Download Marketing Strategy Research Toolbox

Marketing Strategy:
Based on First Principles and Data
Analytics
Research Toolbox
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Agenda
 Introduction
 Research Methods and Data
 Marketing Engineering Analysis
 Markstrat
Simulation (Part II)
 Marketing Strategy Project
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Is Marketing an Art or a
Science?
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Marketing is Transitioning from an Art to a
Science
 Global 1,000 companies spend over $1 trillion on
marketing, but only about 16% use marketing analytics
 One unit increase in use of marketing analytics (7 point scale) led to a
8% increase in ROA (70M$ in net income) for Fortune 500 firms
 Same change in competitive markets where customer needs are
changing led to 21% increase in ROA (180M$ in net income)
 Different study shows marketing productivity increases by 5 – 10%
with minimal additional costs
 “You can count on us to combine a strong quantitative and
analytical culture with a willingness to make bold decisions.
As we do so, we’ll start with the customer and work
backwards. In our judgment, that is the best way to create
shareholder value.” (Jeff Bezos in letter to shareholders)
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(Germann, Lilien, and Rangaswamy 2013)
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Data  Insights for Action Analysis
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Key Steps in Marketing Research
Define question or decision (importance,
timing)
1.


E.g., How best to acquire new customers?
E.g., Should we launch this new product?
Decide on research “methods and models”
2.


Qualitative (e.g., interviews, focus groups)
Quantitative (e.g., experiments, models)
Collect data
3.

Sampling and source (e.g., survey, CRM, interviews)
Perform analyses
4.


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Decision type & variables (e.g., go/no go, tradeoffs)
Analysis/model (e.g., cluster, choice, conjoint)
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Agenda
 Introduction
 Research Methods
and Data
 Marketing Engineering Analysis
 Markstrat
Simulation (Part II)
 Marketing Strategy Project
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Two Major Research Methods:
Qualitative and Quantitative

Qualitative: used to study highly complex and contingent phenomena
where linkages and variables are mostly unknown (e.g., what is the next
new product)

Quantitative: used to study “natural” phenomena where linkages and
variables are mostly known (e.g., what is the impact of advertising on
sales)

Often portrayed as an “either or” decision, but is actually more of a
continuum and methods are very complementary (ideally use mixed
methods)
See Market Research: Listen
and Learn
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Qualitative Research Methods

Inductive approach where theories/ideas emerge

Softer less structured methods (sociology, anthropology),
small sample sizes, more open to researcher induced biases

Best early in the process to help refine ideas; when you don’t
even know what to study (brainstorming, defining pool of
attributes)

Process
1.
2.
3.
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Pick method (case study, interview, focus group, etc.)
Pick sampling approach (deviant, snowballing, etc.)
Code and analyze data for themes, frameworks, and theories (visual,
summarize, NVivo, Atlas.ti)
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Qualitative Methods and Data
 Methods
Case study: single business situation, great for story telling, poor
generalizability, very popular
 Interviews: structured/unstructured, flexible, time effective
 Observation: slow, finds the unexpected, undirected
 Historical/literature review: easy and cheap start, dated

 Data or sampling approach
Deviant case sampling: In Search of Excellence
 Intensity sampling: Good examples but not outliers
 Heterogeneous sampling: Diverse to cover domain
 Snowball sampling: ask person for referral when hard to find exemplars
 Opportunistic sampling: easy and quick

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Qualitative Exercise
 Research question: Why
do people get an EMBA?
 Process
Pick method: Semi-structured interview
 Start broad and open ended
 Why, when, what, where
 Ask follow-up questions (follow the thread)
 Pick sampling approach: intensity sampling
 Code and analyze data: find themes and summarize

 In small groups: take 5 minutes to conduct interview to
“answer” research question
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Quantitative Research Methods

Deductive approach where theories/ideas are tested

Data and analysis focused, larger sample sizes
(psychology, science, engineering, economics)

Best later in the process to select among proposals and
fine tune or test ideas found during qualitative stage

Process (depends on question)
See Practical Regression:
Convincing Empirical Research
in 10 Steps
1.
Pick model/analysis (e.g., experiment, multivariate, choice model)
2.
Pick sampling approach and data source (e.g., random, stratified, survey,
CRM)
3.
Analysis
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
Check and cleanup data (make sense, outliers, problems, etc.)

Run models and interpret

Sensitivity, robustness, holdout
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Quantitative Analyses/Models

Data reduction (simplify)
 Factor
analysis (find common factors in data, group variables)
 Cluster analysis, latent class (find common segments in data, group
people)

Link variables to outcomes (identify cause)
 Experiment
(link treatment to outcome, strong causality)
 Multiple regression (link many predictors to continuous outcome)
 Choice models (link predictors to an individual’s discrete choice)

Find tradeoffs among variables (optimize)
 Conjoint analysis
(determine an individual’s unit-less tradeoff among
unlike features; size, price, status)
 Response models (find level of inputs for optimum output)
 Customer lifetime value analysis (accounts for customer, time, and
dynamic differences to make tradeoffs)
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Data: A Good Sample is Key to Valid
Results

Random sample



Law of large numbers



Removes alternative explanations, averages out noise
Random-stratified sample (when everyone is not equal)
Power and statistically significance
Probability > 95% not due to chance
Qualifying respondents


Knowledgeable
Population, potential customers, customers, lost customers

Robustness and sensitivity (hold outs, retests)

Sources (survey, lists, customers, intercept, CRM database, secondary
sources, etc.)

Survey


Multi-items, 7 point scale, avoid yes/no, center of scale (use adjectives to move mean)
Simple, single idea questions (no and/or/if/buts)
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Summary of 4 Stages of Marketing Research
Stage I
Planning and Design
Internal Assessment
& Planning
• Objective(s) of
segmentation
•
Resources
• Constraints
Database
Review
• Primary data
already available
• Secondary data
• …
Prototype
Implementation
Exercises
Stage II
Qualitative Assessment
Qualitative
Research
• Interview
Materials
Development


• Qualitative Data
Collection


• “Deep needs”
Identification


• Decision-Making
Process
Assessment


Stage IV
Analysis and Implementation
Stage III
Quantitative Measurement
Quantitative
Survey
• Sample Design



Analysis
• Cluster Analysis
• Portfolio Analysis
• Questionnaire
Development



• Data Collection



•Conjoint Analysis
Implementation
• Call Center
• Web
Classification Tool
Development
• Discriminant
function
• Sales call
patterns
• Promotion
•
….
• Binary tree
•
…
• What ifs?
• Relevant groups
involved?
• …..
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See Note on Market Research for
process for startups
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Agenda
 Introduction
 Research Methods and Data
 Marketing Engineering Analysis
 Markstrat
Simulation (Part II)
 Marketing Strategy Project
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Marketing Engineering (ME)

Software that is an “add in” for Excel, which does many of the most
powerful marketing analyses

Analyses and models


Factor and cluster analyses

Discriminant and classification analyses

Choice and conjoint models

Bass diffusion models

Response models, GE matrix, CLV
You will have three assignments using ME

Factor and cluster analyses, conjoint analysis, and choice models

Tutorial under each menu item (software)

Technical note on ME website (optional)

Help session by TA (optional)
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Agenda
 Introduction
 Research Methods and Data
 Marketing Engineering Analysis
 Markstrat Simulation (Part II)
 Marketing Strategy Project
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Success Depends on Using Strategic
Processes and Research Tools

Segmentation, targeting, positioning (STP process)

Building SCAs
Innovation of new products
 Modify existing products
 Build brands and relationships


Balancing portfolio of products and spending priorities

Market research data and tools
Positioning maps
 Sales and advertising experiments
 Conjoint analysis
 Many different survey results (awareness > perception > intentions)

You can now reposition using perceptual
objectives and launch new products
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STP is One Key Process for Success
Strategy
STP Process
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Consumer Decisions Are Based on Brand
Perceptions
Your perception of brands
Brand
A
Brand
B
Brand
C
Brand
D
Technical quality
Their perception of brands
?
Brand
C
Brand
B
Brand
D
?
Brand
A
21
Perceptual Maps Are a Valuable tool for Brand
Positioning
Need 2
Segment
ideal point
Need 1
Perceived
position of SOLO
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Two Ways to Re-position Brands
Perceived
Performance
Advertising
R&D
Perceived
Economy
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Positioning with R&D Involves Matching
Products to Customer Needs
CUSTOMER NEEDS
Battery Life
No. of Features
Convenience
Design
Price
SOLO
Display Size
Performance
Processing Power
Economy
BRAND CHARACTERISTICS
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Positioning With Advertising Involves Setting
"Perceptual Objectives"
Perceived
Performance
20
Sh
11
10
5
Perceived
Economy
0
-10
-20
-20
-10
0
5
10
12
20
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Innovation Is A Second Key Process for Success
STP Process
Strategy
Innovation Process
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R&D Success Requires Ability to Identify
Evolving Opportunities
Hi
Sh
New target
segment
Changing
segment
needs
Pressure on
margins
Pr
Competitor
entry
Sa
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R&D Cost is a Function of Several Factors
Physical
characteristics
R&D
Experience
Requested
base cost
To find out more:
Budget
required
for
completion
Accuracy
Feasibility
study
vs.
Speed
Online
query
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R&D Project Can Modify Existing Brands or
Introduce New Brands
Performance
Ex
Pr
Sh
Hi
Economy
New Brand
MOKA
Sa
New MOVE
higher performance
Old MOVE
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New Decisions in this Round
R&D
• Initiating new projects
• Continuing or shelving uncompleted projects
Brand Portfolio
• Launching new brands
• Upgrading or withdrawing existing brands
Marketing Mix
• Production planning, Pricing, Advertising &
segmentation strategy
• Setting Perceptual Objectives
Commercial Team
• Size of commercial team
• Allocation across distribution channels and brands
Market Research
• Ordering industry-wide market studies
• Ordering market-specific market studies
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Initiating New Projects
Click here to modify,
delete, or shelve an
existing project
Launch a new brand targeted at Highs
Click here to initiate
a new project, and
follow the assistant
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Launching New Brands
Click here to launch
a new brand
Choose a name …
… enter the role of
the new brand …
… and choose the
base R&D project
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Modify Existing Brands
You keep
the same
name
Choose the
new R&D
project
Select the
Modify
option
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Set Perceptual Objectives for Each Brand
1
Do you want to communicate
on the semantic scales or on
the multidimensional scales?
2
On which dimensions
do you want to
communicate?
1
3
Input the coordinates
of the point that you
want to reach on the map
2
3
2
3
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Each Team Can Get One Loan
 Limit is 15,000,000 M$
 Interest is 5%
 Duration is 10 years (beyond end of class)
 Cannot be split up into multiple periods
 Need to send me an email requesting the loan by the
deadline of the decision round
 You will submit
decision with an error of overspending
your budget (I will give loan before I run simulation)
 Key way to “catch-up” with new product(s)
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Agenda
 Introduction
 Research Methods and Data
 Marketing Engineering Analysis
 Markstrat
Simulation (Part II)
 Marketing Strategy Project
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Marketing Strategy Project

Each team will do a marketing strategy project for this class



Project feedback is recommended but optional



Last day of class hand in 5 page report, and
Make a 20 minute presentation
Email to me or meet at lunch/after class and I will give some
feedback
Business problem, decision, method(s), data, and analyses
Must be a marketing strategy problem


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Use your firm or business idea
Must do some quantitative analysis
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Marketing Strategy Project Ideas

STP for an existing product or service

STP for new product

Plan to launch new or existing product or service

Test a marketing strategy using an experiment

Analyze “CRM or existing data” to find out what has worked in the past

Design a new or test an old loyalty program

How to best acquire, expand, or retain customers (AER strategies)

How to best use brands, offering, or relationships to achieve business
goals (BOR strategies)

Evaluate marketing strategies based on CLV analysis
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Exercise: Talk Among Your Team Members
About Ideas for Your Project
 Interesting and important problem
 Ease of data collection
 Pick one of your firms
 “Clean” project
 Ask me for project ideas (UW programs, local firms)
 Will ask you about your idea in 5 to 10 minutes
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Readings
 Market
research readings
 Market
Research: Listen and Learn (overview of
qualitative and quantitative research)
 Practical Regression: Convincing Empirical
Research in Ten Steps (excellent discussion of models
and analysis)
 Note on Marketing Research (good process on market
research process for startups)
 Data
Analysis Techniques (DATs) in book across
most all chapters
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