May 21st, 2008 Mark
Inevitably every market researcher eventually gets to the point where they break down and use a panel finding company such as e-rewards to find the necessary demographics for their survey. These services aren't typically cheap, depending on the results desired. Oftentimes this poses a serious dilemma for those on a strict budget. If counts are off and one more respondent is used the extra money spent could be catastrophic. Fortunately many online survey companies are adding new features to help save the pocket of corporate America.
One such feature is a survey quota. This tool actually counts the specific survey responses and shuts down the survey when the total number of responses is reached, ensuring exact numbers. The quotas currently available are only in higher scale tools, but they are definitely worth it. Most quotas operate off of a particular question response, but depending on the tool you can often arrange it to count a particular demographic not mentioned in the survey (Normally the panel provider can give you this).Quotas are definitely a time and money saver when it comes to distributing a survey via a corporate panel provider.
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May 14th, 2008 Josh
Because different groups of people with different characteristics have differing attitudes and opinions about consumer products, market researchers have sought for meaningful ways to identify those segments of the population most likely to be influenced by a particular marketing strategy. Market Segmentation, therefore, refers to the process of dividing a population into groups or segments with similar characteristics in order to conduct more meaningful research by targeting specific groups of consumers. These segments can be created using demographic variables, geographic variables, psychographic variables, or behavioristic variables. By focusing on a particular segment of the population through these variables, market researchers can identify how certain consumers will react to new products or changes in old ones.
Here's an example found in a consumer behavior article by Nancy D. Rhodes from Texas A&M University: "In 1987, Colgate-Palmolive introduced a new product that was a combination laundry detergent and fabric softener. Because it was in a hurry to beat the competition to the stores, C-P neglected to conduct careful market research. The product was targeted to large families. Yet, the product was perceived by members of large families as too costly; large families tend to have tight budgets. Thus, the product failed largely because the company marketed it to the wrong segment. The product would likely have been more successful if marketing efforts had been targeted toward single people, apartment dwellers, and college students. These groups are typically more willing to pay extra for convenience. Thus, an error in market segmentation can be quite costly."
In order to conduct this type of market research, online survey software programs, like Qualtrics, can provide all the essential tools you'd need. As questions of different variables are generated and sent to consumers, a Qualtrics library panel can categorize those responses and segment them into specific groups for future research. This allows market researchers to save time and money by marketing to the right segment of the population.
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May 5th, 2008 Josh
This is a copy of an article called "When Market Research Fails, or Why They Don't Sell 'New Coke' Anymore" found in the following source: Sadava, S. W. & McCreary, D. R., (1997). Applied Social Psychology. RR Donnelley & Sons Company: Upper Saddle River, NJ. (p 203-4).
"In the early 1980's the makers of Coca-Cola were concerned. Coca-Cola's market share was slipping, and Pepsi's was on the rise. In spite of expensive and extensive ad campaigns, and successfully launching Diet Coke, Coke still dropped 1 percentage point in market share in 1984. Although 1 percentage point doesn't sound like a lot, it accounts for millions of dollars in lost sales - most of the loss going to Pepsi. Furthermore, this was a trend that had started in the mid-1960's and showed no signs of stopping.
"This was not very long after Pepsi's highly successful "Pepsi Challenge" ad campaign. In the challenge, ads showed candid shots of regular Coke drinkers amazing themselves by their preference for Pepsi in a blind taste test. Coke's own taste tests showed a very disturbing preference for the taste of Pepsi, by a 58-42 margin. There was a crisis climate at Coke. Confidence in the product was low. The company believed there was only one explanation for Coke's continual slide: The taste simply wasn't as good as Pepsi's. Consumers preferred a sweeter drink.
"The research and development team took over. Under orders of great secrecy, they were charged with the task of changing the formula for Coke. They were to try make it taste "smoother," and give it less bite. In short, they were to make it taste more like Pepsi. They eventually came up with an altered formulation that beat the classic formula by 6 percentage points in blind taste tests.
"While the formula was being altered, market researchers asked long-time Coca-Cola drinkers how they would feel if Coke "added a new ingredient" to make the drink "smoother." Results indicated that only about 11 percent of confirmed Coca-Cola drinkers would be angry. Notice, the question did not specifically ask the consumers how they would feel if Coca-Cola was replaced with a drink that tasted different. The Coke executives, confident that people would be thrilled with the new formula, went ahead with plans for a new ad campaign and launched the new formula.
"The first negative reaction encountered was at the news conference announcing the new formula. Reporters at the conference challenged the Coke executives with the assumption that the reformulation had been a defensive response to the Pepsi challenge. The Coke people denied that assertion, of course, but unconvincingly.
"The next negative reaction came when long-time Coke drinkers realized that Coke was actually replacing their favorite drink with a Pepsi clone. Many devoted Coke drinkers became extremely upset. People complained and wrote letters in droves. Some people poured New Coke into sewers. Thousands of people each day called the company. In short, the Coca-Cola manufacturers had created a huge mess.
"How could the Coca-Cola people have been so wrong about the reaction of their loyal customers to change in the formula? The easy answer is that they simply asked the wrong questions. They did the taste tests, and they asked about adding a new ingredient to the old formula, but in all of the market research conducted prior to the distribution of the new formula, they never asked customers how they would feel if the makers of Coca-Cola changed Coke. Coke was more than a soft drink to many people. An example of the comments the company received from the thousands of letters written sums up the sentiment: "Changing Coke is just like breaking the American dream, like not selling hot dogs at a ball game" (Pendergrast, 1993, p. 363). People identified with Coke; they had memories of significant times in their lives with Coke. To them, changing Coke was blasphemy.
"After 3 months of bad publicity and complaints, Coke reintroduced the original formula as "Classic Coke," much to the delight of many consumers. New Coke stayed on the market for 5 years and never received more than a 7% market share. The company officials were accused of planning the whole New Coke debacle simply to improve sales of Classic Coke. However, in the words of Coke CEO Roberto Goizueta, "We are not that dumb and we are not that smart" (Pendergrast, 1993).
"Could the Coca-Cola executives have avoided these problems with New Coke? It is difficult to say with certainty. Because they were concerned with developing the product secretly, it would have been impossible to survey a few thousand consumers and ask them how they would react if Coca-Cola changed its formula. The Coca-Cola experience certainly points to the importance of asking the relevant questions. In defense of the marketing researchers who conducted the work for Coca-Cola, it is easy to see after the fact what questions they should have asked. Much more difficult is anticipating what issues are important to consumers in advance of marketing campaign.
"Perhaps the most important lesson that can be taken from the failure of New Coke is that it is important for marketers to consider not just market share and net profits, but also what their products mean in the lives of their customers. According to McKracken (1986), consumer goods became invested with cultural meaning. It is a tribute to the success of early marketing of Coca-Cola that its customers have invested so much meaning in their product. Many of the letters written to Coke to protest the new drink touched on just this sort of feeling: that the makers of Coke were destroying their memories, their identity, and their culture by tampering with "their" Coca-Cola. If market research in the development of New Coke had been sensitive to the values associated with Coca-Cola, they might have been able to circumvent the difficulties in changing the formula. Perhaps they might have decided to abandon entirely the attempt to change the formula.
"A final point that Coca-Cola's experience clearly illustrates is that there are limits to what marketers and social psychologists can persuade consumers to accept. In spite of decades of research on persuasion, and in spit of millions of dollars spent on the ad campaign, the majority of cola drinkers chose not to purchase the product. Consumers do not mindlessly act in accordance with the whims of advertisers. Consumers can have a powerful effect on huge corporations such as Coca-Cola simply be refusing to buy a product that clashes with their own values."
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