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Marketing research is what? |
• the process of defining a marketing problem and opportunity systematically collecting and analyzing information, and recommending action. • (you define the problem. Collect information and recommend action) |
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what is and Decision making. And decision making challenges |
Decision • Is a conscious choose from among two or more alternative Decision-making. • Is formal structural approach used to choose from a set of alternatives to try and improve the outcome of decision Challenges • It is difficult to ask consumers about new or unknown product. |
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Five step approach to marketing research Define the problem. |
1. Define the problem – 2. Develop the research plan – specific constraints identified data needed for marketing action . Determine how to collect data. 3. Collect relative information – obtain secondary data obtained primary data. 4. Develop findings – analyze the data present the findings. (once you have an info develop findings, ( take the data and turn it in to some meaningful representation. That will allow you to make decisions more easily) 5. Take marketing action – make action recommendation , implement action recommendations. Evaluate results |
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Step one. Define the problem Two key elements. • Set the research objective |
Set research objectives. • Research objectives are specific, measurable goals, that the decision-makers seek to achieve • If your goals are too broad. It may not be possible to do the research • If it is too narrow. It may be useless ( in other words to small it is useless) • the decision-maker in this case an executive at Fisher-Price seeks to achieve. In conducting the marketing research. For Fisher-Price, the immediate research objective was to decide whether to market the old or new telephone design |
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Types of research. Exploratory research Causal research |
Exploratory- you start off by looking around to see what you can see • Descriptive-does describe what it is you are studying it might describe the Frequency of something. Or the Relationship with something ( in the summer. People buy more of our products as the relationship is described in something, relationship is things go together) Causal- when one change factor cause a change in another, causal relationship is when something causes something to happen, eating too much sugar causes diabetes, -Interview with experts -Analysis of secondary data -pilot study (usually with convenience sample) – Focus group interviews -Depth interviews -projective techniques |
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Identify possible marketing actions. What is Measure of success |
Identify possible marketing actions. Measure of success • Affective decision makers develop specific measure of success, which are criteria or standards use in evaluating proposed solutions to the problem. Different research outcomes based on the measure of success lead to different marketing action for the Fisher-Price problem. If a measure of success were, the total time children spend playing with each of the telephone designs. The results of observing them would lead to clear-cut actions as follow . Measures of success helps you describe which action to take Measure of action • Criteria or standards use in evaluating proposed solutions to a problem you have to have some measure of success in order to define the best action to take • Measure of success playtime o Should spend more time playing with bold designs. o Children spend more time playing with new designs Possible market action would be. Continue with old design don’t introduce new design. Introduce design o One test of whether marketing research should be done is if different outcomes would lead to different marketing actions. If all the research outcome lead to the same action – such as top management sticking with the older design. Regardless of what you observe children like – the research is useless and a waste of money. In this case research results showed that kids like the new design, so Fisher-Price introduced its noisemaking pull toy chatter telephone, which became a toy classic and has sold millions o Market researchers know that defining a problem is an incredible difficult task if the objectives are too broad, the problem may not be researchable. And they are too narrow, the value of the research results may be seriously lessened. This is why marketing research spent so much time defining a marketing problem precisely and writing a formal proposal that described the research to be done |
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Step two. Develop a research plan |
1. Specified constraints on the marketing research activity. 2. Identify the data needed for marketing action. 3. Determine how to collect data |
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Specify constraints is what? |
• The constraints in a decision. Are the restrictions placed on potential solutions to a problem. o Example include the limitations on the time and money available to solve the problem. o (you can engage in a research project that is so expensive and take too much time o Thus, Fisher-Price, might set 2 constraints on his decision to select either the old or new version of the charter telephone. This decision must be made in 10 weeks and no research budget is available beyond that for collecting data in its nursery school |
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Identify data needed for marketing action (you have to identify which data you need) |
• Often marketing research studies wind up collecting a lot of data that are interesting but are not relevant for marketing decision that results in marketing action. • In the Fisher-Price charter telephone case, it might be nice to know who the children’s favorite color were today like would or plastic toys better, and so on. • In fact, knowing answers to these questions might result in later modification of the toy, but right now the problem is to select one or two designs. So this study must focus on collecting data that will help managers make a clear choice between the two telephone design |
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Determine how to collect data |
• Determine how to collect useful marketing research data is often as important as actually collected the data – step three in the process which is discussed later. Two key elements in deciding how to collect data are • concepts and methods |
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Concepts |
• are ideas about products or services. To find out about consumer reaction to a potential new product, marketing research frequently develop o marketers new product concept which is a picture or verbal description of a product or service the firm might offer for sale o you have this product concept . You can test it on your consumers for example, Fisher-Price, addition of a noisemaker, wheels and eyes to the basic design of its charter telephone made toy more fun for children and increased sales |
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Methods |
• Sampling. • Statistical inference Sampling • Selecting a group of distributors, customers or prospects, representing a population as a whole asking them questions and treating their answers as typical of all those in who they are interested in Statistical inference • They may then use the statistical inference to generalize the results from the sample to much larger groups of distributors, customers, or prospects to help decide on market action Step three. Collect relevant information Collect enough relevant information to make a rational, informed marketing decisions sometimes simply means using a knowledge to decide immediately |
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What is Data? What is secondary data? What are internal and external data? |
• The facts and figures related to the problem o Categories Secondary data are facts and figures that have already been recorded prior to the project at hand. (in books or online) Secondary data are divided into two parts Internal and external data. Depending on whether the data comes from inside or outside the organization needing the research |
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Primary data |
Primary data – or facts and figures that are newly collected for the project. Primary data can be divided into observational data, questionnaire data and other source of data (you can do this by watching people or asking people questions) (data that you have to collect yourself) |
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Secondary data/internal include |
• Internal records o Internal records of the company generally offers the most easily accessible marketing information. (these are the records that are easily accessible o These internal sources of secondary data may be divided into two related parts o Marketing inputs and marketing outcomes Marketing inputs data • Are input data relate to the effort expended to make sales o These range from sales and advertising budgets and expenditures of salespeople call report. o The call report describes a number of sales calls per day who was visited and what was discussed o (basically information that tells you about efforts to make sales ) Marketing outcome data Marketing outcomes data relates to the results of the marketing efforts. o These involves billing records on shipments from the accounting department and o includes sales and repeat sales often broken down by sales representative, industry and geographic region. o In addition, the communication from customers e-mails phone calls and letters can reveal both complaints and what is working well o (,basically information on how successful your efforts to make sales are) |
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Secondary data external What are US Census Bureau? What are the Syndicate panel? market research companies or data service firms Sales data can be scanned at checkout Another source of secondary data are trade Association, universities, and business periodicals |
• Are published data from outside the organization or company it is collected by the US Census Bureau US Census Bureau • Includes demographic information and economic information about citizens of the United States US Census Bureau • The U.S. Census Bureau published a variety of useful reports. The best known in the Census 2010, which is the most recent count of the US population that occurs every 10 years o It contains detailed information on American household such as the number of people per house and their age, sex, race at this in the background income, occupation, and education markers use these data to identify characteristics and trends of ultimate consumers o The Census Bureau also published the economic census, which is conducted every five years. These reports are vital to business firms selling products and services to organizations. o The economic Census contain data on the number and sales of establishment in the United States that produce a product or service based on its geography (state, countries, zip codes, etc.) another source of secondary data are Syndicate panel •A syndicated panel is households and businesses which are paid to record purchases, they record all of the purchases through a diary or electronically, so they have information of a single household for a period of time, • It allows you to answer questions requiring consistent data over time • (example how many times did a customer by our product over time, this allows you to look at a individual or single household or consumer and see how much they bought over time) • Several market research companies pay households and businesses to record all of their purchases using a paper or electronic diary. Such syndicate panel data economically answer questions that require consistent data collection over time, such as how many times did our customer buy products. This year compared to last year? Examples of syndicate panels that provide a standard set of data on a regular basis are Nielsen media research TV ratings and the JD power automotive quality and customer satisfaction survey • Example is on page 153 Another source of secondary data are data service firm • You can go to data service firms Who jobs it is to give you information information on household demographic and lifestyle, product purchase, • TV viewing behavior in responses to coupon and free sample promotion • You can go and buy information from such a service • The advantage is that a single firm can collect, analyze and to relate and present all this information. For customer product firms such as Procter & Gamble sales data from various channels and critical to allocates scarce marketing resource. As a result they use services such as infidels can or Nielsen scan track to collect product sales and coupon/free samples redemptions that have been scanned at the checkout counter of supermarket, drug, convenience and mass merchandising, retail Sales data can be scanned at checkout • Every time you go to buy something and they scan it, someone is keeping records • Trade associations- what they do is collect data about that specific trade • universities(collects data on their students), • businesses periodically (journals) -provide detailed data of value to market research and planners. These data are now global online via the Internet and can be identified and located using search engines such as Google or Bing. The marketing matter box. Provide examples |
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Secondary data external |
message |
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Advantages and disadvantages of secondary data |
Advantages of secondary data • Tremendous time-saving because the data have already been collected and published or exists internally • It is low costs, such as free or inexpensive census report. Disadvantage • Secondary data may be outdated, especially if they are U.S. Census data collected only ever five – 10 years • The definition or categories might not be right for a research project (for example the age groupings all product categories might be wrong for the project. Also, because if data have been collected for another purpose, they may not be specific enough for the project. In such case it might be necessary to collect primary data) |
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Primary data watching people What is Observational data? What is Mechanical methods.? |
• Observing people and asking them questions are two principal ways to collect new primary data for a marketing study Observational data • data obtained by watching, either mechanically or in person how people behave • observational data can be collected by mechanical (including electronic), personal or nueromarketing method Mechanical methods. • National TV ratings, such as those of Nielsen media research are examples of mechanical observational data collected by a people meter. • Is a box that is hooked up to the TV • The device measures what channels and programs is tuned and who was watching. • This is how they calculate the ratings and the share • Share is how much people watch the show and the rating is the percentage of the population • Page 154 Another example of mechanical methods are Closed-circuit cameras. • A store can put in closed-circuit cameras to monitor customers while they shop and see what there patterns are Another example of mechanical methods are Scanners • Scanners at the checkout counter • The scanners record what you buy so they can keep track of how much products are sold • (cards allow the business to know more about the customer |
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Personal methods. |
• Watching consumers in person • One way to do this is called mystery shopper. • Example • You pose as a customer and observed behavior • Company pay mystery shopper to check on the quality and pricing of their products and the integrity of the customer service provided by the employees. • Example watch a consumer in person or recording them or to other observation approach. For example, Procter & Gamble watch women do their laundry, cleaned the floor put on makeup and so on because they comprise 80% of his customers and Gillette records consumer brushing their teeth in their own bathroom to see how they really brush not just how they say they brush. The product results gellet Oral-B Cross action to brush. |
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Neuromarketing Method. |
• To Merge neuroscience and marketing • Lindstorm use brain scanning to analyze the buying process of more than 2000 participant. Lind storm merge neuroscience study of the brain with marketing. |
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Primary data asking people. |
• We can divide this primary data collection task into o Idea generation method and Idea evaluation method. Although they sometime overlap and each has a number of special techniques. o Each survey methods results in valuable questionnaire data, Questionnaire data- which are facts and figures obtained by asking people about their attitudes awareness intentions and behavior Questionnaires- which are facts and figures/data obtained by asking people about their attitudes awareness intentions and behavior |
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Qualitative method-usually idea generation method – coming up with ideas Individual interview is what? depth interviewing Focus groups |
• you want to come up with an idea for your product, you want to ask people what they don’t like about your product and if they have any ideas for improvement • it’s beyond yes or no answers. You’re trying to let the consumer open up and to see how they really feel • part of the problem is lack of reliability you ask too much open ended question In the past. The most common way of collecting questionnaire data to generate ideas was through an individual interview Individual interview • Involves a single researcher asking questions of asking questions of one Respondent • Or single researcher – one respondent o Advantage o Being able to probe for additional ideas using follow-up questions to a respondent initial answer (how do you like this product, you don’t like this product, how can we improve this product? (follow-up question what don’t you like about this product) o Disadvantage o it is very expensive depth interviewing • this is a type of individual interview. • Researchers ask lengthy, free-flowing kind of questions to probe for underlining ideas and feelings of the respondent. • Basically you go in depth with the person Example page 156 Focus groups • Informal session about six – 10 past, present or prospective customers in which a discussion leader or moderator ask their opinion about the firm and its competitors products, how they use these products and special needs. They have that these products don’t address o Often video recorded and conducted in special interviewing rooms with a one-way mirror, these groups enable marketing research, and manages to hear and watch consumes reaction. o The informality and per support and effective focus groups help undercover ideas that are often difficult to obtain with individual interviewing (basically you get to see the interactions of the focus groups on how they react about your product) |
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Idea evaluation method – testing an idea • In idea evaluation the marketing Personal interview surveys mail, telephone, fax, an online (e-mail or Internet) surveys |
• conventional questionnaires using personal mail, telephone, fax, an online (e-mail or Internet) surveys of the large sample of past, present or prospective consumer.’ Idea evaluation method – testing an idea • In idea evaluation the marketing research tries to test ideas discovered early to help the marketing manager recommend marketing action. Types entrails Personal interview surveys. • Personal interview surveys enabled the interviewer to be flexible • You survey people by asking probing questions or getting reactions to visual materials, (coke vs pepsi) • Disadvantage • Very costly. Mail survey o Easy to conduct o You come up way a questionnaire and mail it out to everyone o Inexpensive. o Disadvantage o Are usually biased because those likely to respond have had especially positive or negative experience with the product or brand. o Basically, you don’t have enough people to be representative o Low response rate- many people would not answer it Telephone interview • Allows for Flexible • Can be very efficient if you use the (CATI on the interview even with the efficiency of the computer assisted telephone interviewing (CATI) • unhappy respondent may hang up • also Bias Online survey • can be E-mail or Internet. surveys E-mail surveys is a survey that is e-mail to consumers When they open the e-mail. Consumers can either see a survey or click on a link to access the survey from a website Internet surveys Pop-up surveys • Marketers can also ask consumers to complete a pop-up survey in a separate window when they access the organization’s website. Many organizations use this method to have consumers assess their product and service or evaluation the design and usability of their website • A big problem with this is that many consumers may have pop-up blockers Advantages for both o Cost is relatively minimal. o The turnaround time from data collection report presentation is much quicker than the traditional method discussed earlier. However, online surveys have serious drawbacks which are Disadvantage for both • Spam • Internet pop-ups. • Pop-up blockers Drawbacks disadvantage • some consumer may view e-mail survey as junk or spam and may either choose to not receive them if they have a spam blocker or purposely or indirectly delete them, on open.. Four Internet surveys. Some consumer have pop-up blockers that prohibits a browser from opening a separate window that contains the survey. Thus, they may not be able to participate in the research. For both e-mail and Internet surveys consumers can complete the survey’s multiple times creating a significant bias in the result Advantages of e-mail and Internet • They are very cheap. They have fast turnarounds • you can take the surveys and turn it into a chart so it can be turned around very quickly this event is for pop-up surveys and mall intercepts-personal interviews of consumers visiting shopping centers advantage • these face-to-face interviews reduce cost compared to home visits • flexible-providing the flexibility to show respondents visual cue such as ads or actual products, samples o Disadvantage o Bias because the people interviewed may not be representative of the consumer targeted |
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Question formats page 158 Open ended questions Scale question Question five sematic differential scale Question six. Likert scale Question 9 Demographic |
Question one. Open ended questions • This allows respondent to express opinions, ideas, or behaviors in consumers own words without being forced to choose among alternatives that have been predetermined by a marketing researcher. o This information is useful to marketers because it captures the voice of respondents which is useful in understanding consumer behavior identifying products benefits or developing advertising messages o (you let them answer in their own words.) Question two close ended or fixed alternative questions • Requires respondent to select one or more response options from a set of predetermined choices • Example of dichotomous questions, the simplest form of a fixed alternative questions that allow only a yes or no response . Scale question • A fixed alternative questions with three or more choices Question five sematic differential scale • A five-point scale in which the opposite ends have one or two word additives that have opposite meeting ( o For example depending on the respondent opinion regarding the cleanliness of Wendy’s restaurant, he or she would check the left-hand space on the scale, the right-hand space or one of the three other intervening points. o (very important, somewhat important, important, unimportant, somewhat unimportant, very unimportant) Question six. Likert scale • This is a Five-point scale extent to which the respondents agrees or disagrees with a statement Question 9 Demographic • The demographic question Provide information on personal or household characteristics • This can be used to segment the market |
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Problems in wording questions |
• Leading question -like this product right • ambiguously question- a question that has no meaning or the consumer may not understand what you’re saying • • unanswerablequestion • 2 question in one – do you like this product and would you use it every day • Nonexhaustive-you give a list of possibilities but it does not cover every possibility( when would you most likely be able to use this product. Monday, Tuesday and Wednesday. But you left out the other days • non-mutual exclusive -you have two possibilities enabled can occur at the same time ( which statement. You may think it may be true but the product. It makes you feel good or taste good it does both example (leading question- how brutal is the beating that the defendant gave you, you like this product right?, how much did you like this product? (ambiguous Marketing research questions must be worded precisely so that the all respondent interpret the same question similarly. For example, in a question asking wheather you eat at fast food restaurants regularly, the word regularly is ambiguous. Two people might answer yes to the question, but one might mean once a day while the other means once or twice a month. However, each of these interpretation suggests that dramatically different marketing actions be directed to those two prospective consumers. |
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Primary data. Other sources |
message |
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What is an Experiment? What is a Independent variable? What is a Dependent variable? |
Experiment • Getting data by Manipulating factors under tightly controlled conditions to test for cause and effect Independent variable • (the interests is in weather changing one of the independent variables (the cause) will change the behavior of the dependent variable that is studied (the results or effect) Dependent variable • Is what you observe that is the effect or result research tasks • The researcher task is to identify the marketing variables of interest on the dependent variable. When the effects of outside factors might hide it Ex • You like to have the same consumer and find out what they might do if the market factor was one-way and the market factor was another way • If you’re testing the color of your product you would like to know if the consumer is more likely to buy if it is blue or red. • You would like to have random selected consumers and you would give one consumer read and one consumer who and then you observe them and control all of the environmental factors and the dependent variable would be the outcome or the effect that happens • The problem is outside factors can distort this |
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What is a Market drivers? (what drives sales the input) |
• The modern experiments the independent variables of interest is sometimes called the market drivers (often one of the 4ps) are often one or more of the marketing mix elements, such as product features, price, or promotion (like advertising message or coupons) these are the things that drive sales. |
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In marketing The ideal dependent variable are what? |
• usually is a change in the purchase behavior or change in sales of individual, households, organization o for example for companies often use test markets, which offer a product for sale in a small geographic area to help evaluate potential marketing actions. In 1988 Walmart open three experimental stand alone supercenters to gaug consumers of substance before deciding to open others. Today, Walmart operates over 3000 supercenters around the world a potential difficulty with experiments is that other factors (such as, actions of competitors) can distort the results of an experiment and affect the dependent variable, such as sales. It researches task is to identify the effects of the marketing variables of interest on the dependent variables. When the affect of outside factors in an experiment might hide it. |
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The key elements of an experiment is what? |
The first is a randomization • (you want to test a medication you have to population was exposed to the medication and the other gets a placebo. We have random people exposed to this medication. You want to make sure that they are randomly selected) • you can’t pick a specific group you have to randomly select people from different groups 2n you need a control group • you always need to compare with or without the medication • ex 2 • the classical studies on shelf space were conducted by trying different amount of shelf space 3 t, 6ft. 9 ft • a product was randomly assigned to the three conditions the product was allocated throughout 50 stores randomly • and 50 stores. It was allocated 3 feet, 6 feet and 9 feet as well • with testing for shelf space and everything has to be controlled manipulation • you give one group medication and you give the other group of placebo • with the shelf space example you are manipulated the shelf space • and everything else need to be held constant in that you only change shall space how is this conducted Test market – • they offer a product for sale on a limited basis in a defined area to test • ex I’ve been making blue colored candy and I want to see if red colored candy works. So I limit the supply of blue color candy • then I do the experiment I randomly assigned color candy to different stores Experiments • are good because they -tests actual behavior • and they test how consumer react to change • (if they buy more if the color changes) Problem with expermients • -outside factors can distort • (your testing red candy against blue candy but now your competitors sent out more red candy so you experiment would not work properly ) Panels and experiments Two special ways. The observations and questionnaires or sometimes use our panels and experiments Marketing research often want to know if consumers change their behavior over time. So they take successive measurements of the same people |
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a Panel is what? |
• a panel is a sample of consumers or stores from which researchers take a series of measurements (this is another way to test consumer behavior over time) • for example o the NPD group collects data about consumers purchases such as apparel, food and electronics from its online panel, which consists of nearly 2,000,000 individuals worldwide. So a firm like General Mills can count the frequencies of consumer purchases to measure switching behaviors for one brand of its breakfast cereal (Wheaties) to another (Cheerios) or to a competitor brand (Kellogg’s special K) Advantages – is that it measures switching brands behavior over time Disadvantage – marketing research firms needs to recruit new members continually replace those who drop out and also those new recruiters must matched the characteristics of those they replaced to keep the panel representative of the marketplace |
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Information technology data mining |
• Information technology involves operating computer network that can store and process data. (. Today, information technology can extract information from a large database, or data sites such as those containing retail sales collected through barcode scanners at checkout counters and household products) Data mining. • the extraction of hidden predictive information from large database to find statistical links between consumer purchase patterns and marketing actions. • ex Google does this (some of these are common sense – since many consumers by peanut butter and grape jelly together, why not run a joint promotion between Skippy peanut butter and Walters grape jelly? But would you have expected that men buying diapers in the evening sometimes by a sixpack of beer as well? Supermarkets discovered this when they mine checked out data from scanners. So they placed in diapers and beer near each other, then place potato chips between them and increase sales on all three items. ) (data mining is learning unexpected things from data) |
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Advantages/disadvantages of primary data |
Advantages of primary data\ • primary data have the advantages of being more flexible and more specific to the problem being studied. (because you get to gather the data that you need • they tend to be more Timely and up-to-date Disadvantage of primary data • Gathering primary data is more Costly. • And is Time-consuming |
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Step 4 . Develop findings page 163-164 Step five Take market action |
There is two parts • Analyzed the data • Present findings o There’s different graphing tools to visualize the data o And then you come up with findings and present them Step five Take market action Effective marketing research doesn’t stop with findings and recommendations. Someone has to identify the marketing action, put them into effect, and monitor how do decision turns out After you present the findings you have to make • Market action recommendation page 165 • Then you have to make the Implementation action recommendation page 166 • Than you have to Evaluate the results |
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what is sales forcasting • Three main sales forecasting techniques that are often use are |
sales forecasting Refers to the total sales of a product that a firm expects to sell during a specific time period under specific environmental conditions and its own marketing efforts • It assumes preferences remain constants and competitors don’t change price (for example Betty Crocker might develop a sales forecast of 4 million cases of cake mix for US consumers in 2013, assuming consumers desert preference, remain constant and competitors don’t change. Prices judgment of the decision-maker • Basically, the CEOs or managers make the decision or prediction of what the sales forecast is going to be • (Probably 99% of all sales forecasts are simply the judgment of the person who must act on the results of the forecast – the individual decision-maker) b. A direct forecast- • involves estimating the value to be forecast without any intervening steps (example appeared daily – how many quarts of milk should I buy? How much money should I get out of the ATM b. Lost horse forecasts • Involve stating with the last known value of the item being forecast, listing the factors that should affect the forecast, assessing whether they have a positive or negative impact, and making a final forecast. (The technique gets its name from how you would find a lost horse. – Go to where it was last seen, put yourself its use, consider these factors that could affect where you might go (to the pond. If you’re thirsty, the hayfield if you’re hungry, and so on) and go there) Example, new balance recently introduced its minimus, shoes that are 50% lighter than other light weight shoes. It’s unique features are designed to make writing easier and limit foot injuries. Suppose a new balance marketing manager in early 2013 needs to make a sales forecast through 2015. She would take the known value of 2012. Sales and list positive factors (good appearance of its high-tech design, great publicity) and a negative factors (the economic recession, competition from established name brands) to arrive at the final series of sales forecasting) Assess whether factors have positive or negative impact • You start with last known sales then you look at positive or negative factors and see whether they will increase or decrease sales • And then you make the final forecasts based on those factors Jury of executive opinion • You bring together key executives from various areas (business or finance or marketing)and use them as a panel to make a forecast or prediction together Survey of knowledgeable groups If you wonder what your firm sales will be next year. Ask people who are likely to know something about future sales. Two common groups that are surveyed to develop sales forecast are prospective buyers and firms sales force Survey of buyers intention forecast • Involves asking prospective customers. If they are likely to buy the product during some future time period • This works better if you have few buyers For industrial products with few prospective buyers This can be effective. Ex There are only a few hundred customers in the entire world for bowling large airplanes, so Boeing surveys them to develop its sales forecast and production schedule A sales force survey forecast involves • Asking the firm sales people to estimate the sales during coming period. Because these people are in contact with customers and are likely to know what customers like and dislike, • there is a logic to this approach. • However, salespeople can be unreliable forecasters – painting too rosy a picture if they are enthusiastic about the new product, or to Grim a forecast if this sales quota and future compensation are based on it (basically they have reason to lie because they want to make themself look better) Outside experts survey (a part of judgment of the decision-maker) • As someone who knows about the industry to forecasts. For example, trade associations often do this |
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Quantitative methods Test marketing Trend extrapolation |
Quantitative methods Before you introduce a new product nationally a company will introduce a test market Test marketing • A test market involves Introduce new products in a limited number of test cities. • These are supposedly representative as US as a whole • (. Portland, Oregon, California, did you find out how your product is done , you could use those findings as a prediction of how your product will do) Make projection Statistical method The best-known statistical method of forecasting is trend extrapolation trend extrapolation • involves extending a pattern observed in the past data into the future. (assuming there is no change in the trend, such as recession or market falls apart) • When the pattern described with a straight line, it is linear trend extrapolation Linear trend extrapolation. • This is when you try an Describe data using a line. (basically, you look at sales in the pass and try to predict how they will be in the future using a line) • Multiple regression-when you have multiple inputs and what you want to do is find predictors of variables (basically, you look at what variables in the past increase sales. Maybe time, season, holidays discounts color of the product, price,location) Example, suppose that in early 2000 you were a sales forecaster for Xerox Corporation and had actual sales data running from 1988 to 1999. Using linear trend extrapolation you draw a line to fit the past sales data and project it into the future to give the forecast value shown from 2000 to 2012 If 2012. You want to compare your forecast with actual results. You are in for a surprise – illustrating the strength and weakness of trend extrapolation. Trend extrapolation assumes that the underlying relationship in the past will continue in the future, which is the basis of the method key strength – simplicity. If this assumption proves correct, you have an accurate forecasts. However it does prove wrong the forecast is likely to be wrong. In this case forecast from 2000 from 2011 were too high, largely because of fierce competition in the photocopying industry. The spike in 2010 sales revenue is mainly due to new accusation |
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Timeseries analysis |
• Trends – long-term.( it is something like trend extrapolation look at sales over time and you extrapolate the variables from it) • cyclical variation.-(long term) (sales will go up and down during certain times in a year • Seasonal variation.-sales will vary throughout the season will go up and down during the season • Some randomness- sales will randomly go up and down some people will come in some people won’t |
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