2020

2021

Instr. Revenlie G. Galapin

COLLEGE OF BUSINESS & MANAGEMENT |

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Objectives:

 Identify the elements that must be stated in a research design;

 Compare and contrast exploratory, descriptive and causal design;
 Describe each of the different types of exploratory research;
 Distinguish between cross sectional and longitudinal study;
 Detail the steps in market testing; and
 Differentiate market testing methods based on the type of the market
namely business to consumer (B2C) or business to business (B2B).

THE NATURE OF RESEARCH DESIGN

A research design is the detailed blueprint used to direct a research study
toward its objectives. The process of designing a research study involves many
interrelated decisions. The major component of research design is to choose which
type of marketing research will be best suited for desired objective.

A marketing research design specifies the procedure for conducting and

controlling the marketing research project. The choice of particular design would
follow from the problem. At such there is no single best design. The following
are the elements that need to be explicitly stated in any marketing study about
collection and analysis of data:

* Type of data - What type of information is to be collected in line with

marketing research objectives. Will it involve exploratory, descriptive or casual
research?

* Source of data- What are the possible sources of data such as primary, secondary
or commercial for obtain the needed information?

*Form of data - This refers to specification of how data are to be collected.

Data could be collected by observation method or communication method
through various forms of data collection instruments

*Nature of data selection and analysis plan - This refers to whether data
are to be collected at single point or different points of time. The first is
called cross-sectional while the latter is referred as longitudinal. Moreover, whether
the study will involve carrying out any sample selection and if there is how the
sample will be collected. It must state how the analysis will be carried out.

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The research design should be constructed needs creativity and scientific

expertise. A design to be efficient must be simple, easy to administer and flexible.
There is no such thing as a perfect research design for a marketing research study.
The standard for evaluation should be based on practicality, completeness on
major issues and efficiency in terms of time and money required.

EXPLORATORY RESEARCH DESIGNS

Exploratory research is used in cases where the marketer has little or no

understanding about the rese arch problem due to lack of proper information.
The research methods are highly flexible, unstructured, and qualitative, for the
researcher begins without firm preconceptions as to what will be found. The
research may use books, syndicated research, case studies, focus groups, expert
interviews and survey techniques to conduct exploratory research.

The absence of structure permits a thorough pursuit of interesting ideas and

clues about the problem situation. For example, a marketer has heard about social
media marketing techniques which are employed by their competitors with great
success but he is not familiar with using these for his products/services.

He needs to use exploratory market research to gain/discover insights about

this situation. Thus when the goal of the marketer is to precisely formulate problems,
clear concepts, gain insights, eliminate impractical ideas and form hypotheses then
exploratory research is used.

The core goal of exploratory research is to equip marketers with enough

information to facilitate marketers plan a format research design correctly. For
example by conducting exploratory research the marketer can find out that
the competition is using popular social media channels like Facebook, Twitter,
LinkedIn and YouTube to reach target consumers effectively and successfully
engaging customers with the brand directly. Now with this information he can
plan a formal research design to test his hypothesis.

The exploratory approach attempts to discover general information about a

topic that is not well understood by the marketer. For instance, a marketer has
heard news reports about a new Internet technology that is helping competitors
but the marketer is not familiar with the technology and needs to do research to
learn more. When gaining insight (i.e., discovery) on an issue is the primary goal,
exploratory research is used.

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When it comes to online surveys, the most common example of exploratory

research takes place in the form of open-ended questions. Think of the exploratory
questions in your survey as expanding your understanding of the people you are
surveying. Text responses may not be statistically measureable, but they will give
you richer quality information that can lead to the discovery of new initiatives or
problems that should be addressed.

Methods of Exploratory Research

Exploratory research is the researcher's tool to understand an issue more

thoroughly, before attempting to quantify mass responses into statistically inferable
data. Used properly, exploratory research will provide rich quality information
that will help identify the main issues that should be addressed in our surveys
and significantly reduce a research project's level of bias. Here are the different
methods researchers can use in exploratory research:

Literature Search
It is almost impossible to come up with a research topic that hasn't been
conducted before. Beyond this, when it comes to designing your survey and
research plan, it is usually not best to reinvent the wheel. All research strategies
can benefit from reviewing similar studies taken and learning from their results.
Consider your organization's previous research as free direction on how you
should design your present research goals. For example, if you are running your
second annual customer feedback survey, look at the questions that were provided
the most useful information and reuse them in your new survey.

External secondary research can also help you perfect your research design.
Beyond reviewing other organizations research projects, social media like blogs
and forums can give you a better sense of the issues, opinions and behaviors that
go along with your research's subject matter.

In-depth Interviews/Expert surveys

Expert surveys allow researchers to gain information from specialists in a field

that they are less qualified or knowledgeable in. For example, if a researcher was
tasked with surveying the public's stance and awareness on environmental issues, he
could create a preliminary expert survey for a selected group of environmental
authorities. He would ask broad open-ended questions that are designed to receive
large amounts of content, providing the freedom for the experts to demonstrate
their knowledge. With their input, he would be able to create a survey covering all
sides of the issues.

It’s important to start with a good literature search, but at some point it is desirable to

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talk to persons who are well informed in the area being investigated. These people
could be professionals or persons outside the organization. Here, the researcher
doesn't need questionnaire. The approach adopted should be highly unstructured,
so that the participant can give divergent views to tap the knowledge and
experience of individuals with information strongly related to the situation or
opportunity at hand. Anybody with related information is a potential candidate for a
depth interview, such as existing clients, members of the target market, executives
and supervisors of the client organization, sales representatives, suppliers, retailers,
and so on. For example, a children's book publisher obtained useful information
regarding a sales decline by speaking with librarians and school teachers who
revealed that increasing numbers of people were using library facilities and possibly
buying fewer books for their children.

Focus Groups
A focus group most commonly contains 8 to 12 people fitting the description
of the target sample group and asks them specific questions on the issues and
Subjects being researched. Sometimes, focus groups will also host interactive
exercises during the session and request feedback on what was given. This depends
on what is being researched, like a food sampling for a fast food chain or maybe a
presentation of potential advertisements for an anti-smoking campaign.

Focus groups continue to be one of the most common uses of exploratory

research, providing researchers with a great foundation on where people stand
on an issue. The open and natural discussion format of focus groups allows for a
wider variety of perspectives in a shorter period of time.

The discussion is directed by a moderator who is in the room with the focus
group participants. While choosing these individuals, care must be taken to see
that they should have a common background and have comparable experiences
in buying. This is certainly needed since there should not be a conflict among the
group members on the common problems that are being talked about. Throughout
the discussion, future buying attitudes, present buying opinion and other related
information are collected.

Here are several ways of conducting focus group discussion:

1. Two-way focus group- Here one focus group watches another focus
group and discusses the observed interactions and conclusion.

2. Dual moderator focus group -Here one moderator ensures the session
progresses smoothly, while another ensures that all the topics are covered.

3. Dueling moderator focus group -Here two moderators deliberately take

opposite sides on the issue under discussion.

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4. Respondent moderator focus group - Here one and only one of the
respondents is asked to act as the moderator temporarily.

5. Client participant moderator focus groups- Here one or more client

representatives participate in the discussion, either covertly or overtly.

6. Mini focus groups - Here groups are composed of four or five members
rather than 6 to 12.

7. Teleconference focus groups-Here the telephone network is used.

8. Internet-based focus groups- Such groups in which multiple respondents

can meet electronically via chat rooms, instant messaging, Web cameras, and the
like, offer tremendous speed and cost benefits, particularly when
using an established online panel of respondents.

The moderator in the focus group plays the single most important and most
difficult role in the process. For one thing, the moderator typically translates the
study objectives into a guide-book. The moderator's guidebook lists the general
(and specific) issues to be addressed during the session, placing them in the general
order in which the topics should arise. In general, a funnel approach is used; with
broad general topics first and then increasing focus on the specific issues to be
studied. A moderator must understand the background of the problem and what
the client needs to learn from the research process. Without this information, it's
impossible to develop the guidebook and conduct a focus group effectively.

Case Analyses/Pilot Studies

Researchers can understand a lot in regards to a problem by studying carefully
selected examples or cases of the phenomenon. Case studies are suitable to
undertake exploratory research. A researcher must examine carefully the previously
published case studies with regard to variables like price, advertisement, changes
in the trend, and so on.

An increasingly popular form of case analysis is ethnography. Ethnography

is useful as an exploratory research tool. This tool, which has been adapted
from anthropology, often involves prolonged observation of consumers during
the course of their ordinary daily lives. It can allow insights based on real
behavior, not just on what people say. Microsoft has used teams of researchers
to observe and videotape computer users at home and at work. Not long ago,
the researchers observed 50 families in seven countries as they used the next
version of the company's operating system. Through this process, they found over
1, O00 problems, about 800 of which hadn't been identified by company testers.
Interpreting the rich, qualitative data produced by this tool is very difficult to do.

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Remaining objective about the results (such as not allowing preconceived ideas
and expectations to influence the interpretation) may be even harder to do.

Open-Ended Questions
All open-ended questions in your survey are exploratory in nature. The mere
fact that companies allow respondents to provide any feedback they please, gives
them the opportunity to gain insights on topics they haven't previously thought of.
Adding a few open-ended questions in surveys with large amounts of respondents
De a bit difficult and time-consuming to search through, but it can point to
significant trends and opinions for more research.

For instance, a news website may ask its visitors the open-ended question,
What would you like to see improved most on our website? After analyzing the
responses, it identifies the top three discussed areas which are navigation, quality
of information and visual displays. It can then use these three topics as its main
focus or research objectives for a new survey that will look to statistically quantify
people's issues with the website with closed-ended questions.

Observational Research
Observational research can come in a different shapes and sizes. In general, there
are two categories: strict observation with no interaction with the subject
at all, or observation with some level of intervention/interaction between the
researcher and subject. There are many examples of observational research. Here
are a few:

1. Usability testing - Watching a subject use a prototype device 1s one

form of observational research. Again, this can be done with or without
intervention.

2. Eye tracking - Let's say a company has come up with a website. It might ask
people to navigate his website, and it will use eye tracking technology to
create a "heat map of where their eyes go on the website. This information
can be used to re-design and optimize the page elements.

3. Contextual inquiry- This is a hybrid form of research that involves

interviewing subjects as the researcher watches them work or play in their
natural environment.

4. In-home observation -Watching a family member go through the morning

routine in their home might turn up useful insights into problematic points
that need solving.

5. In-store observation - Simply watching shoppers in action is another

form of observational research. What do shoppers notice? How do they go
through a store? and some other questions.

6. Mystery shoppers - This involves hiring a regular person to go into a store

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and pretends to be an everyday shopper. They will then report on aspects

of their experience, such as store cleanliness, politeness of staff, and others.
In the case, the mystery shopper is the researcher and the store is the subject
being observed.

The greatest benefit of this technique is that researchers can measure actual
behavior, as opposed to user-reported behavior. It's a big deal, because people will
often report one thing on a survey, but behaves in another way when the rubber
hits the road. Observational research is a direct reflection of "real life," so these
insights are often very reliable and useful.

DESCRIPTIVE RESEARCH DESIGNS

Descriptive research embraces a large proportion of marketing research.
Unlike exploratory research, descriptive research is preplanned and structured in
design so the information collected can be statistically inferred on a population.

The purpose is to provide an exact picture of some aspect of the market

environment. Descriptive research is used to find accurate answers of questions like:

1. Who are users of my products/ services?

2. How they are using my products/ services?
3. What proportion of population uses my products/ services?
4. What is the future demand for my products/ services?
5. Who are all my competitors?

Thus, descriptive research is used to explain, monitor and test hypotheses

created by marketers to help them find accurate answers. Due to this reason
descriptive research is rigid, well structure and well planned and uses quantitative
techniques like questionnaires, structured interviews, data analysis and other
instruments.

For instance, the marketer from previous case may use descriptive research to
find out if he also starts using social media marketing techniques for promoting
his products and services then:

1. How many of his current customers will be attracted to them?

2. How many new customers can be engaged using social media?
3. How much time, effort and money will be involved in this activity?
4. What will be the predicted return on investment (ROI)?
5. Will he be able to attract competitor's customers?

The main idea behind using this type of research is to better define an opinion,
attitude, or behavior held by a group of people on a given subject. Consider
your everyday multiple choice questions. Since there are predefined categories

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a respondent must choose from, it is considered descriptive research. These

questions will not give the unique insights on the issues like exploratory research
would. Instead, grouping the responses into predetermined choices will provide
statistically inferable data. This allows you to measure the significance of your
results on the overall population you are studying, as well as the changes of your
respondent's opinions, attitudes, and behaviors over time.

Coming from a market research perspective, descriptive research can be an

important tool in understanding consumer behavior. In order to conduct this type
of research in regard to a market, one must determine the purpose of the research,
form a question stating what the researcher wants to know and form a hypothesis
as to what the answer might be. Once the purpose, a question and a hypothesis are
put together, they can be used to create a market research study.

For example, a purpose, a question and a hypothesis are created for two
descriptive research situations below:

Situation One
Purpose: What should be the target market segments

Question: Who buys our product?

Hypothesis: Customers who buy our product are between the ages of 28 and 30.

Question: Who buys the product from our competition

Hypothesis: Those who buy from our competition are 30 and over.

Situation Two
Purpose: How should a new product be distributed?

Question: Where do consumers purchase similar products right now

Hypothesis: Consumers buy products similar to our new product at large discount
chain stores.

TYPES OF DESCRIPTIVE STUDIES

Further classifications of descriptive research would consist of following five
categories:

Cross-sectional study
Cross-sectional research is used to examine one variable in different groups
that are similar in all other characteristics. It is based on observations that take place
in different groups at one time. This means there is n0 experimental procedure, so no
variables are manipulated by the researcher. Instead of performing an
experiment, a researcher would simply record the information that he observes

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in the groups he is examining. Because of this, a cross-sectional research study

can be used to describe the characteristics that exist in a group, but it cannot be
used to determine any relationship that may exist. This method is used to gather
information only. The information may then be used to develop other methods to
study the relationship that is observed.

All too often, decision makers will make changes based on an intuition. Even if
it's an educated guess based on observable trends, the only way to make the right
choice is to act on real data from actual audience.

For busy researchers looking to provide insight on a smaller scope, cross-

sectional studies are a more realistic and, often, more effective way to get the data
they need to make informed decisions.

While the exact benefits vary by project, there are three main reasons why
researchers may choose to run a cross-sectional study. They are:

1. Faster - Because a cross-sectional study only happens once, a researcher

will be able to analyze and act on his data immediately.

2. Less expensive -Again, the strength of cross-sectional studies is that they

happen once. A researcher won't need to go through the time and expense
of administering multiple surveys over a long period of time. With this
method, it's one and done.

3. Easier to manage- ls the researcher noticing a theme yet? One survey is

much easier to manage than multiple, from design to collecting responses
to analyzing data to acting on the results.

SAMPLE OF CROSS-SECTIONAL STUDY

A mobile game company knows that the most valuable customers are those who regularly
use their game for at least two months.

The marketing director for this company wants to know which age group is the
most likely to download the game and, most importantly, to keep playing.

To find out, she created a survey to poll 300 individuals from three categories: 15-24
years old, 25-34, and 35-44. All individuals are current players.

The questionnaire collected data on how long a player had been using the game
and how often they played.

The information collected gave preliminary data suggesting that while more 15-24
year olds were downloading the game, 25-34 year olds were actually the most likely to
still be playing after two months.

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The marketing director sees this and acts on it, making short-term readjustments to
their existing promotions to appeal to the 25-34 age bracket.

To explore the findings more deeply, the team may put together two new surveys:
one for 15-24 year olds to see why the game is not keeping their attention, and one for
the 25-34 year olds to explore how best to get more people to download the game in
the first place.

This example illustrates both the strength of cross-sectional studies in collecting

data that can immediately influence business decisions, and shows how researchers
can use one study's findings to inform future surveys that will explore causation more
deeply.

Source: https://www.surveygizmo.com/survey-blog/how-to-use-cross-sectional-studies-to-
validate-
your-marketing-assumptions/

While there are lots of reasons to go cross-sectional, there are reasons why
researchers choose longitudinal studies. There are data types and trends that
are easier to track and analyze over the course of many weeks or months, and a
researcher simply won't get that kind of insight with a one-off survey.

These are the limitations of cross-sectional studies:

1. Observational - With a cross-sectional study, a researcher is only looking at

d8roup once. He is not able to influence survey-taker behavior or monitor
changes in behavior over time.

2. One time only-Sometimes, strength can be a weakness. Because a researcher is

only polling his audience once, he will not be able to track changes over
time.

3. Correlation, not causation - Correlation does not imply causation. In a cross-

sectional study, it may be easy to spot answers that correlate with one another, but
a researcher will not be able to precisely find out why they appear to g0
together.

Longitudinal study
A longitudinal study is observational, meaning that there is no interference
with the subjects, or respondents (if you happen to be surveying). What makes
a longitudinal study distinctive is the timeline. Instead of a researcher collecting
data from varying subjects in order to study the same variables, the same subjects
are observed in multiple times, and often over the course of many years.

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What is noteworthy about longitudinal research is that data is gathered from

the same individuals at a minimum of two points in time. First, data is collected
from individuals to establish baseline information. Then, data is gathered from
those similar individuals at least one more time so that some type of comparison
can be made.

Most information collected over time involves data collection points over
months, years and/or decades; it is important that data analysis involve comparison
of data between or among data collection points or periods to most exactly gauge
change over time as well as the effectiveness of an intervention or strategy.

There are three distinct kinds of longitudinal studies: panel, cohort, and
retrospective.

1. Panel - A panel usually involves a somewhat random sample of subjects.

2. Cohort - A cohort observes subjects in a similar group based on region,
age, or common experiences
3. Retrospective study - A retrospective study involves historical data, often
times in comparison to updated data. This is a type of longitudinal research
that involves a look into the past using historical documents, including
medical records, employment records, or documentation recording a
continuous quality management initiative.

An applicable example might be a study on the benefits of jogging, where

multiple measurements are taken; resting heart rate, body mass index, blood
pressure, all across groups of varying levels of exercise. Researchers aren't collecting
data from a single subject over several years to learn about the effects of jogging,
but from many subjects just once. This is often referred to as a snapshot.

The key advantage to longitudinal studies is the ability to show the patterns of
a variable sooner or later. This is one powerful way in which to learn about
cause-and-effect relationships. Depending on the scope of the study, longitudinal
observation can also help to discover "sleeper effects" or connections between
different events over a long period of time; events that might otherwise not be
linked.

There are, of course, drawbacks to longitudinal studies, panel attrition being

one of them. If you are dependent on the same group of 2,000 subjects for a study
that takes place once every year, for twenty years, obviously some of those subjects
will no longer be able to participate, either due to death, refusal, or even changes
in contact information and address. That cuts down on useable data a researcher
can draw conclusions from.

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Another weakness is that while longitudinal data is being collected at

multiple points, those observation periods are pre-determined and cannot take
into description whatever has happened in between those touch points. A third
disadvantage is the idea of panel conditioning, where over time, respondents
can often unknowingly change their qualitative responses to better fit what they
consider to be the observer's intended goal. The process of the study itself has
changed how the subject or respondent views the questions.

The richness of data gathered over months and years cannot be undervalued;
the breadth and depth of information resulting from longitudinal research is
unparalleled. It can be expensive, but those costs can be contained with careful
attention to the design of process. But, there is no better way to document change
in attitudes, behavior, perception, employment, mobility and retention. In most
cases, it is the only way.

CAUSAL RESEARCH DESIGNS

In this form of research the marketer tries to determine if the manipulation of

one variable, called the independent variable, affects another variable, called the
dependent variable. In essence, the marketer is conducting an experiment. In order
to be effective the design of causal research is highly structured and controlled so
that other factors do not affect those being studied.

Marketers use this approach primarily for purposes of prediction and to

test hypotheses, though it can also be used to a lesser extent for discovery and
explanatory purposes. In marketing, causal research is used for many types of
each including testing marketing scenarios, such as what might happen
to product sales if changes are made to a product's design or it advertising is
changed. If causal research is performed well marketers may be able to use results
Tor forecasting what might happen if the changes are made.

When it is necessary to show that one variable causes or determines the values
of other variables, a causal research approach must be used. Descriptive research is
not sufficient, for all it can show is that two variables are related or associated. Of
course, evidence of a relationship or an association is useful; otherwise, researchers
would have no basis for even inferring that causality might be present. In order to
go beyond this inference researcher must have reasonable proof that one variable
preceded the other and that there were no other causal factors that could have
accounted for the relationship.

Causal research is used by marketers to find cause and effect relationship of

variables. It is also sometimes referred as "If.. Then..." method. In this type of
research, the marketer tries to understand the effects of manipulating independent

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variable on other dependent variable.

Causal research uses field and laboratory experimentation techniques to

achieve its goals. This research is used by marketers mainly to predict and test
hypotheses. Here are some test cases where causal research can be used:
1. What will happen to sale of my product if I change the packaging of the
product?
2. What will happen to sale of my product if I change the design of the
product?
3. What will happen to sale of my product if I change the advertising?

Like descriptive research, causal research is quantitative in nature as well

as preplanned and structured in design. For this reason, it is also considered
conclusive research. Causal research differs in its attempt to explain the cause and
effect relationship between variables. This is opposed to the observational style
descriptive research, because it attempts to decipher whether a relationship
is causal through experimentation. In the end, causal research will have two
objectives:
1. To understand which variables are the cause and which variables are the effect

2. To determine the nature of the relationship between the causal variables

and the effect to be predicted.

For example, a cereal brand owner wants to learn if they will receive more
sales with their new cereal box design. Instead of conducting descriptive research
by asking people whether they would be more likely to buy their cereal in its new
box, they would set up an experiment in two separate stores. One will sell the
cereal in only its original box and the other with the new box. Taking care to avoid
any outside sources of bias, they would then measure the difference between sales
based on the cereal packaging. Did the new packaging have any effect on the
cereal sales? What was that effect?

Causal research falls under the category of conclusive research, because of

its attempt to reveal a cause and effect relationship between two variables. Like
descriptive research, this form of research attempts to prove an idea put forward
by an individual or organization. However, it significantly differs on both its methods
and its purpose. Where descriptive research is broad in scope, attempting to better
define any opinion, attitude, or behavior held by a particular group, causal
research will have only two objectives:

1. Understanding which variables are the cause, and which variables are the
effect. For example, let's say a city councilor wanted to reduce car accidents
on their streets. They might find through preliminary descriptive and
exploratory research that both accidents and road rage have been steadily

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increasing over the past 5 years. Instead of automatically assuming that

road rage is the cause of these accidents, it would be important to measure
whether the opposite could be true. Maybe road rage increases in light
of more accidents due to lane closures and increased traffic. It could also
be the case of the old saying "correlation does not guarantee causation."
Maybe both are increasing due to another reason like construction, lack of
proper traffic controls, or an influx of new drivers.

2. Determining the nature of the relationship between the causal variables

and the effect predicted. Continuing with the example, let's say the city
councilor proved that road rage had an increasing effect on the number
car accidents in the area. The causal research could be used for two
things. First measuring the significance of the effect, like quantifying the
percentage increase in accidents that can be contributed by road rage.
Second, observing how the relationship between the variables works (ike
enraged drivers are prone to accelerating dangerously or taking more risks,
resulting in more accidents).

Causal Research and Business Goals

It really doesn't matter what type of organization you are or what goals you
have, causal research can be used to benefit you. The goal of causal research is to
give proof that a particular relationship exists. From a company standpoint, if you
want to verify that a strategy will work or be confident when identifying sources
of an issue; causal research is the way to go.

Here are a few examples of how causal research could be implemented with
different goals in mind:

1. Increasing customer retention - Most franchise chains conduct causal

research experiments within their stores. In one case, a large auto-repair shop
recently conducted an experiment where select shops enforced a policy that
employee would have a one-on-one with the client while their vehicle is
being assessed. They were instructed to go over any concerns and speak in
layman's terms about anything wrong with the car, focusing on the client
understanding the issues. This experiment was implemented because of
an online survey that identified a lack of employee-client communication
as being a barrier to repeat customers. After identifying two solutions to
this issue (facilitating discussion and increasing client understanding), the company
used this experiment to learn just how effective these solutions would be in
increasing customer retention. By comparing the sales in unchanged shops to those
that were part of the experiment, the company noticed a significant increase in
customer loyalty.

2. Community initiatives- City councilors often use causal research to measure the

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success of their community initiatives. Let's say the City of Manila conducted a
survey and learned that Manilans were dissatisfied with current public transit options.
They could then set in motion a strategy to create more Park and Rides' to help
more people be able to ride the bus. After implementing this strategy they can
resend the same survey and measure what type of effect it has had on the overall
satisfaction of public transit.

3. Effective advertising - Advertising is one of the most common sectors for

causal research. Most times companies will test ad campaigns in small areas
before expanding it across all locations. The idea is to measure whether
there is a sufficient increase in sales, leads or public interest in those regions
with the advertisement before committing fully. Many organizations will
take this experiment a step further by creating a survey asking customers
what made them visit or interested in their services. Now the business can
compare responses from customers in the experiment area to the responses
of their overall client base and see if the increase in traffic is a direct result
of their advertising

MARKET TESTING
Introducing a new product or service without first testing the market is
like jumping off a cliff into the sea, blindfolded unthinkable, life threatening,
treacherous and unnecessarily risky. Many new ideas and products are successful
because their creators identified an unmet need in the market and verified the
viability of that concept.

Your time and money are extremely valuable to you. You cannot afford to
waste them by investing them in producing a product or service that fails in the
marketplace. The more you test your product before you produce and sell it, the
more likely you are to earn the sales and profits that you desire. Just remember,
every peso you spend in market testing will save you many pesos of losses later on
in the marketing process

Market testing is a tool used by companies to provide insight into the probable
market success of a new product, or effectiveness of a marketing campaign. It can
be used by a business to evaluate factors such as the performance of the product,
customer satisfaction or acceptance of the product, the required level of material
support for the full launch, and distribution requirements for a full launch.

Here's how to begin market testing:

1. Develop a prototype, model or description of the product or service that
you can show to others. Most ideas for new products or services don't work the first
time. With a model or prototype, you can photograph it or create a picture of some
kind and demonstrate it to a prospective buyer. It also allows you to try it out tor

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yourself to make sure it works. (Be sure to keep accurate notes of your research; you
may come up with an even better idea later.)

2. Determine the price that you can sell the product for in the current
marketplace. Get accurate prices and delivery dates from suppliers,
especially if you're purchasing the product for resale. Determine all the
costs involved in bringing the product or service to market: the costs of
offices, equipment, shipping8 loss, breakage, insurance, transportation,
salaries, etc. Include your personal labor costs at your hourly rate as a cost
of doing business. Ask your friends and family if they'd buy this product
at the price you will have to charge.

3. Go to a potential customer with your sample or prototype and ask if he

would buy it. Be sure to call on the individual who makes buying decisions.
Then ask him how much he'd pay for this product. If people criticize your
new product idea, ask them why. Ask how the product could be modified
to make it more attractive.

4. Compare your product with other products on the market. Continually

ask, "Why would someone switch and buy from me?" Solicit the negative
opinions of others. Don't fall in love with your idea--be an optimistic
pessimist by looking for the flaws in your marketing plan.

5. Visit trade shows and exhibitions--they're a terrific place to get immediate

feedback on a new product. You can get into a trade show by signing
up as ether a manufacturer or wholesale buyer. Once you're in, find out
what else is available that's similar or that performs the same function as
your product. Other companies marketing similar products will have their
products on display--take a good, hard look at what they have to offer.
Then talk to product buyers--sophisticated buyers at the trade show can
tell you immediately whether or not your product will be successful.

The only real test of a product is a market test, where you take your new
product or service to a customer who can buy it to see if he likes it. As soon as you
know your cost and price, make a sales call on a potential buyer. The ability to sell
e product is more important than any other skill; this will give you a chance to
sharpen yours. Listen carefully to the comments and objections of the buyer their
feedback is priceless.

Then once you've determined there's a large enough market tor your product
of price you'll have to charge to make a profit immediately begin thinking
of ways to improve both the product and the marketing. Continually tweaking
your plans instead of sticking only with your original ideas will help ensure your
product's success.

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Different Methods for Market Testing

There are different market testing methods based on the type of the market
namely business to consumer (B2C) or business to business (B2B).
The Main Methods for B2C are the following:

1. Simulated test market - In a simulated test market, respondents become

aware of a new product after being exposed to advertising, typically
a concept board. They then indicate their interest in purchasing the
product. They are assigned to a certain "awareness track" before viewing
the product at the shelf. Simulated test marketing takes into account
the changing influences on consumer purchasing decisions. It allows
a consumer to become aware of a new product as he would in the real
world. This provides marketers with an accurate purchasing rate for sales
forecasting. Simulated test marketing primarily serves as a forecasting tool.
Additionally, it enables marketers to experiment on different inputs, from
tactical elements such as budget allocation across different digital media
to strategic elements such as target and positioning. It allows them to test
a few alternative plans and choose the best one according to projected
volume or sales. With the use of this market-testing method, companies
are able to improve and revise their marketing plans and select the optimal
plan that will most likely attain performance objects in the real world.

2. Test marketing -This is the final step before commercialization. The

objective of this marketing phase is to test all the variables in the marketing
plan, including different elements and characteristics of the product. This
stage represents the launching of the total marketing program, albeit on a
limited basis. Three questions can be answered through test marketing:

a. Is the overall workability of the marketing plan realized as planned?

b. Do alternative allocations of the budget need to be evaluated?
c. Can marketers determine whether users are being inspired to switch
from their previous brands to the new one, and whether repeat
purchases are taking place?

3. Consumer panel - It is a group of consumers within a specific market; it is

these consumers whose industry behavior is believed to be a representative
sample of the entire market. By studying such panels marketers are able
to determine the attitudes, values and beliefs of consumers and gain an
understanding of the total market. Consumer panel research is, nowadays,
often carried out online and can consist of many hundreds or thousands
of respondents. It is through these online panels that marketers are able to
gain sector specific insights quickly and inexpensively.

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As far as B2B is concern the following are the methods for market testing:
1. The new product is tested in a limited geographical area. Sales people
attempt to make an actual sale as part of a regular sales call.

2. The new product is tested in distributor and dealer display rooms. This
method is reflects the product's normal selling situation.

3. The new product is tested in trade show. This method has an advantage ot
testing the new product to a large number of potential buyers, but has the
disadvantage of revealing the product to competitors. Therefore, the seller
must be ready to launch the product to the market shortly after the trade
show.

4. The new product is tested through speculative sale. Sales people approach
the potential customers and pretend to make a sale using prepared selling
materials, a real product and an actual price list. Here the objective is not
to test whether an actual sale can be accomplished, but rather to test the
customer's level of interest and excitement willingness to ask for a sample
or purchase intention if the product was available.

Reference:
Marketing Research, Serrano, Angelita O. & Palad, Rolando L., Mindshapers Co., Inc.
2016

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