Transcript 4.2 Marketing Planning

4.2 Marketing
Planning
Part 2
Roberts-IBBM
Market Research

The process of collecting, recording, and
analyzing data
about customers,
competitors,
and the market
Why conduct market research?
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4.
Reduce the risks of launching a new
product
Predict future demand changes
Explain patterns in sales of existing
products and market trends
To identify the favored designs, flavors,
styles, promotions, and packaging
Marketing Research
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Secondary Research
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A collection of data from second-hand sources. Often
called “desk” research.
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Second-hand research should be conducted first. It is less
expensive and reveals a lot of information.
Primary Research

A collection of first-hand data that is directly related to the
researcher’s needs.
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Primary Research can be expensive yet specific to your
needs.
Where do you get Secondary Data
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Government publications
Local libraries and local government offices
Trade organizations
Market intelligence reports
Newspaper reports and specialist publications
Internal company records
Internet
Advantages / Disadvantages of
Secondary Data
Advantages
Disadvantages
Typically
May
inexpensive
Can
be out dated
assist with planning primary
research
Originally
Can
Data
be obtained quickly
Comparison
of data from
different sources
collected for another
purpose so it may not entirely
suitable for your purposes
collection methods and
accuracy may be unknown
May
not be available
Primary Research

Quantitative Research
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Research that leads to numerical results that can
be analyzed and presented.
The average person dines out 3X per week.
Qualitative Research
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Research into the motivations behind buying
behaviors and opinions.
All fast food restaurants are cheap.
Where do you get Primary Data
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Qualitative Research
includes:
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Focus Groups
* Small groups of
people expressing
their attitudes towards
product, services,
advertisements, or
packaging.
Where do you get Primary Data

Test Marketing
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Marketing a new product in a
geographical region or city
before a full-scale launch.
Consumer Surveys
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Directly asking consumers
about their opinions and
preferences.
4 Issues with Surveys
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2.
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4.
Who to ask?
You cannot ask everyone, so a SAMPLE is
taken.
What to ask?
Construct an unbiased questionnaire.
How to ask?
Telephone, self-complete, interviews
How accurate is it?
Assess the accuracy and validity research
Sampling
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Sample
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A group of people taking part in market research
selected to represent the target market.
Sampling Error

Error in research caused by using a sample for
data collection instead of the whole target
population
Who to ASK?
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Random Sampling
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Each member of the target population has an
equal chance to be selected.
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You should:
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Have a list of all the people in the target
population
Sequential numbers are assigned
A list of random numbers are generated
Who to ASK?
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Stratified Sampling
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The target population contains
many layers (men, women,
children, teenagers, elderly)
The sample should include
representation from all the
layers in the target population.
Who to ASK?
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Cluster Sampling
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If the target population is geographically diverse,
clusters of samples may be taken from a few
different locations instead of every location.
Who to ASK?

Quota Sampling
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The population is segmented into mutually exclusive
groups (example: women, men)
If the survey was to be administered to 100 people,
then 50 men and 50 women would be interviewed.
Who to ASK?
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Snowball Sampling
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The first respondent refers a friend, who refers a
friend, who refers a friend.
This type is likely to be biased because friends
tend to have similar lifestyles and opinions.
Marketing Concepts
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Market:
The group of potential
customers who have
similar needs/wants,
sufficient buying power,
and the willingness to give
up a portion of that buying
power in order to buy your
product/service.
The GROUP
Marketing Concepts

Market
Segmentation:
Dividing the total market
into smaller, well-defined
groups with similar wants/
needs and similar key
characteristics.
How to divide the GROUP
Marketing Concepts

Market Segment
One sub-group of the many segments that
belong to the whole group. Specific
products and services can be targeted to a
specific segment.
Marketing Concepts
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Target Market:
The group or groups of
potential customers
identified as most likely
to patronize the
business and buy its
products.
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Section of Group
Focused on For Sales
Consumer Profile
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A quantified picture of the consumers of
your products
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Proportions of age
Income levels
Location
Gender
Social class
How are markets segmented?
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Geographic
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Tastes may very by geographic location
Demographic
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Most common way to segment
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Age, gender, family size, ethnic background, income,
weight, job classification
Psychographic
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Differences in lifestyle, hobbies, personalities, values
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Sports fans, athletes, fisherman, church-goers
Positioning Your Product
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Determining who should want to purchase
your product…..placing your product in that
market segment….using your marketing
mix to correctly market to that target
market.
Unique Selling Point (USP)
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The factor that makes your company’s
product unique…designed to motivate
customers to buy.
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Product: Dyson’ vacuum cleaner with cyclone
technology
Price: Walmart – always low prices
Place: Dell Computers – first computer
manufacturer to utilize Internet sales
Promotion: FedEx….when it absolutely,
positively has to be there overnight.
Sales Forecasting
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Sales Forecasting is predicting future sales levels and
sales trends for your product.
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Benefits to sales forecasting include:
The production department would know how many to
produce, how much raw materials to order, and how much
final product to inventory.
The marketing department would be aware of how many
products to distribute to the market place and any needed
changes to the marketing mix to maximize sales.
Human Resources could construct an accurate workforce
plan creating appropriate staffing levels.
Finance could plan cash flows with accuracy.
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4.
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Sales Forecasting
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The following are considerations when creating sales
forecasts:
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Trends: movement of data over time
Seasonal Variations: regular and repeated variations that
occur in sales data within a 12 month period or less
Cyclical Variations: variations in sales occurring over
periods of time greater than a year – they are related to the
business cycle
Random Variations: may occur at any time and will cause
unpredictable sales figures….poor weather, negative publicity
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Quantitative Sales Forecasting
Methods
Time-Series Analysis
Using past sales data to forecast future
sales. Past data presented in data order is
called a “TIME-SERIES”
Two methods are:
 Extrapolation
 Moving Averages
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Extrapolation
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Use past sales data to
view trends and make
predictions about
future sales.
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Assumes that sales
patterns are stable and
will remain stable.
It is ineffective when
instability is present or
possible.
Forecasted
TREND
16
14
12
10
8
6
4
2
0
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Moving Averages
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Considers underlying factors that are
expected to influence future sales.
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Trends
Seasonal variations
Cyclical variations
Random variations
Moving Averages
Calculation
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Calculated based upon “moving” totals gathered
from sales figures.
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Quarterly Sales figures
Four-Period moving total (1st, 2nd, 3rd, 4th)
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Daily Sales figures
Seven-Period moving total (Monday….. Sunday)
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Monthly Sales figures
Twelve-Period moving Total (January….December)
Depending upon your industry, you determine which time-frame is
appropriate for your business.
HL
Moving Averages
Calculation
1
2
Year
Quarter
3
Sales
Revenue
2007
1
120
2
140
3
190
4
130
580
1
130
590
1170/8
156.25
2
160
610
1200
163.75
3
220
640
1250
167.5
4
160
670
1310
168.75
2008
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4
4-Qtr
Moving Total
5
8-Qtr
Moving Avg
Mid point of data range for
8-qtr moving average
6
Qtrly Moving
Avg (trend)
146.25
150
Moving Averages
Calculation – computing variations
1
2
Year
Quarter
3
Sales
Revenue
2007
1
120
2
140
3
2008
6
Qtrly Moving
Avg (trend)
7
Seasonal
Variation
8
Avg Seasonal
Variation
9
Random
Variation
190
146.25
43.75
51.67
-7.92
4
130
150
-20
-15.4
-4.6
1
130
156.25
-26.25
-33.3
6.8
2
160
163.75
-3.75
-4.6
1.1
3
220
167.5
52.5
51.67
.83
4
160
168.75
-8.75
-15.4
6.65
Seasonal Variation=Actual (column 3) – Moving Avg (column 6)
Average Seasonal = Determine the average for each seasonal quarter
HL
Avg for Qtr 3 = 43.75 + 52.5 + 58.75 (not show) = 155/3 = 51.67
Moving Averages
Calculation – computing variations
1
2
Year
Quarter
3
Sales
Revenue
2007
1
120
2
140
3
2008
6
Qtrly Moving
Avg (trend)
7
Seasonal
Variation
8
Avg Seasonal
Variation
9
Random
Variation
190
146.25
43.75
51.67
-7.92
4
130
150
-20
-15.4
-4.6
1
130
156.25
-26.25
-33.3
6.8
2
160
163.75
-3.75
-4.6
1.1
3
220
167.5
52.5
51.67
.83
4
160
168.75
-8.75
-15.4
6.65
Random Variation= Difference between seasonal and average
seasonal calculations 43.75 – 51.67 = -7.92
HL
Moving Average
Plotting the trend
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2.
3.
4.
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Plot the trend
(moving average – column 6)
Extrapolate into the future – using slope
or line of best fit
Use the graph to determine the forecast
Adjust by the average seasonal variation
for the time period
(Qtr 1, Qtr 2, Qtr 3, or Qtr 4)
Moving Average Forecast
208
200
175
150
line of best fit
125
100
1
2
3
2007
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4
1
2
3
2008
4
1
2
3
2009
4
1
2
3
2010
4
1
2
3
4
2011
The estimated forecast for 2011 2nd qtr = 208,000 – 4,600 seasonal
adjustment for quarter 2 = $203,400 forecasted Sales
Moving Average –
Advantages vs Disadvantages
Advantages
Disadvantages
Useful for identifying and applying
seasonal variations and predictions.
Fairly complex to calculate.
Reasonably accurate for short-term
forecasts during stable economic times.
Forecasts further into the future are less
accurate as projections are made based
on past data.
Identifies the average seasonal variations
for each time period which aids in planning
for future quarters.
Forecasting for longer time periods may
require the use of more qualitative
methods and are less dependent on past
results.
HL