schools as well and may have similar interests and needs as students at these schools. Cornell will prove especially important to look into because, like Notre Dame, Cornell has a highly-rated campus food service. Financial success at the Cornell location will prove that Insomnia Cookies
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can survive even in light of a very competitive dining services program. The Purdue University location would also serve as a good comparison, as both Notre Dame and Purdue are located in rural Indiana. In addition to these similar schools, we will also want to look into dissimilar settings such as the New York University (NYU) location. NYU has over 3.5 times the amount of students as Notre Dame, in addition to being set in a huge metropolis with millions of potential nonstudent customers. NYU also has significantly less undergraduates living on campus and very low marks for financial aid. Looking at the differences in profitability between one of the three NYU locations and the Yale location, for instance, would give a good indication of whether it is worthwhile to pursue an Eddy Street location. 1
Primary Research Our primary research consists of a short, 16 question questionnaire to be distributed to Notre Dame students. The questionnaire, which can be found in Appendix 1, consists of two portions. The first portion contains both frequency and Likert items concerning behavior and preferences toward Eddy Street and food delivery. This portion is to determine the demand for cookies and for food delivery services among Notre Dame students. We use three Likert items for each construct to ensure convergent validity among the unobservables. The second portion of the questionnaire is just for respondents that are responsible for arranging catering for club or dorm events. Because Insomnia Cookies offers catering as well as delivery, we included this portion to discover whether Notre Dame students would utilize a cookie catering service. After
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All college/university information was obtained from the Princeton Review.
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designing our questionnaire, we pretest it to ensure that it has content validity. In order for our study to be effective and valuable, we must double check that all definitions, domains and dimensions are valid. We will make all necessary changes and revisions post pretest.
5. Design Sample and Collect Data In the best case scenario, we would be able to convince the University administration in charge of distributing surveys for research to help us distribute the survey to the correct number of students, using a random probability sample. The sampling frame would be undergraduate and graduate students at the University of Notre Dame. We would be able to reach these students in our random sample through their Notre Dame “nd.edu� email addresses. If we were not able to use this method with the University, we would utilize cluster sampling of the dorms. Because the dorms are already separated by gender, and then we would choose randomly a number of dorms from each group (gender), it would be a clustering sample using two variables. We would choose the number of dorms that would provide the correct sample size. We could then use the dorm Listserv to reach the students in that dorm via email. Another option for collecting this data would be to have a non-probability convenience sample outside of LaFortune Student Center or Reckers, two late night hangouts for students on the weekends, late at night. This would be the least desirable of our options, because this method is useful for only for the exploratory phase, and may not prove a reliable technique during our descriptive research.
Insomnia Cookies Marketing Research Project In order to determine the sample size, separate calculations were made for the Likert, frequency, and dichotomous “Yes or No� items. We have chosen a half interval level of precision of 5% for this project. The calculations for a prototype of each of the types of questions are below. Because there is an expected response rate of 25%, in order to collect a sample of 400, which is the largest required sample size of all of the questions, we must distribute the survey to 4 times as many people, being 1,600.
Example: Frequency Question How often do you go to Eddy Street for food? (circle one) More than 2 times per week | 1-2 times per week | 1-2 times per month | Less than once per month | Never
The range in this case would be 31 days.
22 31 Ă— ďż˝ ďż˝ 2 = 44.44 ~ 45 đ?‘?đ?‘’đ?‘œđ?‘?đ?‘™đ?‘’ (0.05 Ă— 31)2 6 Example: Likert Item Question Indicate strength of agreement or disagreement with following statement: “I would not walk to Eddy Street for cookies and desserts.â€? (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree
4 22 Ă— ďż˝ ďż˝ 2 = 44.44 ~ 45 đ?‘?đ?‘’đ?‘œđ?‘?đ?‘™đ?‘’ (0.05 Ă— 4)2 6
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Example: Dichotomous Question Would you order cookies for your event? (circle one) Yes | No
22 Ă— (0.5)(1 − 0.5) = 400 đ?‘?đ?‘’đ?‘œđ?‘?đ?‘™đ?‘’ (0.05 Ă— 2) 6. Analyze and Interpret Data The goal of our research is to determine if Insomnia Cookies would be profitable in an Eddy Street location and, therefore, whether they should or should not open a store there. To determine this, we will use the results of our questionnaire to determine how much business Insomnia Cookies would receive from Notre Dame students if they were to open a store, and from this research we would calculate an estimate of sales. This estimate would be compared to the results of our discussions with store managers of Insomnia Cookies locations near schools similar to Notre Dame, to see if the estimated amount of sales would be enough for the store to be profitable. Based on this, we would form a recommendation for whether Insomnia Cookies should open an Eddy Street location. The main part of our survey is comprised of 4 frequency items, 3 Likert scale items, and 1 yes/no question. The additional portion includes 1 frequency item and 1 yes/no question. From each frequency item, which are all measured on the same scale, we would obtain a percentage of respondents that selected each frequency. Using these percentages, we would extrapolate from the sample to obtain an estimate for how many students in the population of Dame students would select each frequency. Using these estimates, along with estimates for
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the average amount purchased with each visit or delivery order which we would obtain from interviewing other stores, we would be able to calculate an estimate for total sales. This number, which would include cookie sales in store, sales for delivery, and late night sales, is important because it will be the main determinant of whether or not a store would be profitable on Eddy Street. For the Likert items, we include 3 questions for each measure so that we can compute a correlation between the different measures. If the correlation is around .8-.9, then there is extremely strong evidence in favor of convergent validity. In measuring students’ attitudes towards walking to Eddy Street, we combine questions 2, 5, and 8, putting a negative weight on questions 2 and 5, and compute a comprehensive mode. This mode would be computed using a scale where “Strongly Agree” is given a value of 2, and “Strongly Disagree” is given a value of 2. In measuring students’ attitudes towards delivery, we combine questions 4, 6, and 10, putting a negative weight on question 4, and compute a comprehensive mode for this as well. These measurements would be used to predict students’ attitudes toward walking to and ordering delivery from a business on Eddy Street, from which we could draw inferences about their behavior. The other two measurements used are yes/no items. The first one acts as a funnel to direct a specific group of respondents to certain questions. We would want to obtain a count for this item because this will be used in calculations with the other yes/no item. The next yes/no item will be calculated as a percentage of this subset of respondents. Multiplying this percentage by the number of respondents that selected “Yes” to the item about involvement in a student club can be used to produce an estimate for amount of business from student groups.
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7. Prepare the Research Report The last step in the marketing research process is to prepare a research report, a document that summarizes the research results and conclusions. Our textbook emphasizes that the written research report and its accompanying oral presentation are often the deciding factors on if research will be useful for its intended purposes. Since we chose not to collect data for this project, we cannot prepare an official report. However, if we would have, here is what we would do in order to complete this last stage of the research process: 1. We would prepare the written report with goals of completeness, accuracy, clarity and conciseness in mind. In order to achieve these goals, we would outline and organize our report using multiple headings and sections. We would include the following sections: introduction, data collection and results (methods and results, subheadings), conclusions and recommendations, and any appropriate appendices. 2. We would make an accompanying oral presentation. We would decide in advance how we want our report to be organized; for the purpose of this project, we would most likely introduce our conclusion after all of our evidence is presented. We would develop effective visual aids and charts to help communicate our results. 3. Lastly, we would put great preparation and work into delivering our oral report. The text recommends knowing your stuff and knowing your audience. Certainly, this knowledge is crucial to our report being delivered and interpreted well.
Because we decided not to collect data, we could not complete a report in totality, since visual aids and results would be missing. However, we have taken these steps into mind as we
Insomnia Cookies Marketing Research Project have prepared our written and in-class reports. We have worked to ensure these reports achieve standards of completeness, accuracy, clarity and conciseness, and that our work represents the knowledge we have obtained throughout our Marketing Research course.
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Appendix 1: Questionnaire 1.
How often do you go to Eddy Street for food? (circle one) More than 2 times per week | 1-2 times per week | 1-2 times per month | Less than once per month | Never
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Indicate strength of agreement or disagreement with following statement: “I would not walk to Eddy Street for cookies and desserts.” (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree
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How often do you order food to be delivered to your residence? (circle one) More than 2 times per week | 1-2 times per week | 1-2 times per month | Less than once per month | Never
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Indicate strength of agreement or disagreement with following statement: “If a restaurant is within walking distance of campus, I do not feel the need to order delivery from it.” (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree
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Indicate strength of agreement or disagreement with following statement: “I do not need to leave campus to buy cookies or desserts.” (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree
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Indicate strength of agreement or disagreement with following statement: “If a restaurant that offered delivery moved into Eddy Street, I would order delivery.” (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree
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How often do you eat cookies? (circle one) More than 2 times per week | 1-2 times per week | 1-2 times per month | Less than once per month | Never
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Indicate strength of agreement or disagreement with following statement: “If a restaurant that offered cookies and desserts moved into Eddy Street I would eat there.” (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree
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How often have you wanted to order food for delivery but were unable to because it was too late in the night? (circle one) More than 2 times per week | 1-2 times per week | 1-2 times per month | Less than once per month | Never
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10. Indicate strength of agreement or disagreement with following statement: “I would take advantage of a nearby food delivery service.” (circle one) Strongly disagree | Disagree | No opinion | Agree | Strongly agree 11. Are you in a club, organization, or dorm for which you are responsible for arranging catering for club-related events? (circle one) Yes | No If you answered “Yes” to question 11, please answer questions 12 and 13. If you answered “No” to question 11, please skip to question 14. 12. How frequently do you order catering for club-related events? (circle one) More than 2 times per week | 1-2 times per week | 1-2 times per month | Less than once per month | Never 13. Would you order cookies for your event? (circle one) Yes | No 14. Gender (circle one): Male | Female 15. Class (circle one): Freshman | Sophomore | Junior | Senior | Graduate 16. Dorm (if applicable): ________________________________________