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Singapore International Quality and Productivity Centre: Insight Asia 2005

Press Release

21 November 2011

Channel NewsAsia - AM Live

Address to Insight Asia Conference 2005

24 – 26 August 2005
Non-Traditional Tools for Understanding Consumers
Thursday 25 August, 3.45pm, Swissotel Merchant Court Hotel, Singapore
Speaker: Leon Perera, Chief Executive Officer, Spire Research & Consulting

Spire background

Spire: A strategic market intelligence firm serving enterprises in the Asia- Pacific.

We focus on holistic, strategic studies on the external business environment to support market entry, feasibility and strategic investment decision-making.

Material for this session is drawn from Spire’s regional practice and from material published in the Spire E-Quarterly.

To receive the Spire E-Quarterly, please email us at spireequarterly@ spireresearch.com

Thesis: Non-traditional research tools add value when used prior to traditional consumer research programs

The non-consumer research methodologies used by Spire include business and professional interviewing, expert interviewing and secondary data analysis. Non-traditional tools can be useful in: – Setting priorities for traditional consumer market research investment – Formulating hypotheses for testing – Adding context to better understand consumer research findings Such non-traditional tools include: – Secondary data analysis – Expert interviewing, targeting:

Expert observers of a market


Competitor and substitute analysis Non-traditional tools can be a powerful source of competitive advantage in a consumer insight program – informing recruitment criteria, questionnaire or DG design and interpretation of results.

Example: The China Beer Market

Introducing an imported, foreign brand of beer into China Secondary research – to understand share of imported/foreign beer and trend, from analysis of trade data – Review consumer study objectives – focus on promising niches? Expert interviews and visits to pubs, hotels and retailers for products checks – to form a preliminary view on the major imported brands – First register which are the import brands that have a foothold – later used to test consumer awareness of those brands to work out best positioning Key Competitor analysis using secondary research – to analyze data on critical success factors such as bottle design and relationships with key channels – To later design consumer questionnaire to test importance of competitor CSFs – e.g. is choice of pub more important than choice of brand Channel interviews (distributors, retailers, pubs, hotels), secondary research on geographic and demographic patterns by income and beer consumption – to form a preliminary view on promising channel segments, customer segments and geographic regions – If there is need to prioritize consumer research budget, use this to help decide focus by geography or channel segment

How do non-traditional research tools add value?

The value of non-traditional tools can be seen in terms of:
– Setting priorities for traditional consumer market research investment where necessary:

Selecting geographic areas of greatest interest

Prioritizing segments of greatest interest by product category or customer type

– Formulating hypotheses for testing using consumer research tools – Providing context for understanding consumer research findings

Identifying promising Geographic zones

We can prioritize geographic areas by looking at economic or demographic indicators…but which ones? Much depends on whether one is marketing “high-end” or “low-end” consumer products or commercial/industrial products

For products with low income elasticity, we should look more at population distribution, taking into account age, ethnic or religious demographics where necessary

For products with high income elasticity, we should look more at metrics like income per head, household spending, retail sales or disposable income...

– …though this data is not always easily available by province and city and in some cases may need to be estimated

Identifying promising Geographic zones (continued)

We can prioritize geographic areas using macro-strategic research to discover historical sales of product by type

Secondary data may be available in some cases, eg vehicle registrations by province…

…but often, secondary data is not available and estimates need to be made based on industry interviews

Judgements about promising geographic regions should take into consideration not only absolute sales volumes but sales values and the likely growth rate, taking into account product life cycles

Identifying promising Product Categories

Prioritizing segments by product category, price band or customer type is another path for non-traditional tools to add value Product category prioritization:

Often a program of consumer research examines demand for a product category which has a number of sub-categories, eg different engine capacities for motorcycles

Macro-strategic research tools can be used to elicit information on historical and forecasted future sales by product sub-category, based on secondary data searches and information exchange with channels and competitor producers

This helps to prioritize focus by product category, to make best use of limited budget or time

Identifying promising Customer Segments

Customer segment prioritization:

This objective is more problematic using non-traditional tools

Engaging with channels to understand their view of key segments can be of value

One example: power tools research, where non-traditional tools helped determine what proportion of the market was DIY/home consumer versus industrial users, a critical input for prioritizing customer segments for traditional research

For example:

Research on data-enabled phones – interviews with retailers to understand characteristics of customers in terms of demographic profile and line of work, to validate our hypotheses about what profile of customers to recruit for consumer research

Research on industrial equipment – arriving at a view on the most promising vertical segments and geographic regions by starting first with competitor and channel interviews before going on to customer interviews

Formulating Hypotheses for Testing

Formulating or validating initial hypotheses for testing can be done with the help of expert or channel interviews and secondary research. These can relate to:

Usage and attitude towards product category and brands

Drivers of buying and switching behaviour

Which competitors or substitutes have a strong position

Examples of using non-traditional tools prior to consumer research, to generate hypotheses for testing

Online sales of electrical and electronic goods in Japan – competitor benchmarking suggested that Japanese e-commerce consumers prefer a COD mode of payment

Home computer peripherals - competitor analysis helped our client to ask the right questions during consumer research about reactions to new competitor product concepts

Interpreting Consumer Research Findings
Non-traditional tools can provide context for understanding and making use of consumer research data by, for example:

Understanding the reasons behind consumer research findings, for example changes in the economy or access to credit which may impact consumer interest in a product
Quantifying the size of demographic, economic or geographic segments, so as to set feasible sales targets
Understanding the number, distribution and companies in specific types of channels (for example: hypermarkets, DIY retail stores, Post Office outlets, photography mini-labs) , to help plan channel programs
Elaborating on legal and regulatory requirements necessary when at the go-to-market stage

Non-traditional tools: Secondary Research

Secondary data analysis encompasses : – Published economic, demographic and industry data

The reliability of sources, even where they are Government sources, needs to be scrutinized and adjustments made where necessary

Such data can inform the choice of consumer research method – for example telephone penetration viewed in conjunction with income per head data can help decide if most of the targeted segment can be reached by telephone

Product sales trend data is sometimes available from published sources, based on underlying macro-environmental research programs – Import/export data and production data can be extracted and examined

Trade data for product categories is often grouped together to secure minimum numbers of data points per HS code

Trade data should be adjusted for re-exports

Trade data in some Asian countries should be used with caution due to problems with underlying data collection accuracy

For products where substantial volumes are not imported but locally produced, local production data can be crucial…but sometimes hard to find

– Published market commentary is often very helpful in formulating hypotheses about:

Trends in product design, consumption patterns, competition, distribution and technology

Popular product sub-categories

– Such commentary can be found in trade periodicals and news media, but also from other sources such as:

Sector reports published by investment banks

Competitor press releases, annual reports and IPO prospectuses

Trade and country news websites

– Example: a press released on a publicly listed competitor’s website highlighted consumer research findings on a stationery product market in Korea

Example: Business school academic specializing in BPO, interviewed for a project on document outsourcing

– Journalists

Can be trade periodical journalists but also news media journalists with relevant specialization

– Government officials

Useful because regulators can offer an understanding of the market situation, but also because Government influences trends rather than just observeing them

– Trade bodies

Can be useful in cases where the trade organization has permanent staff and conducts research.

A Delphic approach can be used to process expert feedback

Non-traditional tools: Channel interviewing

The client’s channels can be engaged using in-depth interviews or focus groups bringing together executives with similar roles in the channel company – Spire is experienced in both The value of Channel interviews is similar to that for Experts

The principle to follow would be to select channels that are closest to the end-customer and to interview the relevant individuals in the company

For some industrial and commercial products, the decision-making process can be complex and elongated, with various tiers of channels, contactors and consultants influencing or even making the decision to buy

Understanding novel channels will help in prompting consumers during qualitative or quantitative consumer research. Novel but emerging channels would include auction web-sites, Multi-Level Marketing and direct sales initiatives from manufacturers

Non-traditional tools: Competitor Analysis

Studying how competitors view their customers, what new product concepts they have placed before customers and how their activity may have impacted customer attitudes and perceptions… …is valuable in designing consumer research tools. We should also study providers of substitutes and successful best practice leaders which may not be direct competitors. Forecasting competitor future plans can be useful. Examples:

Using patent searches to suggest new product concepts in the competitors pipeline, which can be tested in consumer research to determine the best counter-strategy

Studying product substitutes when researching a consumer data storage product, to understand what was the closest substitute people now had to our client's product. In some countries, it was flash cards and for others, back-up portable drives. Recruitment of consumer respondents would be by ownership of the dominant product.

Studying a successful direct selling firm in Japan, learning how customers may call up several times to ask questions before they buy – this hypothesis could be tested in consumer research

Non-traditional tools: Client interviews

Lastly, it should be noted that interviews with client company executives in charge of local sales can be useful in developing initial hypotheses to inform consumer research. Interviews or focus groups that are conducted by an external market research firm can be more useful in eliciting frank feedback about the market situation from such executives.

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