Market Research and Advertising: Market Research and Advertising Kent Wolfe
December 4th, 2002
Why Market Research?: Why Market Research?
“It is easier to sell something people want than it is to sell something that is easy to produce”
Market Research: Market Research Exposed to market research each and every day (TV & Radio programming, cell phone packages, beverage products, shelf space, restaurant location).
Used to determine customer perceptions, attitudes and preferences (i.e., Georgia Grown, war with Iraq, package or container size)
Who uses what, when, how much, and what are they willing to pay
Questions Market Research Can Answer: Questions Market Research Can Answer
Other Market Research Uses: Other Market Research Uses Produce manager survey
Aquaculture
Pelletized Poultry
Peanut shelling facility
Marketing cooperative
Needs assessment
Rabbit market analysis
Clam market analysis
Pricing Suggestion: Pricing Suggestion Research suggests rounding prices to the nearest Os.
Consumers don’t distinguish between a price of $1.50 and $1.59.
However, they do perceive a price difference between $1.59 and $1.60
How Consumers Found Out About The Farmers Markets They Patron: How Consumers Found Out About The Farmers Markets They Patron Source Percentage
Roadside Signs 50%
Newspapers 49%
Passing by 49%
Word of mouth 42%
Flyers 15%
Magazines 1%
Television 1%
Radio 1%
Internet 0.3%
Additional Market Research Uses: Additional Market Research Uses Market research guides your communication with current and potential customers
Market research helps you identify opportunities in the marketplace.
Market research minimizes the risk of doing business.
Types of Market Research: Types of Market Research Focus groups
Taste tests
in-depth interviews
Surveys - mail, telephone and intercept
New Agribusiness Opportunities – First Step is Target Market Identification: New Agribusiness Opportunities – First Step is Target Market Identification Target Market – A segment of the population that is most likely to use your product or service.
Usually described using demographic variables like, Gender, Income, Race, Age
Used to:
Determine market potential
Develop product packaging
Choose marketing channels
Develop marketing mix and advertising strategy
Target Market Examples: Target Market Examples
Market Segmentation: Market Segmentation
Micro Brewery: Micro Brewery Micro brewed consumers consume an average of $250 worth of beer annually.
Younger people were more likely to have tried a microbrew. Thirty-six percent of beer drinkers between the ages of 25 and 34 had tried a microbrew.
In contrast, 27% of beer drinkers between the ages 34 through 45 and 20% of those 45 and older had tried microbrews.
The appeal of micro brewed beer was strongest among White beer drinkers were almost twice as likely as black Americans to try a microbrew.
Market Segmentation : Market Segmentation A 1995 National Pork Producers Council study identified five very different pork consumer segments and they are as follows:
Main Street Today
Quality Carnivores
Good N’ Plenty Guys
Apathetic Eaters
Politically Correct Eaters
Main Street Today Segment: Main Street Today Segment Main Street Today
Largest segment of the population
Consist of strong pork supporters.
Very price sensitive- cost conscious shoppers.
Purchasing decisions are price based rather than product preference.
• Women (57%)
• Middle aged - (20%) being 50-59 years of age
• Lowest income $31,000 median household income
• Least educated – less than 10% have college degrees
• Blue collar occupations
• 19% widowed/divorced (more than the other five segments)
• Average household size
• Most non-white group (29% are African American or Hispanic)
Quality Carnivores Segment: Quality Carnivores Segment Quality Carnivores
Generally males
Prefer family and fine dining restaurants
Not concerned with nutrition
Indulge in food and prefer premium cuts of meat
•Males (77%)
•On average 36 years old
•Not primary shopper
•High incomes ($48,500 household incomes)
•Have some college (62%) or a college degree (26%)
•Married (66%)
•On average is non-white
•Smaller households
Good N’ Plenty Guys Segment: Good N’ Plenty Guys Segment Good N’ Plenty Guys
frequent fast food and take-out restaurants
meat lovers
second most responsive to pork behind the Main Street Today segment.
•Mainly male
•Young (49% of the segment is under 35 years of age)
•$38,000 median household income
•45% have some college
•Employed- split between blue and white color
•61% were married
•Have large households 47% have 4+ family members
•Primarily non-white
Market Analysis: Market Analysis Two groups were identified
Local Market - area residents
Metro Atlanta ethnic markets
Local Market
Interviewed 232 potential customers residing within 60 miles of Toccoa
71 people (232) indicated they did not eat fish
69% of area residents are fish consumers
Ethnic Markets
Visited 8 ethnic markets in Metro Atlanta
Local Market Customer Base: Local Market Customer Base
Market Potential: Market Potential Market Potential – the maximum sales opportunities achieved by all sellers in the market.
Sets the upper limit on consumption units
Estimating Market Potential: Estimating Market Potential
MP=NxQ; where
MP= Market Potential
N= number of buyers
Q= average number purchased by each buyer
Estimating Market Potential: Estimating Market Potential Information needed to estimate market potential
Market Area - US, State, County, city
Roadside stands 10-20 mile draw
School field trips – 45 miles or 45 minutes
Demographic composition of the specified area
Number of people in area with similar characteristics
Consumption or usage levels
Estimating Market Share: Estimating Market Share A market area and the target market within that area will support a certain level of sales
A companies portion of these total sales is referred to as its market share
Estimating market share is not easy but essential
Three Steps to Estimating Market Share: Three Steps to Estimating Market Share Estimate the total market potential
Identify each of your competitors and estimate their market share
Decide or estimate what you think your market share might be or what portion of the market you intend to capture
Example Market Share Calculation: Example Market Share Calculation Market share for new hot sauce to be marketed locally
A supermarket visit identified 10 sauce competitors
Market share data is not available, assume each product captures and equal share of the market (10%)
Example Market Share Calculation- Con’t.: Example Market Share Calculation- Con’t. New product will mean there are 11 competing products
Assuming equal market share, you can assume to capture roughly 9.1% of the market
Does 9.1% of the market generate enough sales to make your business feasible?
Estimated Retail Sales: Estimated Retail Sales The potential retail sales for a specific retail operation can be estimated by using a standard formula:
ES= P x EXP x (ADI/MDI) x MS where
ES= Estimated Sales
P= Trade Area population
EXP= Average expenditures for retail outlet category
ADI = Area Estimated Average Household Disposable Income
MDI = Georgia Average Household Disposable Income
MS= Estimated Market Share
Estimated Retail Sales Example: Estimated Retail Sales Example 50% of Americans consume beer
Thirty-six percent of microbrew drinkers are 25 -34, 27% are 34 - 45 and 20% are 45 and older.
Microbrew consumers have average incomes of $54,000
Microbrew consumers spend between $250 annually on these products
Microbrewery Market Area Demographic Information
50,000 residents
15% are 25-34
16% are 34-45
29% are 45+
25% have incomes over $54,000
Income Information: Income Information Area Estimated Av.e Household Disposable In.=$67,000
Georgia Average Household Disposable Income =$30,240
Trade Area Sales Estimate: Trade Area Sales Estimate ES= P x EXP x (ADI/MDI) x MS
P= 50,000 x 50% (percentage of beer drinkers) =25,000
25,000 x 15% = 3,750
25,000 x 16% = 4,000
25,000 x 29% = 7,250
15,000
37% of area residents have incomes over 50K
15,000 *37% = 5,550
EXP=$250
(ADI/MDI)=($67,000/$30,240)
MS = Estimated Market Share = 10%
ES= 5,550 x $250 x ($67,000/30,240) x 10% = $307,416
Demographic and Population Sources: Demographic and Population Sources Sources for Demographic Information:
Chamber of Commerce
University (www.agecon.uga.edu/~caed/)
www.georgia.stats.uga.edu
US Census Bureau (WWW.CENSUS.GOV)
Easy Demographics (WWW.EASYDEMOGRAPHICS.COM)
Easy Demographic Data (WWW.EASIDEMOGRAPHICS.COM): Easy Demographic Data (WWW.EASIDEMOGRAPHICS.COM) Miles 20 15 10
Population: 82,683 59,644 36,409
Households: 31,974 22,806 13,773
White Population: 77,003 56,126 34,497
Black Population: 4,881 2,901 1,506
Asian Population: 623 473 307
Hispanic Population: 719 518 275
Median Age: 37.0 36.7 36.4
Med. HH Inc.($): $29,572 $30226 $32,214
Av. HH Inc. ($): $40,855 $41,877 $43,165
Consumption and Usage : Consumption and Usage Sources for information on Consumption and usage:
USDA – per capita food consumption estimates
Trade Associations
Commodity Groups (e.g. Nation Pork Producers Association)
University Research
Marketing: Marketing
There is no “silver bullet” or formula for success
Marketing is more like an art than a science
What is Marketing?: What is Marketing? “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”
-American Marketing Association
What Exactly Does That Mean?: What Exactly Does That Mean? Marketing is...
All the actions you & your employees
take that promote the sale of your
products.
Building good relationships with your
customers.
What Exactly Does That Mean?: What Exactly Does That Mean? The Company Name
Company Goals
Location
Pricing
Packaging
Promotional Activities
Advertising
Sales Techniques
Business Cards
Employee Uniforms
The Goal of Marketing: The Goal of Marketing To present your products/services to the market in a way that makes them more attractive than the products/services of
your competitors.
Advertising/Promotion: Advertising/Promotion Advertising – Delivers information
Promotion – Involves generating consumer response
Publicity – inexpensive or free advertising
Types of Advertising: Types of Advertising
Newspaper: Newspaper Advantages
Broad mkt coverage
Immediate
Short lead time
Flexible ad size
Visibility of product
Color
Use of coupons
People believe what they read! Disadvantages
Inconsistent reproduction
One day life span
Limited demographics
“Lost in the Crowd”
Lack of movement & sound
Radio: Radio Advantages
Demographic selection
High frequency
Immediate
Sound reinforcement
Quick flexibility Disadvantages
Restrictive message length
Need for repetition
Short recall factor
Cluttered placement
Television: Television Advantages
Use of sight, sound, motion, & color
Mass coverage
Immediate
Demographic selection Disadvantages
Short exposure
Expensive production
Expensive to air
Cluttered placement
Viewing time drops as income increases
Direct Mail: Direct Mail Advantages
Demographic selection
Unlimited message length
Consistent reproduction
Direct response by order or coupon Disadvantages
Expensive
Difficult to obtain “pure” mailing lists
Long lead time
Negative reaction to junk mail
Outdoor: Outdoor Advantages
Reaches large audience
Long-term exposure
Color & graphics
Forms include billboards, posters, illuminated signs, moving vehicle signs, bench ads Disadvantages
Limited message length
Expensive to produce & place
Difficult to obtain the best locations
Legal restrictions for use
Examples of Advertising Costs and Exposure: Examples of Advertising Costs and Exposure
Signage is important: Signage is important Information that should be included on your sign:
Location
Business hours
Special Promotions
Seasonal Products
Other attractions
Sign should reflect the stands personality
Signage Is Important: Signage Is Important
Words Read At Various Speeds : Words Read At Various Speeds
Packaging Counts – Specialty Food Expert : Packaging Counts – Specialty Food Expert Have a beautiful product, including jar and label
Use expensive beautiful glass
Go to trade shows to show product as well as find out what the competition is doing
Make your product presentation count-90%of the purchases of these niche products is based on product presentation.
Packaging: Packaging First Line of Promotion is Product Packaging and is your silent salesperson
Evaluate your target market and create a package that is consistent with their expectations- i,e. single jar or 3-pack,
Packaging should reflect a product’s desired personality (Tennessee Toe Jam)
Packaging Considerations (size, plastic glass, dressy)
Selling a 8 oz. Jar of Jelly for $6.95, it needs to be packaged accordingly
Packaging Examples: Packaging Examples
Hot Sauce Packaging Examples: Hot Sauce Packaging Examples $6.95 (5 oz) $6.29 (5 oz) $7.59 (4 oz)
Jams and Jelly Packaging Examples: Jams and Jelly Packaging Examples $4.50 (16 oz) $5.25 (10 oz) $5.00 (9.9 oz)
Know Your Target Market: Know Your Target Market Where and when does my target market look for information
What is the most effective means of reaching my target market ? i.e., television, radio, print material, etc..
What type of packaging are they expecting
“Adding Value to Georgia’s Agricultural Economy Through Research and Extension”: “Adding Value to Georgia’s Agricultural Economy Through Research and Extension”
www.agecon.uga.edu/~caed/
College of Agricultural & Environmental Sciences