307 Midterm: International Marketing, Market Research

Taste Tests

Not experiments unless: -Two or more groups of people are treated differently (e.g., get different food version) or -The same person is being treated differently at separate times (e.g., half the participants receive new formulation, then current; half the participants receive in the opposite order) "Triangle" Measure - The triangle test is one tool used to examine the extent to which people can reliably taste a difference (b/c am improvement on food or beverage formulation for example) -Each respondent is given three items: One current, one new, and one duplicate of either old or new -Asked to identify the one that is different and explain why - In some cases, the hope is that people will not be able to taste the difference. - For example, when McDonald's is trying to qualify a new potential supplier of food items to restaurants, with these being perceived as identical by consumers. In other cases, a manufacturer may be looking to see if it may be possible to eliminate a relatively expensive ingredient. How is the "triangle" test performed? In the triangle test, each participant is given three items to taste. One is version A, one is version B, and one is a randomly selected duplicate of either A or B. Respondents are then asked to indicate which one is different from the other two.

Panel data

Panel data Information collected from a group of consumers, organized into panels over time What they have purchased and responses to survey questions Focuses on total weekly consumption by a particular person or product Both panel and scanner data provide firms a comprehensive picture of what consumers are buying and not buying Key difference between scanner and panel research is how the data is aggregated

Focus Groups: Composition and Dynamics

•Members of each focus group should generally be similar to each other in terms of factors affecting comfort in speaking openly (e.g., age, gender, socio-economic status, people are uncomfortable discussing certain issues by people of the other gender or those in a different age group) •If the target market crosses such variables, different focus groups should be run •It may be helpful to run focus groups—even with customers otherwise demographically similar—in different cities --> To get representative results, it may be necessary to run multiple focus groups each consisting of relatively similar individuals and in different geographic areas --> When doing a survey, it is generally important to have the sample be representative of the population as a whole so that results can be generalized.

Airport Clip - Discussion

- Use information (based on incoming flights) to their advantage for certain merchandise, themed music, sales representatives, sales tactics - Researched the feeling of the need for free will after exiting security (you want to be in control after many people tell you where to stand and what to do (makes you feel uneasy/vulnerable) and therefore you buy stuff to gain that sense of control back) - Visualize yourself in an airport - Stop at a car because it's interesting (tie between German music and interesting car) - Motivates you to preserve this memory

Experimentation Helps determine:

**Does it make a difference if subjects (i.e., consumers, people) are treated one way or another way in terms of some outcome (e.g., likelihood of purchase?) -Will consumers rate a red car as more exciting but a blue one as more reliable? -Are those who hear German (as opposed to French) music more likely to buy beer? -Will students who are told to expect an essay exam do better than those told to expect a multiple choice exam even if everyone ultimately takes a multiple choice exam? **Testing what people actually do rather than way they say or think they will do and, in some cases - People are often not very good at predicting what they would do in a hypothetical situation. We can also avoid tipping people off as to what we are studying. In the cockroach example, people who met what they thought to be a fellow student did not know that others met what they thought to be an experimenter, so they did not consciously think about how responses under these two conditions should be different. **Setting up experiments can be a rather cumbersome process, so we usually reserve experimentation for situations where these factors are at issue. Subjects in different groups are usually treated differently or the same individual must be given different treatments at different times -E.g., for some, "target" product is given better shelf space -E.g., some get coupon Everyone is treated the same way, so nothing is being manipulated for comparison: Having all participants taste the same new food product is not an experiment by itself **Can help isolate causes, determine causation (e.g., does a product sell more if the packaging is red rather blue?) **Subject is not biased by questions—does not know how others are treated **Possible to: -Control for factors that are not equal in real life (e.g., If those who pay restaurant checks with credit cards are more likely to be reimbursed by their employers, it is not clear if the credit use was the cause of the higher tip) -Test and rule out competing explanations (subject to some caveats)—e.g., does texting while driving cause accidents because (1) eyes are removed from the road, (2) attention is diverted to the conversation, or (3) a combination Generally, the idea is to systematically vary either: (1) the way that different groups of people are treated or (2) the way that the same person is treated at different times.

Focus Groups: Steps

1. Groups of 5-12 consumers assembled to discuss consumption preferences and experiences 2. Start out talking generally about context of product (a focus group aimed at sugar-free cookies might first address consumers' snacking preferences, by not mentioning the product up front, we avoid biasing the participants into thinking only in terms of the specific product brought out) 3. Gradually "focus" in on actual product - For example, instead of having consumers merely discuss what they think about some sugar-free cookies that we are considering releasing to the market, we can have consumers speak about their motivations for using snacks and what general kinds of benefits they seek. Such a discussion might reveal health concerns and desire for wholesome foods. Probing on the meaning of wholesomeness, consumers might indicate a desire to avoid artificial ingredients. This would be an important concern in the marketing of sugar-free cookies, but might not have come up if consumers were asked to comment directly on the product where the use of artificial ingredients is. FOCUS GROUP COSTS: High (especially for the amount of information collected) - getting a small number of people to show up may be inexpensive, but the use of trained facilitator and transcription/analysis needed to make sense of answers given drive up the cost

Product Adaptions Two types

1. Mandatory—required by laws of nature or laws of government (before use of product) - Legal requirements - Infrastructure - Ex. appliances made for the U.S. and Europe must run on different voltages, and a major problem was experienced in the European Union when hoses for restaurant frying machines could not simultaneously meet the legal requirements of different countries. 2. "Discretionary"—not required by natural or human laws before use of product but often not really "optional" in practice (needed to compete with brands that do offer adaptations, products may face poor sales if such changes are not made) - Local tastes - Fit into cultural environment - Ex. there is nothing to prevent an American firm from introducing an overly sweet soft drink into the Japanese market - Ex. in Sesame Street, the Big Bird became the Big Camel in Saudi Arabia.

Scanner Panel Data Limitations

A large proportion of grocery purchases are made at Walmart. Walmart has chosen not to participate, so a significant proportion of purchases—and people who shop predominantly there—are not reflected. Limitations: •Only TV advertising (and not radio, print, billboard, or online) is considered—although online advertising may come about in the near future •Walmart—which accounts for a large share of total sales in many categories—does not participate •Purchases made outside the community and online purchases are not included (although purchases from select online vendors such as Amazon could potentially be added)

6. Some Questions that can be Tested

A number of questions can be asked to help identify the most effective use of promotional resources (e.g., price discounts, coupons, advertising, special display space, free premium products). •Is one advertising theme (e.g., low price) more effective than another (e.g., nutritiousness)? •What is the effect of the number of times an ad has been seen? (Likely a non-linear relationship) •What is the impact of seeing only part of an ad (usually while fast forwarding on pre-recorded content)? •Based on historical frequency of purchase and time since the last purchase occasion, what is the customer's likely "inventory" of the product at home? If a customer buys when inventory is estimated to be low, other factors are less likely to be impactful; if inventory is estimated to be larger, factors such as sale prices, coupon availability, and special display are more likely to be involved?? •Impact of demographics (e.g., income, home ownership, occupation, presence of children in household, geographic region, education) on choice •"Purchase acceleration:" Do customers "stock up" during sales? Many do not; higher income consumers are more likely to buy ahead (lower income consumers may not have cash to spend and may not have space to store purchases)

Analyzing Sociocultural Factors

Analyzing sociocultural factors Culture (shared meanings, beliefs, morals, values, customs of a group of people) is seen through 1. Visible artifacts (behavior, dress) 2. Underlying values (thought processes, beliefs, assumptions) → more difficult to understand underlying values and appropriately adapt marketing strategies to them on a global scale Ex. Oscar winner Emma Tompsom paid to appear in Chinese ads but few Chinese consumers know who she is

Effects of Imports/Exports on Currency Supply/Demand

Any one transaction will tend to have a limited effect on the supply and demand balance much the same that any one small farmer's wheat output will not have a large impact on the market. When there is a pattern of heavily imbalanced imports and exports, however, effects on currency can be large. Chart: steps that occur as a country gives up its own currency to buy imports (irrelevant whether the currency exchange is made by the buyer or the seller) Two things happen when a country's currency is being sold to buy that of another country: 1. More of the country's currency is being made available to the world market. - This means that buyers of the country's currency are now bidding for an increasing quantity - As a result, the value of the importing country's currency is driven down so that the market can regain equilibrium. 2. Some of the exporting country's currency is now being taken away from the market. - Since there is not enough currency now available to be sold at the "old" exchange rate, the price will go up to match this reality - Some "marginal" buyers, seeing how expensive the country's currency now is, decide not to buy that currency. For example, some people may conclude that it is just too expensive to vacation in a particular country. - As a result, the increase in price reduces the quantity being sold.

Reasons for Product Standardization

Avoiding high costs of customization, if applicable - Firms that produce a global product can obtain economies of scale (proportionate saving in costs gained by an increased level of production) in manufacturing, and higher quantities produced also lead to a faster advancement along the experience curve. Technological intensity -Reduced confusion: less confusion will occur when consumers travel across countries and see the same product/global brand -International compatibility among product group components -Faster spread of rapid life cycle products Convergence of global consumer tastes/needs Country of origin positioning?? - There may be significant differences in desires between cultures and physical environments (software sold in U.S. and Europe will often utter a "beep" to alert the user when a mistake has been made; however, in Asia, where office workers are often seated closely together, this could cause embarrassment)

Product Standardization Benefits/Cons

Benefits: - Economies of scale - More resources available for development effort (better quality possible) - Rapid product life cycles may make extensive adaptation infeasible Cons: - Unnecessary features - Vulnerability to trade barriers - Strong local competitors --> There may be significant differences in desires between cultures and physical environments (software sold in U.S. and Europe will often utter a "beep" to alert the user when a mistake has been made; however, in Asia, where office workers are often seated closely together, this could cause embarrassment)

Bottom of the Pyramid Consumers

Bottom of the pyramid: consumers earn very low wages Large, impoverished population that still wants and needs consumer goods but cannot pay the prices that the fewer, wealthier consumers in developed nations can Ex. P&G developed single use shampoo packets for consumers who can't afford an entire bottle at once

Approaches to Product Introduction

Complete customization or standardization are rare—modest adjustments are usually made Firms face a choice of alternatives in marketing their products across markets. An extreme strategy involves customization, whereby the firm introduces a unique product in each country, usually with the belief tastes differ so much between countries that it is necessary more or less to start from "scratch" in creating a product for each market. On the other extreme, standardization involves making one global product in the belief the same product can be sold across markets without significant modification (Intel microprocessors are the same regardless of the country in which they are sold) In most cases firms resort to some kind of adaptation, whereby a common product is modified to some extent when moved between some markets (United States: fuel is relatively less expensive so many cars have larger engines than their comparable models in Europe and Asia; however, the design is similar or identical, so some economies are achieved) - Another example: Similarly, while Kentucky Fried Chicken serves much the same chicken with the eleven herbs and spices in Japan, a lesser amount of sugar is used in the potato salad, and fries are substituted for mashed potatoes.

Online Surveys 3 Characteristics

Conditional branching—allows the computer to skip directly to the appropriate question - Traditional surveys: Have you bought a new car during the last six months? If not, please skip to Question 11. - Conditional branching: Respondent will be taken to the appropriate question according to answer - Allows for Customization of questions -Example: consumer lists three brands --> subsequent questions ask about these specific brands by name and their relative quality Quality of response -Time pressures -Willingness to write out answers or respond to multiple closed-ended questions -Willingness to read and follow instructions is limited: difficult to get respondents to carefully read instructions online, tendency to move quickly --> This makes it difficult to perform research that depends on the respondent's reading of a situation or product description Reliability and browser compatibility issues - some consumers may be more comfortable with online activities than others—and not all households will have access (but today, this type of response bias is probably not significantly greater than that associated with other types of research methods)

Conjoint Analysis

Conjoint Analysis: used to Determine the Relative Importance of Product Attributes - respondents rate a number of products with different combinations of attributes ("profiles") Consumers rate several "profiles" (combinations of features) Statistical analysis is used to "decompose" ratings into preferences If we were to ask an individual, how important are gas mileage, repair record, and the safety record of a car, we would likely get an answer of "very important" or at least "important" for each one. Ultimately, however, consumers need to make tradeoffs between important attributes that may be negatively correlated with each other. It may not be possible to produce a car that has a large amount of room, quick acceleration, high gas mileage, and a low price. Consumers often have difficulty determining how important seemingly essential product characteristics are relative to each other. Example: The consumer evaluates the combination as a whole rather than providing an explanation for the rating in terms of the attributes listed. Using a statistical technique known as decomposition, it is then possible to infer the relative importance of each attribute.

Psychological Measures (cost = ?) Real-Time Response Over Time

Consumer bodily responses are watched at various phases of advertisement or other marketing exposure Tracking of: -Eye movements (By attaching a tiny camera to plain eye glasses worn by the subject) •For areas of focus •For attention, involvement -Heart rate -Skin conductivity -Brain waves (By attacking electrodes) •State of mind: what they think, active thought and analysis (Beta) •Attention: levels of attention (Alpha) PSYCHOLOGICAL MEASURES COST: High For example, advertisers may want to measure a consumer's level of arousal during various parts of an advertisement. This can be used to assess possible discomfort on the negative side and level of attention on the positive side. An important feature of physiological measures is that we can often track performance over time. Real-Time Response Over Time: Participant may be asked to move a lever or dial to adjust how he or she likes, agrees with, or is positive toward some message over time (much like one would adjust the volume on a radio or MP3 player) This can be used to test which statements are more effective in persuasion or bring about favorable affect Republican strategist used this technique during the impeachment and trial of Bill Clinton in the late 1990s. By watching approval during various phases of a speech by the former President, it was found that viewers tended to respond negatively when he referred to "speaking truthfully" but favorably when the President referred to the issues in controversy as part of his "private life." The Republican researchers were able to separate average results from Democrats, Independents, and Republicans, effectively looking at different segments to make sure that differences between each did not cancel out effects of the different segments. (For example, if at one point Democrats reacted positively and Republicans responded negatively with the same intensity, the average result of apparent indifference would have been very misleading).

Culture and its Implications

Culture: "That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man as a member of society." Alternative definition: "Meanings that are shared by most people in a group [at least to some extent]". (Adapted from Peter and Olson, 1994) A concept related to that of culture is socialization--the way that one learns to be part of a society. For example, mathematics books in the United States may focus on the calculation of interest, which is not a legitimate concept in most countries governed primarily by Muslim law. Culture affects every aspect of consumer behavior: why people buy, who is in charge of buying decisions, how when and where people shop

Two Types of Experimentation

Details not needed for exam Between-subject: Different groups of people are treated the same except for the variable or variables manipulated -E.g. One group shops in simulated store in which a credit card logo is displayed; the other group shops in the same simulated store but the credit card logo is removed - E.g. Cockroach study discussed in Contagious, half the participants met someone who looked to be another student while the other half met with someone who appeared to be an experimenter. - E.g. In the college dining hall study, half the respondents were asked to evaluate one of two different slogans. The type and quantity of food that people exposed to each type of message were then compared. - E.g. Instant Coffee: Respondents tended to rate the housewife buying the instant coffee much less favorably than the one buying ground coffee. Respondents examining the shopping list may not have thought much consciously about the coffee purchase as such, but it had a major effect on judgments, whether at the conscious or unconscious levels. Within-subject: The same individual is treated differently at different times and responses to common questions are then compared (e.g., at time 1 is given cola drink that includes vanilla and one without at time 2) -Subjects are usually counter-balanced to rule out order effects (1/2 receives treatment A first and then B, the other half receives B, then A) - Advantage: is that since we are comparing the same individual under different circumstances ("paired" observations), much of the individual variation is avoided (some people are more skilled in making decisions while others are less skilled, when we compare the two conditions across the same individual, we avoid some of the "noise" resulting from individual differences) - E.g. first experimental session is quiet while second is significantly louder = if the participant is given a similar decision task under both circumstances, we can compare the quality of the decision made each way

6 Characteristics of Problematic Questions

Difficult to answer—respondent may not have knowledge needed - Most people do not keep track of the amount of money they spend on soft drinks in a given year, for example. Sensitive (embarrassing): If asked about certain personal issues and habits, people may fail to answer honestly. Two in one—e.g., "On a scale from 1 to 10, how fast and reliable are Microsoft programs?" - A question may ask about more than one thing but there could be different answers to each. - For example, in the question "On a scale from 1 to 10, how fast and reliable are Microsoft programs?" a person may feel that Microsoft programs are slow but reliable. Leading questions—giving the feeling of the "desired" response - Certain questions seem to suggest what the "desired" response should be. -"Do you agree that soft drinks with sugar are bad for you?" - "On a scale from 1 to 5 where 1 represents 'Very unhealthy' and 5 represents 'Very healthy,' how healthy or unhealthy do you believe that soft drinks are?" Non-exhaustive question: available answers do not cover all possibilities - For Example: in a question about education completed, if the lowest answer is "High school," people with less education than this will not be able to answer accurately. Non-mutually exclusive answers: answers may overlap - For Example: in a question about a respondent's age, "18-25" and "25-30" overlap. Which one should a 25 year old respondent choose?

Focus Groups: Drawbacks

Drawbacks: 1. They represent small sample sizes (Because of the cost of running focus groups, only a few groups can be run) - Suppose you run four focus groups with ten members each. This will result in an n of 4(10)=40, which is too small to generalize from. - Therefore, focus groups cannot give us a good idea of: a. What proportion of the population is likely to buy the product. b. What price consumers are willing to pay. 2. The groups are inherently social. This means that: - Consumers will often say things that may make them look good (i.e. cook fresh meals for their families daily) even if that is not true. - Consumers may be reluctant to speak about embarrassing issues (e.g., weight control, birth control). •Focus groups are most useful for identifying issues that should be studied in more detail with more precise methods •Due to the small sample size and social influence on individual responses, it is difficult to generalize much from focus groups Because focus groups tend to be heavily associated with marketing in many people's thinking—possibly because they are often cited in the media—a lot of people will instinctively select focus groups as an appropriate research tool for most issues. Focus groups do have legitimate uses, but they also have clear limitations. Most appropriate as an early stage method Usually NOT the best approach (Should NOT be chosen as default research) - Focus groups are well suited for some purposes, but poorly suited for others. In general, focus groups are very good for getting breadth—i.e., finding out what kinds of issues are important for consumers in a given product category. --> helpful that focus groups are completely "open-ended:" moderator can ask questions to elaborate answers (often won't think or write out an elaborate answer in a questionnaire)

International Economics

Exchange rates -Floating (supply and demand) - When a country imports, it must sell its currency (causing an increase in supply) to be able to buy the currency of the country from which it is importing (whose currency, then, will experience an increase in demand) - prices of various currencies are determined by supply/demand -Floating within a limited range -Fixed: were fixed from 1947-70s, but became infeasibly expensive for members to support the dollar at its artificially high level --> floating exchange rates resulted Trade balances and their impact on exchange rates --> The value of the U.S. dollar, and many other currencies, is entirely based on confidence in the currency --> value of currency will decline if supply > demand (buy excessively) --> foreign imports become less attractive as they become more expensive --> value of currency will increase as demand > supply (country's products will decline in cost as measured in foreign currency abroad as exports increase) --> could increase "demand" for currency by borrowing heavily abroad

Projective Techniques

Getting at motivations that may not be consciously known— "Tell a story about this picture." - consumer is engaged to make sense of the situation and express thoughts that then come about, "hit or miss" process that will not work every time. --> In class we discussed how the photos of the woman shopping may uncover concerns about the competence and/or intentions of the sales person. Looking at the two women clothes shopping together, the likely conversation between the two can be identified, "projecting" the respondent's own views and impressions onto the characters in the photo. Measurement of attitudes consumers are unwilling to express - It is easier to admit something embarrassing about someone else (Thus, we may ask them to explain reasons why a friend has not yet bought a computer, or to tell a story about a person in a picture who is or is not using a product) - Used when a consumer may feel embarrassed to admit to certain opinions, feelings, or preferences (many older executives may not be comfortable admitting to being intimidated by computers - instead explain reasons why a friend has not yet bought a computer (people respond more openly about "someone else") Consumer discusses what other consumer might think, feel, or do PROJECTIVE METHODS COSTS: Usually high if personal interviews or extensive interpretation is needed The main problem with this method is that it is difficult to analyze responses. Projective techniques are inherently inefficient to use. - The elaborate context that has to be put into place takes time and energy away from the main question. - There may also be real differences between the respondent and the third party. - Saying or thinking about something that "hits too close to home" may also influence the respondent, who may or may not be able to see through the ruse.

Hofstede's cultural dimensions concept

Hofstede's cultural dimensions concept: culture differs on these dimensions 1. Power distance: willingness to accept social inequity as natural 2. Uncertainty avoidance: the extent to which society relies on orderliness, consistency, structure, formalized procedures to address daily life situations 3. Individualism: perceived obligation and dependence on groups 4. Masculinity: extent to which dominant values are male oriented - Lower masculinity ranking indicates that men and women are treated equally in all aspects of society while higher masculinity ranking suggests men dominate in positions of power 5. Time orientation: short versus long term orientation (long term commitments and longer time horizon for success of a new product intro) 6. Indulgence: extent to which society allows for gratification of fun and enjoyment needs 7. (added) Conversation/verbal communication/context clues (in China more formal with handshake, trust and honor more important in legal docs) can help someone classify culture

Tax Policy Issues

Income tax -Levels imposed --> can be very high—often significantly more than half is taken by the government -Degree of progressivity for different countries --> extent to which those with higher incomes pay higher rates Property, inheritance, and specialized: Some countries have wealth taxes, meaning that even if you have no income during a particular year, you may be hit with a tax based on wealth accumulated. Even in the U.S., we have property taxes on real estate. Excise (sales) taxes -More difficult to make progressive; usually outright regressive - "value added" taxes - Sales taxes are generally considered "regressive" (the opposite of progressive) in the sense that everyone, by and large, pays the same rates. - less affluent family may spend less on taxed items than a more affluent one, but the percentage of their income spent on items subject to sales tax is typically much higher than the percentage paid by wealthier households whose spending goes in part to savings, investments, and real estate, which are not generally taxed this way "Sin" taxes whose purpose is in part to discourage "bad" consumption -Some types •Alcohol and tobacco (health) •Petroleum (environmental impact) •Imported products (trade balance) •"Luxury" products ("frivolous") -Can have a very regressive effect since poor families may spend quite a disproportionate share of their income on such vices (taking a proportionally greater amount from those on lower incomes)

Syndicated Secondary Data 3 Types

Inexpensive External Secondary Data Some sources of external secondary data can be quickly accessed at a relatively low cost Ex. US Bureau of the Consensus provides data about businesses by county and zip code for example BUT inexpensive external data sources are not adequate to meet researcher's needs (as data was initially acquired for some other purpose than the research question at hand) Syndicated External Secondary Data - Marketers can purchase external secondary data called syndicated data - Data available for a fee from commercial research firms like IRI - National Purchase Diary Panel, etc - Offers information about shifting brand preferences and product usages in households Scanner data Type of this data used in quantitative research that is obtained from scanner readings of UPC codes at check-out counters Ex. firm use scanner data to determine what would happen to its sales if it reduced the price of its least popular product by 10% Typically focuses on weekly consumption of a particular product at a given unit of analysis (i.e. individual store, chain, region)

Mandatory Adaption Issues

Infrastructure differences—e.g., electricity supplies vary among countries in - many appliances need to be made to comply with the infrastructure of the country in which they are intended for use) -Voltage -Frequency (time between flips in polarity under alternating current) -Plugs Conflicting rules between countries—it may not be possible to make a product that would be simultaneously legal in both of two countries - Ex. countries may have different rules in areas such as the types of artificial sweeteners allowed in food and beverages or the specifications for a restaurant fryer such that it may be impossible to make a product that is simultaneously legal in two countries

Internal Secondary Data Data warehouses Data mining Churn Big Data: Amazon/Google

Internal secondary data: cache of customer information and purchase history Data warehouses: Large computer files that store millions of pieces of individual data Hard to make sense of billions of pieces of individual data (need to data mine) Data mining: The use of a variety of statistical analysis tools to uncover previously unknown patterns in the data stored in databases or relationships among variables - Data mining can allow firms to properly categorize consumers → helps identify different segments to which the firm can offer valuable packages that meet their specific needs (firm can tailor separating marketing programs to each of these segments too) Churn: Number of participants who discontinue use of a service divided by the average number of total participants - Use data mining to help reduce churn levels Big Data - data sets too large and complex to analyze with conventional data mining software and techniques Amazon: Proper conversion of big data into customer insights helps Amazon determine which relevant products to suggest, generating almost ⅓ of its sales Google: Has developed tremendous marketing analytical capabilities that it makes available to partner firms Google helps firms attract customers through the use of more relevant keywords

Scanner Panel Data Research

It is now possible to assess the relative impact of a number of factors on the consumer's choice—e.g., •What brand in a given product category was bought during the last, or a series of past, purchase occasions; •Whether, and if so, how many times a consumer has seen an ad for the brand in question or a competing one; •Whether the target brand (and/or a competing one) is on sale during the store visit; •Whether any brand had preferential display space; •The impact of income and/or family size on purchase patterns; and •Whether a coupon was used for the purchase and, if so, its value. A "split cable" technology allows the researchers to randomly select half the panel members in a given community to receive one advertising treatment and the other half another. Thus, observed differences should, allowing for sampling error, the be result of advertising exposure since there are no other systematic differences between groups. Interestingly, it has been found that consumers tend to be more influenced by commercials that they "zap" through while channel surfing even if they only see part of the commercial. This most likely results from the reality that one must pay greater attention while channel surfing than when watching a commercial in order to determine which program is worth watching.

Observation

Looking at consumes in the field—e.g., -Searching for product category area -Number of products inspected and time spent on each -Apparent scrutiny of labels or other information -Involvement of others -Behavior under limiting circumstances (e.g., time constraints) OBSERVATION COSTS: Low to High (depending on coding and analysis needed) Looking at how consumers select products may yield insights into how they make decisions and what they look for. - For example: Japanese consumers scrutinized packages looking for a name of a major manufacturer—the product specific-brands that are common in the U.S. (Tide) were not impressive to the Japanese, who wanted a name of a major firm like Mitsubishi or Proctor & Gamble. Observation may help us determine how much time consumers spend comparing prices, or whether nutritional labels are being consulted. Privacy Issues: - It should be noted that there is no particular interest in what the individual customer being watched does but rather what what consumers—either as an entire group or as segments—do or what their tendencies in their response are) - For Example: consumers benefit from stores that are designed effectively to promote efficient shopping. If it is found that women are more uncomfortable than men about others standing too close, the areas of the store heavily trafficked by women can be designed accordingly.

Sentiment Analysis

Making sense of online postings in social media - computerized gathering and analysis -Twitter -Photo sites (e.g., Instagram) -Blogs -Facebook Tracking of massive amounts of data by computer (for large sample size and powerful predictions) Machine (Computer) Interpretation of postings based on -Specific words and combinations of words used -Language use (pronouns, active vs. passive voice) -Context -Indicators of sarcasm, irony --> Certain words are classified as either generally positive or negative, and can be used to identify different types of likes and dislikes. Hashtags as brand identifier and emotion/evaluation --> may be useful to unambiguously identify specific brands, and algorithms may assign different meanings or significance to a term that is used as free-standing text or as a hash tag Heavily proprietary specific methods (firms develop methods and keep these secret) This method takes advantage of the vast amount of information online that can be used to gauge customer attitudes toward a brand, firm, or other object. Over time, technology will likely make it possible to capture relevant information from photographs (e.g., facial expressions), although not much has been published on this topic yet.

Marketing Research Marketing Information System Pitfalls

Market research is often needed to ensure that we produce what customers really want and not what we think they want. An "investment" to reduce uncertainty Can help guide decisions on: -Whether to enter -Product characteristics -Promotional strategy -Positioning Must weigh costs and benefits of research -Money -Time spent No perfect method—tradeoffs between methods Pitfalls: - Does not guarantee success in and of itself - There may be issues that come up which the research has not addressed. - There may also be things that were overlooked in the way a study was done. - It is also possible that things change in the marketplace (e.g., changes in customer tastes, competitor product introductions/enhancements, competitor advertising, or changes in customer knowledge). Marketing Information Systems (MkIS): Set of procedures and methods for regular collection and analysis of information for marketing decisions -Databases (internal information—e.g., sales volumes) -Market research •Primary •Secondary This can include the results of surveys, interviews, experiments, focus groups, and other research methods, data on file (e.g., sales records over time, historical customer order databases), and reports/information produced by outside research firms or other organizations.

Flops in Transplantation of Advertising Examples International Brand Adaptions Example

One area where culture, language, and experiences can get in the way is advertising. For example: •Man and his dog: Although the dog is considered "man's best friend" in many Western countries, it is considered a "dirty" animal in stricter Muslim cultures. •"Follow the leader—he's on a Honda!": While being a part of the group and deference to those in "higher" positions has historically been valued in Japan, Honda was unsuccessful in an advertising message for its motorcycles that did not appeal to more individually oriented Americans. •"Get your teeth their whitest!": Having white teeth may not be desirable in a country where status is associated with being able to afford nuts that stain teeth. Brand names may be close or identical in countries to words with a negative connotation. 1. Chevy Nova did not do well in Latin America ("no va.") A term with a completely innocent meaning in one area that have "off color" connotations in another (This phenomenon particularly common in Spanish, where many dialects have evolved among people separated by great distances from others areas where Spanish is spoken) Chevrolet was successful with its Nova brand in the U.S., but was widely ridiculed in Spanish speaking areas. The U.S. firm had not realized that the sound and spelling was similar to the term no va, meaning that "It doesn't go." 2. A Japanese soft drink which did not sell well in English speaking countries... A Japanese beverage brand name involves a term similar to an off-color term used to refer to urine.

Country of Origin Effects Today?

Perception of product based on associations with the country -Quality (e.g., Japan, Germany) -Elegance and style (e.g., France, Italy) --> One country could have a good reputation for one type of product but not for another --> ethical practice of giving a product appearance of being associated with a country of favorable origin (printing in French even if product is not exported or made in France) Positioning strategies -Emphasis on origin (e.g., French wine) -De-emphasis or obfuscation of country of origin (e.g., French beer, American made shampoo intended only for the U.S. with instructions in French) Today, in practice, the country of origin may be ambiguous -High quality products can now be manufactured in many countries -The brand name (e.g., Sony) may invoke the that country's image (e.g., Japan) rather than the country in which the product was actually made (e.g., China) --> Consumers are increasingly aware that products are often not made in the country associated with the brand (ex. many "Japanese" cars made for the U.S. market are now manufactured in North America) --> It is now also recognized that high quality products can be designed and made in countries such as South Korea and even China. --> Few people know in which country a particular model of the Apple iPod® has been made = The country-of-origin effect today, then, is considerably less than it has been in the past

Primary Research Methods Exploratory vs. Precision Methods

Primary Methods: •Surveys •Experimentation •Observation •Focus groups •In-depth interviews •Projective techniques •Physiological Measures •Online research •Scanner data •Conjoint Analysis •Hybrid Methods •Sentiment Analysis Exploratory Methods 1. Observation (can be more definitive with larger sample sizes and focus on specific behavior) - Example: we may use focus groups or personal interviews to gauge what concerns a consumer may have with a new product. For each concern identified, we will not be able to say very precisely how significant it is or what percentage of the population will have each respective concern (need the larger scale precision methods where larger number of people are involved) 2. In-depth interviews 3. Focus groups 4. Projective techniques - Intended to get some basic understanding of issues that may surround a product or practice - Major Benefit: flexibility (If a customer says something interesting in an interview, follow-up questions can be asked. Precision methods generally do not offer as much flexibility in this regard) Precision Methods -Experiments -Surveys -Panel -Scanner data

Data Mining

Processing of vast amounts of data to find relationships between variables—e.g., -Items frequently purchased together --> "strategic adjacencies" (items placed together in retail setting) -Seasonal patterns in sales -Customer segments Data mining involves the use of "brute force" computer power to assess potential relationships between variables. Used for: - Items frequently purchased together → "strategic adjacencies" (items placed together in retail setting) - Seasonal patterns in sales - Customer segments Example: Walmart found that bananas and cereal were bought together much more frequently than expected by chance. This led Walmart to stock bananas in some of the larger stores both in the produce section and in the cereal section. A number of customers would forget to buy bananas when in the produce area, but would then be "triggered" when they saw the cereal since the two would be used together.

Purchasing Power Parity

Purchasing Power Parity (PPP) If exchange rate of two countries is in equilibrium, a product purchased in one will cost the same in the other if expressed in the same currency

Continuum Questions

Questions rating the degree or extent of a characteristic (brand loyalty, awareness, frequency of use, satisfaction level) (e.g., agreement or product usage) tend to be more effective than binary "Yes/No" questions In the above example, having a five point scale gives more precision than a binary one. Yes/No answer options are not always appropriate For example, an individual who is "just a little bit" interested in a product might answer "Yes" if asked if he or she is interested. However, such a person is really closer to those who are not interested than to those who are "very" or "quite" interested. People who are "somewhat" interested fall somewhere in between. Therefore, a scale with five or more options would generally be more useful. -E.g., "On a scale from 1-10, with 1 being 'Not all interested' and 10 being 'Extremely Interested,' how interested are you in fashion? -Asking simply "Yes" or "No" on "Are you interested in fashion?" would result in people with very little actual interest potentially answering affirmatively

Collecting the Data

Scanner data is, at the present time, only available for certain grocery item product categories. It is not available for most non-grocery product items. Scanner data analysis is most useful for frequently purchased items (drinks, food items, toilet paper) since a series of purchases in the same product category yield more information (advertising, shelf space, pricing of the product and competitors, and availability of a coupon) with greater precision than would a record of one purchase at one point in time When you collect data: •Each time a customer has his or her card swiped in a participating store and buys anything represents a shopping occasion •Each time the customer makes a purchase in the relevant product category (e.g., cereal, laundry detergent, coffee, yogurt) represents a purchase occasion •Variables such price paid, sale status of available brands, coupon availability for each brand, special display status of any brands, advertisements seen, price paid on last purchase occasion, time since last purchase occasion may be considered

Scanner Panel Data Drawbacks (cost)

Scanner data: in return for signing up for a card and presenting this when making pur Panel members in test communities agree to: -Swipe a card prior to each purchase in most stores that sell grocery products (supermarkets, convenience stores, drug stores) -Have purchases matched to: •Demographic profiles •Media/coupon exposure •Promotional status of competing brands •Past purchases --> It is now possible to track what the consumer bought in all stores and to have a historical record Problems: -Aggregation over household -Aggregation bias--averages of disparate segments obscure! -Only available for grocery products (roughly what you can buy in a supermarket) -Only gives meaningful (accurate and useful) results for products bought at least ten times a year COSTS: High start up costs; Low variable costs possible with developed algorithms usually low Notes: - The consumer's shopping record is usually combined with demographic information (e.g., income, educational level of adults in the household, occupations of adults, ages of children, and whether the family owns and rents) and the family's television watching habits. - A "meter" will be put next to each TV set in the household. Each member of the family is assigned a button that he or she is asked to press when he or she is present and watching TV.

Examples of issues better addressed with continuum questions

Some examples of issues that are usually better addressed with continuum questions include, but are not limited to: •Interest •Purchase likelihood •Satisfaction/ Dissatisfaction •Brand loyalty •Price sensitivity •Knowledge •Experience •Involvement •Decision control •Frequency or level of use •Awareness •Information search •Personality traits •Variety seeking --> binary questions will tend to give inaccurate results

Role of Government Activity in an Economy

Some governments play a larger role in their countries' economies than in others The government may pay for services such as: -Healthcare -Education (free options in most countries) Such policies will influence disposable income for consumers: -Much higher taxes will limit the ability to buy discretionary items, can drive down real estate values dramatically (people can't pay as much for real estate with limited amount of money to spend) -Certain expenses will be eliminated or reduced, and consumes are less likely to experience catastrophic losses (e.g., from unemployment or major illness) -Wealth is transferred from higher income to lower income consumers -Consumer choice may be reduced as the decision power is assumed by the government Tradeoff: - Although heavy government involvement in the economy tends to reduce choice, it may also provide a certain sense of security. - In many European countries, health care costs are borne largely by the government, so a catastrophic illness, the treatment of which is paid for by the government, will have a much lesser impact on those unfortunate enough to experience this situation

Types of Scanner Data

Supermarket club: includes purchases by the specific customer when shopping at the respective chain (assuming that the customer presents his or her card) - In return for presenting the card at each checkout, the customer is usually given special discounts and possible benefits (gas) - The data collected here allows the supermarket to analyze the purchase histories of specific customers and to print out special coupons based on past purchases (e.g., a competing brand or a complementary product) - Purchases at other locations are not counted - Demographic information may be of limited accuracy. - Shoppers are often motivated to join by large discounts (often 20-30%). This is also a method of price discrimination. Members may be given individualized coupons for possible products of interest. - Only available for grocery products. Scanner data panels: in some communities, people can sign up to be part of a "panel." - Purchases at all local retailers are included (e.g. supermarkets, gas stations, drug stores, convenience stores) - For a given customer, the database also includes TV viewing and demographics. - Only available for grocery products. - people's purchases across chains and store types are examined. - generally the most useful Aggregated retail sales records: records of sales volumes of products by UPC may be available from an assortment of retailers, and this data is available for more product categories. - This information is NOT tied to individual customer data and purchase history -This means that we cannot relate these sales volumes to anything else about the customer or store (e.g., price charged, advertising spending, type of display given in the store)

Surveys: Forms, Three Chracteristics

Surveys are useful for getting a great deal of information 1. Forms -Mail (self-administered, single time): inexpensive but response rates are quite low (5-20%) -Mail panel (self-administered, multiple surveys administered over time) -Telephone (from central location): higher response rates but fewer questions asked as many answer options have to be repeated and few people are willing to stay on the phone for more than five minutes -Mall Intercept: convenient to reach customers but respondents are reluctant to discuss anything sensitive face-to-face with an interviewer. -Computer/Internet 2. Planned questions -Open-ended: Open ended questions have the advantage that the respondent is not limited to the options listed, and that the respondent is not being influenced by seeing a list of responses (but they are often skipped) -Closed-ended 3. Need large sample sizes for precise conclusions/meaningful results -Small samples will have very large standard errors and thus large margins of error -E.g., Presidential polls (with only two choices) require a little more than n=1000 to get results accurate to +/- 3%. Notes: - surveys are vulnerable to biases: wording of a question can influence the outcome a great deal or when the interviewer influences the way the respondent answers (interview bias) - For example: more people answered no to the question "Should speeches against democracy be allowed?" than answered yes to "Should speeches against democracy be forbidden?" - A response bias may also occur—if only part of the sample responds to a survey, the respondents' answers may not be representative of the population. Discussion: - Good way to benchmark/check progress - Quality of results can depend on range/detailed description of each option in survey - People may change their answers if they're afraid of not being anonymous "How many of your next 5 hotel stays going to be at Hyatt?" - Lots of variables (business or family trips? how long until your next stay?) - Very abstract/broad question EW.com survey: - Too many options (overwhelming), overly complex - Start with broad question instead and follow-up with specific question - Hard to read long sentences - Conditional branching (answer to one question helps you determine a subsequent answer) - Ordering (may be random) - "Based on your best online experience, how would you rate EW.com as a site that has content updated frequently"

Scanner Panel Data Takeaways

Takeaways: •Reflects actual behavior—not just what people think they will do (since data collected where customer usually shops) •Predicts purchase likelihood under different circumstances (e.g., regular price, competitor's price is discounted, coupon is available). •Can help "disentangle" a large number of variables at the same time (e.g., price, advertising, coupon availability, in-store display) --> we must compare purchase outcome under different combinations of these variables —> need for multiple purchases •Does NOT identify attitudes—we only observe behavior (e.g., purchase or non-purchase), NOT what is going on inside the consumer's brain •Can only be used for frequently purchased items (i.e., something bought at least ten times a year - to identify the impact of factors such as advertising, price, display space, and coupon availability, the customer must buy the item enough times so that these purchases will be spread across these conditions) •Very efficient and precise predictor since large amounts of data are used.

Focus Groups: Dynamics and Caveats

The facilitator should: -Allow the focus groups members to talk as much as possible to get at their views and perceptions -Gently attempt to steer the group in the desired direction -Probe and ask for elaboration when interesting ideas are raised The focus group may involve an activity (e.g., cooking a meal) and/or sampling a product Caveats: •Even with ten focus groups each with ten members, the total sample size is only 100 (10*10) •Because of social influence, the opinions expressed by different members are not independent •Issues identified in focus groups should examined with more powerful methods using larger sample sizes (e.g., surveys, scanner data, experiments) --> focus groups are useful primarily as an exploratory method to identify relevant issues. It is usually not possible to generalize much from a series of focus groups, in part because of the limited number of people involved. Therefore, focus groups should usually be followed by more powerful precision methods.

Poll Q&A Tippability is more likely to apply when: A. Consumer experiences temporary involvement B. External search is used to identify the evoked set before problem identification takes place C. A low stakes decision is involved D. Consumer exposed to subliminal message (unconscious) E. Consumer attempts to bypass the alternatives evaluation state in order to proceed to post-purchase stage

Tippability is more likely to apply when: A. Consumer experiences temporary involvement B. External search is used to identify the evoked set before problem identification takes place C. A low stakes decision is involved D. Consumer exposed to subliminal message (unconscious) E. Consumer attempts to bypass the alternatives evaluation state in order to proceed to post-purchase stage

Choosing a Primary Research Method - what is the first step?

This chart is helpful in deciding which method to use for a particular situation. We first identify whether the issue involves opinions or actual behavior. Generally, we get the most valid results if we can examine the customer in his or her natural habitat—e.g., in a supermarket.

U.S. Laws of Interest Anti-trust Foreign Corrupt Influences Act Anti-boycott Laws Trading with the Enemy Extra-territoriality

U.S. laws of particular interest to firms doing business abroad. Anti-trust: It is illegal for U.S. firms to participate in collusion and other anti-competitive activities abroad. Most countries have such laws; not all enforce these. - Example: if two Japanese firms collude to limit the World supply of VCRs, they may be sued by the U.S. government (or injured third parties) in U.S. courts, and may have their U.S. assets seized. Foreign Corrupt Influences Act: It is illegal for U.S. firms to pay bribes abroad. - Although most if not all countries ban the payment of bribes, such laws are widely flaunted in many countries, and it is often useful to pay a bribe to get foreign government officials to act favorably - For example: it may be acceptable to give a reasonable (not large) facilitating payment to get customs workers to process a shipment faster, but it would not be legal to pay these individuals to change the classification of a product into one that carries a lower tariff. Anti-boycott laws: It is illegal for U.S. firms to participate in a boycott of Israel or even certify that one's firm does not do business with Israel. Technically, it is illegal to participate in all non-U.S. Government sanctioned boycotts, but the emphasis is on Israel. - Many Arab countries maintain a boycott of Israel, and foreigners that want to do business with them may be asked to join in this boycott by stopping any deals they do with Israel and certifying that they do not trade with that country - It is illegal for U.S. firms to make this certification even if they have not dropped any actual deals with Israel to get a deal with boycotters Trading With the Enemy: -It is illegal to trade at all (with few exceptions) with certain countries that are viewed to be hostile to the U.S (e.g., North Korea, Iran, Libya, Cuba) - The idea is that trade will strengthen these enemies, thus giving them greater strength to harm the U.S. or its allies -Exports of certain technologies (mostly with potential for military use, high speed computers) are subject to certain export limitations so that these products will not end up in the hands of U.S. enemies, they are heavily restricted Extra-territoriality: U.S. courts will often take jurisdiction over cases of violations of U.S. law that occurred entirely abroad. - U.S. law will be applied by U.S. courts to behavior that took place entirely abroad

Sentiment Analysis: Functions and Tools, Complications, Cross-Cultural Issues

You will not be tested on the specifics of these slides* A variety of factors complicate sentiment analysis: •Association of brands common to posts •Identification of probable poster characteristics (e.g., male/female, age) by language use •Vocabulary use of different consumer groups •Identifying expressions by opinion leaders -As a source of influence on large numbers of other consumers -As "early warning" of opinions that may emerge among consumers in general Some Complications: •Detection of irony, sarcasm, and humor in the specific context •Emergence of slang: -New slang terms -Context-specific slang terms -Slang used by limited consumer subgroup •Aggregation of responses from different group (e.g., demographic groups, positive/negative to the brand) making for meaningless average responses unless adjusted for group effects •Change of meaning by context (e.g., a consumer goes to Starbucks to improve a negative mood; thus, the negative affect should not be attributed to the brand) •Interpretation of "pseudo-hashtags" invented to be funny and not to be used across postings (e.g., #tastedkindofbad) •Integration of photo or video information into interpretation, especially if text only makes sense in the context of the images Cross-Cultural Issues: •Language structure and meaning (e.g., vague or precise word meaning, sequence of words, ambiguity of implicit objects/subjects) •Homonyms (words with same spelling but different meaning) •Customs of product category usage (e.g., "candy bar" vs. "chocolate bar") •Slang and word meaning in context •Focus on self vs. others

1. Experimentation would be most useful for which of the following purposes? a. Getting an idea about possible consumer beliefs about the nutritiousness of water melons as a breakfast food. b. Finding out how frequently consumers buy water melons. c. Assessing whether consumers would be more likely to buy a product in cardboard or plastic packaging. d. Identifying differences in the amount of time spent by men and women on everyday supermarket trips. e. Determining whether there are regional differences within the U.S. in the average age at which males begin to shave.

c. Assessing whether consumers would be more likely to buy a product in cardboard or plastic packaging.

In-Depth Interviews

• Even costlier than focus groups per person reached • Structured (planned set of questions) vs. unstructured interviews (going where the discussion takes you) • Generalizing to other consumers can be difficult, but contrasting types of consumers can be identified • Often useful for highly emotional, identity involved products (e.g., cars, furniture, clothing) • Biases (Subtle, inadvertent feedback) - personal interviews highly susceptible to inadvertent "signaling" to the respondent - although an interviewer is looking for truth, they unconsciously may inadvertently smile/frown a little when something positive/negative is said - At an unconscious level, the cumulative effect of several facial expressions are likely to be felt (even though neither are consciously aware) - Although this type of conditioning will not get a completely negative respondent to say all positive things, it may "swing" the balance a bit so that respondents are more likely to say positive thoughts and withhold, or limit the duration of, negative thoughts. - The benefit here is that we can get really into depth (when the respondent says something interesting, we can ask him or her to elaborate), but this method of research is costly and can be extremely vulnerable to interviewer bias. - To get a person to elaborate, it may help simply repeating what the person said. He or she will often become uncomfortable with the silence that follows and will then tend to elaborate. This approach has the benefit that it minimizes the interference with the respondent's own ideas and thoughts. He or she is not influenced by a new question but will, instead, go more in depth on what he or she was saying. IN-DEPTH INTERVIEW COSTS: Very High

Examples of Mandatory Adaptions

•Artificial sweeteners permitted (different types are approved for use in different countries) •Product specifications (e.g., alcohol percentage in beverages) •Warning labels •Safety features •Noise suppression filters •Anti-pollution features These are specific examples of product categories where regulations may vary widely. In general, more affluent countries can afford more stringent safety requirements, but views of what is safe may also differ.

4 Overall issues in Market Research

•Do people actually do what they say (and believe) they will do? Often not! •Is A actually causing B, or is B causing A, or is some third variable causing both? This is often difficult to sell! •How much data do we need to make precise conclusions? A sample of n=30 will usually not cut it! Larger sample sizes are usually needed to make reliable decisions! •Will respondents interpret our questions the way they were intended? Often not! --> Studies can give misleading results for some of the reasons listed above. We will discuss precautions to take and how methods to address some of the concerns.

Focus Groups: Potential Uses

•Identifying possible issues of concern with a new product •Probing complex issues where different factors and issues may affect opinions •Probing differences in perspectives among different groups •Identifying the actual language used by customers •Very preliminary pilot testing of ideas Note that follow-up with more precise research methods is essential before firm conclusions can be made