Download new_cases

Case studies
1
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Acknowledgements
We are grateful to the following for permission to reproduce copyright material:
‘Getting to know you’ (Acreman, S. and Pegram, B.), originally published in
Research Magazine, November 1999, pp. 36–41.
In some instances we have been unable to trace the owners of copyright material, and
we would appreciate any information that would enable us to do so.
2
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
CASE 1
Nike sprints ahead of the competition?
Nike was founded by Bill Bowerman, the legendary University of Oregon track and
field coach, and Phil Knight, a University of Oregon business student and middledistance runner under Bowerman. The partnership began in 1962 as Blue Ribbon
Sports (BRS); their first-year sales totalled $8,000. In 1972 BRS changed its name to
Nike, named after the Greek winged goddess of victory. Nike employs 22,000 people
worldwide, from Nike World Headquarters in Oregon. With 1,500 employees
working at the Laakdal Customer Service Centre, Belgium has the most employees of
any EMEA (Europe, Middle East and Africa) country. The Netherlands is a close
second, with 1,200 employees working at the European HQ in Hilversum. Nike is the
number one athletic footwear company in the US and the number two American brand
in terms of name recognition among overseas consumers, a status shared with IBM
and second only to Coca-Cola. This high degree of recognition is probably one of the
main reasons Nike has been so immensely successful. For the 2001 fiscal year sales
in the US were $4,819m, up 2% from 2000. 51% of Nike revenue is generated by
sales in the US. In Europe, sales were $2,585m, up 7% from 2000. Despite their
healthy levels of growth, analysts forecast a change in Nike’s future. Although the
company remains well managed, experts feel the company will have to work harder to
grow in the future. Consumers are becoming less than enthralled with Nike’s $100plus prices and are ‘clearing out’ their Nike-filled closets with other brand name
clothing. Reebok and Adidas, the number two and three businesses in the industry,
respectively, are hot on the heels of Nike. Adidas is giving Nike a run for its money
in women’s sports, running and soccer. Reebok is focusing upon environmental
issues in response to criticism of third-world exploitation levelled at the sportswear
industry. Nike has adjusted its successful marketing formula, which was started in
1985. The company hopes to shift attention to its product innovation and how the
company has evolved.
Perhaps such success should be attributed in part to its wildly successful conceptbased advertising campaigns. The company uses a process that is often called ‘image
transfer’. Nike ads almost never specifically place a product, or mention the brand
name. A mood or atmosphere is created and then the brand is associated with that
mood. ‘We don’t set out to make ads. The ultimate goal is to make a connection’,
states Dan Weiden of one of Nike’s ad agencies. One ad featured the Beatles and
clips of Nike athletes Michael Jordan and John McEnroe juxtaposed with pictures of
non-celebrities also engaged in sports. It was used to infer that real athletes prefer
Nike and that perhaps if the general audience buys the brand they will play better too.
Nike’s unpredictable image-based ads have ranged from the shocking, such as its
portrayal of real blood and guts in a ‘Search and Destroy’ campaign used during the
1996 Olympic games; to humorous, such as the first ad used to launch Michael
Jordan’s Jordan brand wear. The latter advertising made the tongue-in-cheek
suggestion that Jordan himself had a hand in production by slipping away from a
Bulls’ game at half time to run over to his company and then making his way back in
time for the game’s second half.
3
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Of late, Nike has shifted to the new phase in its marketing campaign, emphasising
more of its product innovation skills than the jokey, edgy attitude that it displayed in
previous years. ‘We recognise that our advertisements need to tell consumers that
we’re about product innovation and not just athletes and exposure. We need to prove
to consumers that we’re not just slapping a whoosh [the company trade-mark] on
stuff to make a buck’, says Chris Zimmerman, director of Nike’s US advertising.
With the launch of the ‘I can’ campaign, Nike is showing less of the celebrity
athletes that previously adorned its marketing output and showing more product
usage than in the previous ‘Just Do It’ campaign. Competitors Reebok and Adidas
have recently featured more product-focused ads and have met with a great deal of
success. Despite this rearranged focus, Nike is not backing away from innovative
marketing.
Also at the heart of Nike’s new strategy is the international arena. That may prove
to be the most difficult element for Nike to undertake. According to one source
there seems to be pretty strong recognition that in a few years Nike will be larger
outside the United States than inside. The problem that the company faces is that
even though international sales currently make up one-third of Nike’s business,
international business still pales in comparison with the domestic sales. Nike would
like to expand into the soccer and international sports arena, but to do so it will have
to refocus marketing and distribution in order to re-establish itself as an authentic,
technically superior sports shoe. In the future, Nike would like to build up its
presence in the key markets of China, Germany, Mexico and Japan. Nike will focus
its advertising on sports, and will feature sports that are of particular interest in a
specific region. Nike realises that while it is ahead of the competition, it still has a
long, long way to run.
References
Jeff Jensen, ‘Reebok and Nike go head to head in soccer battle’, Advertising Age
68(18) (5 May 1997): 4.
Jeff Jensen, ‘Product innovation steps into spotlight at Nike’, Advertising Age 68(36)
(8 September 1997): 3, 48.
Isabelle Sender, ‘Just do it, abroad’, Chain Store Age 73(10) (October 1997): 121–4.
www.nike.com
www.reebok.com
www.adidas.com
4
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Questions
1. What is the management decision problem facing Nike as it attempts to retain its
leadership position?
2. Define the marketing research problem facing Nike, given the management
decision problem you have identified.
3. Develop two suitable research questions and formulate two hypotheses for each.
4. How can the Internet be used to help Nike in conducting marketing research?
5
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
CASE 2
Getting to know you1
Markets are becoming ever more competitive, with new brands competing for a share
of consumers’ hearts and minds. Building a relationship with consumers is a challenge
facing all organisations, but particularly so in the case of ‘emergent drinkers’ – those
of legal drinking age up to 25. These consumers are highly experimental, and our only
safe assumption is that their consumption habits will probably not follow on from
those of preceding generations.
In 1997 Allied Domecq Spirits and Wines (ADSW), www.allieddomecqplc.com,
recognised the danger of being distanced from this crucial group, particularly across
geographical markets. They were not looking to understand a current user group per
se, but rather to gain insight into the factors influencing brand adoption as these young
drinkers mature.
Working with Pegram Walters International (PWI), www.pegramwalters.com, a
unique programme of research was created. The objectives went far beyond an
exploration of the current usage and attitudes of these consumers towards spirits, but
also encompassed an exploration of their personal values, their feelings about their
lives, their universe, their hopes and dreams. The project required a willingness to
think beyond current market conditions and business objectives.
The broad objectives of the research, covering an elusive respondent set, clearly
required an approach that would be both informal and unconventional. It needed to
venture beyond ‘traditional’ marketing research in order to maximise the quality of
data. Moreover, because of the innovative nature of the project, it required a high
level of openness, communication and trust between client and agency to ensure that
the information was both usable and relevant. In research terms there were two clear
challenges:

Gathering information from this difficult-access consumer group

Integrating the information back into the organisation.
Gaining access to the adult emergent drinker
It was believed that to gain a real insight into the emergent drinker community, two
realities would have to be taken into consideration:
1. Nobody can understand a community better than the community itself.
2. Information alone cannot provide valuable insight. Insight can only be developed
from the blending of community understanding with external analysis.
1
Acreman, S. and Pegram, B. Research, November 1999, pp. 36–41.
6
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Access to the community was provided via the development of the ‘information
gatherers’ (IGs) concept. IGs would be representatives of the adult emergent drinker
target group. They would participate in the research in order to interpret the dynamics
of their own community for us. To accomplish this, adult emergent spirits drinkers
were recruited, who were required to understand the objectives of the research project
and to be able to communicate concepts. In this way, they would not only provide
feedback on their own needs and actions but, more importantly, they would also be
able to gather and interpret information from their peer group. IGs would become
effectively both respondents and researchers, with the ability to provide rich, valueadded insight.
It was felt that one of the key successes of this programme was a policy of
maintaining honesty at all stages of the programme. By being completely open about
the objectives with participants, by sharing the hopes and expectations with them, the
IGs were empowered to have a stake in the project. As a result, they felt as committed
to gaining valuable insight as the client and research agency. However, the
recruitment of IGs also required both the client and the research agency to step away
from established comfort zones and let go of control – two key ingredients to any
programme of innovation. Overall there were three stages to the research design in
each market.
In the first instance one-hour depth interviews were conducted. There were three clear
objectives for this stage of research, to:
1. Understand personal viewpoints on marketing and lifestyle issues;
2. Clarify and/or narrow down topics for subsequent exploration at the workshop
stage;
3. Recruit appropriate ‘information gatherers’ (IGs).
Depth interviews were conducted to understand what was happening in respondents’
lives. They were invited to undertake ‘homework’ such as essays on their home lives,
and to bring along items of personal importance to stimulate discussion. From this
stage hypotheses were formulated on issues such as how they saw themselves and
their future, relationships, self-discovery, and opting in or opting out of the system. In
each market, from 20 depth interviews, 10 respondents were retained as IGs to
accompany the researchers through the rest of the programme. It was believed to be
important to conduct the bulk of the research in the environment in which alcohol was
consumed. Leading-edge bars were rented out where 50 adult emergent drinkers were
invited to participate in workshops.
From the time the participants entered the venue, the role of client and the research
agency became purely observational, with the IGs leading the discussion throughout.
A task guideline was designed which empowered the IGs with an understanding of the
research needs, and then they were left to do it. As an additional record, the
workshops were video-recorded. Because of the way in which they had been
recruited, the IGs felt a real responsibility to get the right information. The
participants felt comfortable within their peer group and, in the more natural bar
environment, fed back real, relevant and honest information. Moreover, both
respondents and IGs respected the process, allowing them to ‘buy into’ the research.
7
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
On the night following the workshops, focus groups were reconvened with the IGs to
discuss what actually happened, and their interpretation of what it actually meant. In
this way, concentrated data were collected: what was observed, what consumers said,
how it was reported back, and an initial understanding of what it all might actually
mean.
Communicating the findings with the client: Allied Domecq Spirits &
Wines
To infuse the exercise with knowledge, learning and a sense of adventure, ADSW
business teams were invited to spend a day of discovery. The day began by holding
breakout sessions that included ADSW marketing and sales personnel, and their key
agencies. The purpose was to gauge current assumptions about adult emergent
drinkers, and where necessary to dispel some myths. They then ‘met’ the generation.
It was felt that the best way to do this was to create fictional characters for the adult
emergent drinker generation. These would enable ADSW marketing managers to
visualise the consumers when developing new product development or
communication strategies. The personalities created were brought to life using actors
from the generation. In France, for example, the clients were able to meet Matthias,
Stephanie, Seb, Justine and Stan.
These five characters symbolised the richness and diversity of the generation. They
were not meant to represent a segmentation of the market – rather, they were intended
to reflect a collage of adult emergent drinkers in order to help business managers enter
into a relationship with this consumer group.
Each of the characters engaged with the audience via dialogue, discussing for example
their lifestyle, behaviours, in/outs, values, concerns and expectations for the future, as
well as their current attitudes towards alcohol. In addition, the audience was presented
with workshop ‘souvenirs’, notebooks with pictures and ‘biographies’ of the character
types where they could take notes during the presentation. The work groups were then
reconvened to summarise learning. The effect was immediate: with the bar as a cue,
business managers were able to step into a new world and easily meet and interact
with their consumers. Moreover, their ‘consumers’ were eager to explain what was
and wasn’t important to them. This multi-media/multi-layered presentation of findings
allowed information to be assimilated both visually, audibly and kinaesthetically.
In order to ensure that the information remained topical, useful and easily accessible,
it was felt important to create a vehicle for on-going communication and dialogue
with the audience. To achieve this, a high impact ‘magazine’ was created to bring the
research to life after the presentation. This is referred to as a magazine and not a
research report, to reflect the lifestyle of the consumer group in question: it contained
images, layouts and fonts typically associated with the generation. This magazine,
together with the videos containing live footage of the actors and the workshop, was
distributed throughout Allied Domecq Spirits & Wines.
8
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
On-going innovation
This research was considered to be an important exercise in terms of combining
creativity of process and reportage with real business needs. It is often stated that
researchers need to ‘get into consumers’ minds’, and to use creative/projective
techniques to really understand what consumers are thinking. However, researchers
often fall short in that it is frequently forgotten to devote the same amount of time to
understanding and to the context of a clients’ businesses.
Such was the success of the research format that the research agency developed
CommunityInsight, an information gathering process that aims to access primary
target groups. CommunityInsight is based on the same two very simple premises:
1. Nobody can understand a community better than the community itself.
2. Information alone cannot provide valuable insight, which can only be developed
from the blending of community understanding with external analysis.
Questions
1. What is the meaning of ‘access’ and why is it such a big problem for marketing
researchers?
2. What are the advantages and disadvantages of using ‘Information Gatherers’?
3. What is a ‘leading-edge bar’ and what role did such a context for interviews play in
this project?
4. What do you see as being the advantages and disadvantages of using actors to
portray consumers as part of the oral presentation of research findings?
5. What is meant by ‘Nobody can understand a community better than the community
itself’?
6. What is meant by ‘Information alone cannot provide valuable insight, which can
only be developed from the blending of community understanding with external
analysis’?
9
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
CASE 3
Danger! Celebrity in use
The theory behind the use of celebrities is that featuring stars in advertising has
special cultural significance, borne from the unique way that they have constructed an
image through various forms of media in the culture. In associating the star with the
product, these special meanings are passed on to the products or brands. Celebrities
have particular configurations of meanings that cannot be found elsewhere.
Celebrities are believed to possess dynamic qualities – attraction, sexiness and
likeability, which can be transferred to products. For example, the Peugeot 406
acquired some of its ‘attractive and sexy’ attributes from Kim Basinger's appearance
in its advertisements. Because they are famous, celebrities can attract and maintain
attention by their presence in ads, and also achieve high recall results. Even though
research findings are equivocal about the ability of celebrities to stimulate actual
purchase behaviour, the positive impact of celebrity endorsers is well documented.
When Michael Jordan returned to the NBA for his old team the Chicago Bulls in
1995, his return was calculated to be worth around $1 billion on the combined market
values of the five companies he endorsed. Even though Pepsico has had bad
experiences with celebrities, Michael Jackson and the Spice Girls were attributed with
gains in share of 8% and 2% respectively in 1984 and 1997.
Celebrities can easily affect company or product image makeovers, as well as
reposition an old brand or introduce a new brand. An example is Lucozade, which
was able to achieve a new athletic and energetic image through association with wellknown sports stars such as Daley Thompson, John Barnes and Linford Christie.
Celebrities with worldwide popularity can help global marketing communications,
especially in advertising. Though Michael Jackson eventually turned into a disaster
for Pepsi, the first year of the contract with Jackson saw an 8% gain in sales in a
market where 1% is equivalent to millions of dollars. Some global celebrities choose
to endorse products only in other countries to protect their image at home. For
example, Mel Gibson and Woody Allen endorse products only in Japan. Pizza Hut
increased market share by using global celebrities such as supermodels Cindy
Crawford and Linda Evangelista, and Baywatch star Pamela Anderson for panEuropean campaigns.
However, some companies have been embarrassed when their celebrity has become
embroiled in scandal or controversy, for instance, Hertz (O.J. Simpson) and Pepsico
(Michael Jackson). Most companies are smart enough to include clauses in their
celebrity contracts for termination due to moral turpitude, and can purchase ‘death,
disablement and disgrace’ insurance. They may still lose out on their investment and
damage their image. A celebrity may disappear from the limelight before the end of a
contractual term. This can be avoided, to an extent, by careful examination of the lifecycle stage of the celebrity: they should, ideally, be signed during the growth stage of
their career, and terminated prior to decline – but this is not always easy to achieve.
10
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
A celebrity may become spokesperson for many products and become over-exposed.
The spread of links over too many brands is likely to dilute the impact for any one of
them. Possible examples are the Spice Girls (Walkers Crisps, Pepsi, Chupa Chups).
Celebrities can be restricted by contract from working for competitors, or even any
other brand, but this can be very expensive. It is unusual for a celebrity's image to
change suddenly, but this can be a total disaster for a campaign. For example, French
footballer David Ginola endorses L'Oréal's Elvive shampoo both because he is
popular and because of his ‘clean, shiny and controllable’ hair. If he suddenly decided
to shave his hair off, the campaign would be in ruins. A real-life example is Yardley's
experience with Helena Bonham-Carter, who admitted in her first brand interview that
she rarely used make-up. It can be necessary to explain very thoroughly to a celebrity
exactly what their role and responsibilities for the brand are.
One researcher, Michael Kamins, employed marketing research techniques in order to
explore the uses of celebrities in advertising more scientifically. Kamins states that
three processes of social influence determine whether an individual will adopt the
attitude an advertiser is trying to convey: compliance, identification and
internalisation. Although the first of these factors is not relevant to Kamins’s study,
the last two hold considerable implications for celebrity advertising. Identification,
whereby individuals try to imitate another person because they want to be like that
person, is the most important factor determining a celebrity’s influence in an
advertisement. Internalisation occurs when individuals imitate another because they
perceive the other person to be sincere and to have values similar to their own.
Kamins inferred that if both identification and internalisation could be achieved, the
effectiveness of advertising would be increased. Therefore, he studied whether
celebrities could increase the effectiveness of advertising through the identification
component, and whether so-called truth in advertising (operationalised as two-sided
advertising, or advertising that included both positive and negative aspects about a
product) could increase effectiveness through internalisation. Furthermore, he
wondered whether combining these two approaches resulted in even greater
effectiveness.
In order to research this, a 2  2 factorial design was adopted. Sidedness (one-sided
versus two-sided) and type of spokesperson (celebrity versus non-celebrity) were the
two factors. Seventy-seven executives enrolled in an executive MBA programme
were randomly assigned to four groups: one-sided/non-celebrity, one-sided/celebrity,
two-sided/non-celebrity and two-sided/celebrity. Four advertisements corresponding
to these criteria were made up, and each member of each group evaluated the
appropriate advertisement on the basis of four variables:
1. Expectancy-value brand attitude (A).
2. Global brand attitude (B).
3. Global attitude towards the advertisement (C).
4. Purchase intention (D).
11
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Expectancy-value brand attitude represented the degree to which the respondent
believed the product possessed an attribute the advertisement claimed it had. Global
brand attitude was a measure of how appealing the respondents found the product in
the advertisement to be. Global attitude towards the advertisement was an evaluation
of the advertisement’s effectiveness. Purchase intention indicated how likely a
respondent was to purchase the product when an opportunity to do so came about.
Table 1 shows the mean (x) and standard deviation (sd) values, along with the number
of respondents (n), for each variable across each of the groups in Kamins’s study.
Note that the results from related groups can be combined to yield information on
each of the four group characteristics (one-sided, two-sided, non-celebrity and
celebrity) separately. Table 2 contains the ANOVA results for the effect of the
independent variables of sidedness (E) and type of spokesperson (S). These results
provide valuable information about the effectiveness of celebrity spokespersons in
advertisements.
Although the above research results are useful, they are also very specific. Celebrity
advertising can be researched in other ways. For example, dead celebrities have been
shown to be hip, hot and safe. Although they are not cheap (advertisers do have to
pay licensing fees to the celebrities’ estates), they are safe, because they can’t do
anything unpredictable that might jeopardise a product’s image or embarrass the
sponsor. Abbott and Costello have been used to sell bran cereal, Humphrey Bogart to
lend flair to cellular phones and Diet Coke, and Charlie Chaplin to push IBM personal
computers. This just goes to show that while the celebrities themselves may be dead,
their use as advertising spokespersons has a long life.
12
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
TABLE 1
Means, standard deviations and number of subjects
Experimental
condition
One-sided
Two-sided
Non-celebrity
Celebrity
One-sided non-celebrity
One-sided celebrity
Two-sided non-celebrity
Two-sided celebrity
Expectancy-value
brand attitude
(A)
(x)
(sd)
(n)
(x)
(sd)
(n)
(x)
(sd)
(n)
(x)
(sd)
(n)
(x)
(sd)
(n)
(x)
(sd)
(n)
(x)
(sd)
(n)
(x)
(sd)
(n)
7.97
3.92
38
8.33
5.32
36
8.04
4.73
38
8.26
4.58
36
7.89
4.48
19
8.04
3.4
19
8.18
5.09
19
8.5
5.72
17
Variable
Global brand Global attitude
attitude
towards the ad
(B)
(C)
3.47
1.47
40
4.22
1.6
37
3.5
1.55
40
4.19
1.52
37
3.45
1.57
20
3.5
1.4
20
3.55
1.57
20
5
1.27
17
3.4
1.52
40
3.65
1.62
37
3.65
1.46
40
3.38
1.67
37
3.55
1.39
20
3.25
1.65
20
3.75
1.55
20
3.53
1.74
17
Purchase
intention
(D)
2.22
1.4
40
2.92
1.44
37
2.55
1.38
40
2.57
1.56
37
2.4
1.5
20
2.05
1.32
20
2.7
1.26
20
3.18
1.63
17
TABLE 2
ANOVA results for effects of sidedness and spokesperson type
Variable
Expectancy-value brand attitude (A)
Global brand attitude (B)
Global attitude towards the ad (C)
Purchase intention (D)
a
Main effect for
sidedness (E)
F = 0.013
F = 10.876a
F = 0.209
F = 4.845a
Main effect for
spokesperson (S)
F = 0.035
F = 4.355a
F = 0.276
F = 0.050
indicates significance at p < 0.05.
13
© Pearson Education Limited 2003
Interaction
(E  S)
F = 0.003
F = 4.233a
F = 0.001
F = 1.868
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
References
Z. Erdogan and P. Kitchen, ‘Getting the best out of celebrity endorsers’, Admap (April
1998).
M. Kamins, M. Brand, S. Hoeke and J. Moe, ‘Two-sided versus one-sided celebrity
endorsements: the impact on advertising effectiveness and credibility’, Journal of
Advertising 18(2) (1989): 4–10.
Michael A. Kamins, ‘Celebrity and noncelebrity advertising in a two-sided context’,
Journal of Advertising Research (June–July 1989): 34–42.
Michael A. Kamins, ‘An investigation into the “match-up” hypothesis in celebrity
advertising: when beauty may be only skin deep’, Journal of Advertising 19(1)
(1990): 4–13.
George Lazarus, ‘Tiger’s shooting for an endorsement record, too’, Chicago Tribune
(5 May 1997): 4, 6.
Al Ries, ‘Count on consumers to follow the leader’, Brandweek 38(25) (23 June
1997): 18.
Questions
1. What kind of marketing research could businesses conduct to determine whether
their products would perform better with celebrity endorsements?
2. Discuss the role of multi-dimensional scaling in the matching of a celebrity to the
right product.
3. Could conjoint analysis be used to determine whether celebrities should be used
and, if so, which celebrity should be selected? How could it be used?
4. What kinds of precautions or pre-testing should the research engage in to ensure
that the celebrities and two-sided advertisements used in the experiment were
appropriate? What complications or contaminations might be present in the
experimental results if these precautions were not taken?
5. Based on the results presented, do two-sided advertisements have an advantage
over one-sided advertisements? Celebrity advertisements over non-celebrity
advertisements?
6. Which type of advertisement is the most effective? The least effective? (Hint:
look at the ANOVA results.)
7. Is analysis of variance an appropriate technique to use to analyse the data obtained
in this study? Why or why not?
8. Could regression analysis be used to analyse the data obtained in this research? If
so, how?
14
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
CASE 4
The demographic discovery of the decade
Many marketers are ill positioned to take advantage of the most important consumer
segment groups to rise over the next 20 years, and beyond – senior citizens. It is
important that marketers and advertisers do not fail to connect with their older
audiences. Not only are baby boomers holding a large proportion of economic wealth
– 80% of all financial wealth in the UK and Canada, and over 50% of discretionary
income in the USA – they are also major buyers of luxury products such as cars,
alcohol, vacations and financial products. Nonetheless, marketers continue to aim
promotions at and cater to younger segments.
Critics cite an eagerness to use mainly young characters in advertisements, and a
tendency to portray old age as undesirable, as evidence of advertisers’ ageism. In
general, age discrimination has been given a low priority, but this is changing as
demographics demonstrate growing numbers of older people in the population who
have reason to protect and promote their value in society. One reason suggested for
the disinterest shown towards older people is the youthful profile of many of those
working in advertising. The average age of most advertising executives is below 50,
and many researchers have commented on the lack of empathy this seems to create
with the over-fifties population. Research has found the average age of US
advertisers’ representatives to be 31, and the average age of agency representatives to
be 28. A similar picture emerges in continental Europe, where executives are also in
their twenties and thirties, implying a disconnection between agency demographics
and those of the marketplace.
The reluctance of the marketing industry to target the older population is in part due to
outdated and stereotypical notions of age and ageing. The over-fifties today form a
very different profile from the ‘elderly’ of the past; healthier diets, improved life
expectancy and a widespread desire to feel younger for longer mean that they neither
look nor feel old, and certainly do not want to be viewed as such by marketers and
advertisers. A lack of empathy among many marketers and advertisers for the needs
of older consumers has manifested itself in communications that are often
inappropriate for this new generation of over-fifties.
Senior citizens should not be seen as one homogeneous mass. As with all types of
consumer, there are many ways to segment senior citizens, one being based upon age.
Using ‘age’ as a segment descriptor, senior citizens can be divided into four segments.
There are the so-called older adults ranging from 55 to 65 years of age. The second
market segment, the elderly, is made up of those aged 65 to 74. The aged, those from
75 to 84, and the very old, those 85 and over, constitute the other two segments.
A closer look at the older adult group reveals that they are interested in maintaining a
youthful appearance and are major targets for exercise equipment, health programmes,
diets, cosmetics, cosmetic surgery, sports clothing, designer wear, and a wide array of
personal services that improve appearance. An increasing number of older adults opt
for early retirement or move into new careers and part-time jobs. The elderly group
15
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
comprises those who have been retired for some time. They tend to take a keen
interest in health and nutrition and to be concerned with diet, salt intake, cholesterol,
fried foods, and calories. They often drink less alcohol than the younger population
and are a good market for skin care products, prescriptions, vitamins and minerals,
health and beauty aids, and medicines that ease pain and promote the performance of
everyday activities. The aged group often has health and mobility problems and
hence requires health care services and special care facilities. The very old need help
in their day-to-day tasks. They find it difficult to get around and need regular medical
and hospital care. Again, they represent a large market for health care facilities.
While the classification of the mature market into these four segments has been
useful, another classification, and perhaps a better one for advertising purposes, is
based on attitudes towards advertising. These segments could then be profiled in
terms of psychographic variables. A major concern of advertisers targeting the aged
consumer has been the way in which the older population utilises and evaluates
information from advertising to make purchasing decisions. One study by Davis and
French explored aged consumers’ use of advertising as a primary source of
information in purchase decisions. The respondents were clustered based on attitudes
towards advertising. Psychographic profiles were developed for each of the derived
segments.
A database of annual lifestyle surveys was used to obtain a sample of 217 married
female respondents aged 60 and over who were not employed outside the home.
Respondents were asked to rate their degree of agreement with each of the 200 AIO
(activities, interests, opinions) statements on the survey. Respondents were also asked
to rate four attitudinal statements measuring information usage and beliefs about
advertising, as well as the credibility of the source of advertising. Identical
information obtained from a previous study was used for replication purposes by
Davis and French.
The data on the four statements (shown in Table 1) measuring attitudes towards
advertising were analysed used Ward’s method of clustering. Three clusters —
Engaged, Autonomous, and Receptive consumers — were identified. Mean scores for
each cluster are presented in Table 1. To test stability, replication of the cluster
analysis was undertaken using the data obtained in the previous study. Ward’s
method of clustering was used to analyse the data from the previous study. Again,
three clusters were obtained. Cluster means obtained by Davis and French on each of
the clustering variables for the replication sample (previous study) are also shown in
Table 1.
To determine the psychographic differences among the three clusters, two additional
steps were taken. First, one-way ANOVA was carried out to determine the
discriminating variables. The three segments formed the grouping or the independent
variable, and each psychographic statement served as a dependent variable. Forty-one
of the original 200 psychographic statements were found to be statistically significant.
With the realisation that some of these significant variables were probably measuring
the same characteristics, a principal components factor analysis was carried out, with
four factors (accounting for 60.3% of the variance) extracted in a varimax rotation.
Factor scores were computed for each of the three segments by Davis and French, and
Table 2 shows these scores, along with the variables that loaded highly on these
16
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
factors and the variable means. This information can be used to provide
psychographic profiles for each of the three segments identified in cluster analysis.
Table 1
Cluster variable scores by segment
Means
Cluster variable
Segment
Study sample
Replication
Advertising insults my intelligence
Engaged
5.24 (agree)
4.35 (agree)
Autonomous
4.86 (agree)
5.01 (agree)
Receptive
2.20 (disagree)
2.10 (disagree)
Engaged
4.69 (agree)
4.88 (agree)
Autonomous
3.65 (agree)
3.3 (disagree)*
Receptive
4.78 (agree)
4.18 (agree)
Engaged
4.55 (agree)
4.21 (agree)
Autonomous
2.16 (disagree)
1.87 (disagree)
Receptive
2.99 (disagree)
3.02 (disagree)
Engaged
4.78 (agree)
4.25 (agree)
Autonomous
4.85 (agree)
5.00 (agree)
Receptive
4.12 (agree)
4.94 (agree)
Information from advertisements helps
me make better buying decisions
I often seek out the advice of friends
regarding brands and products
I don’t believe a company’s
advertisement when it claims that test
results show its product to be better than
competitive products
*3.5 is the neutral point.
17
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Table 2
Study sample mean factor scores by cluster
Factor
Engaged
Autonomous
Receptive
Factor 1
0.45
0.11
0.21
I am interested in the cultures of other
countries (loading = 0.58966)
4.41
3.92
3.87
I get personal satisfaction from using
cosmetics (loading = 0.48283)
4.29
3.74
3.45
I enjoy looking through fashion
magazines (loading = 0.41592)
4.89
4.31
4.55
Factor 2
0.29
0.32
0.17
I like to bake (loading = 0.70466)
5.49
4.75
5.19
I like to cook (loading = 0.60793)
5.28
4.63
5.01
I always bake from scratch (loading =
0.54404)
3.76
3.15
3.62
Factor 3
0.28
0.26
0.10
I try to select foods that are fortified with
vitamins and minerals (loading =
0.49480)
4.89
4.36
4.59
I try to buy a company’s products if they
support educational TV (loading =
0.4373)
4.13
3.53
3.72
I am usually among the first to try new
products (loading = 0.42521)
3.47
2.81
3.19
Factor 4
0.26
0.14
0.36
Generally manufacturers’ warranties are
not worth the paper they are printed on
(loading = 0.50313)
3.31
3.47
2.82
Most big companies are just out for
themselves (loading = 0.46738)
4.25
4.50
3.93
TV advertising is condescending towards
women (loading = 0.41031)
4.25
4.24
3.55
18
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
References
M. Carrigan, and I. Szmigin, ‘The representation of older people in advertisements’,
Journal of the Market Research Society 41(3) (July 1999).
B. Davis and W. French, ‘Exploring advertising usage segments among the aged’,
Journal of Advertising Research (February–March 1989): 26.
‘Seniors in stores’, American Demographics 18(4) (April 1996): 44.
‘The ungraying of America: although population is getting older, today’s older
consumers are not necessarily acting same way older consumers behaved in the past’,
American Demographics (July 1997): 12.
See also www.saga.co.uk
Questions
1. Studies have found that the older, elderly, aged and very old segments of the
mature market need good supporting health services and facilities. Describe in
detail how health maintenance organisations (HMOs) can effectively determine
the differences in the health care needs of these segments. What kind of
information should be obtained? Which statistical techniques should be used to
analyse the data?
2. Do you think that the data analysis strategy adopted in the study reported in this
case was appropriate? Why or why not?
3. Qualitatively describe each of the three clusters, based on the information in Table
1.
4. Interpret each factor in Table 2.
5. Do you think that the study reported in the case should have used discriminant
analysis? If so, how?
6. Suggest an alternative data analysis strategy for the study reported.
19
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
CASE 5
DuPont has designs on fashion
DuPont (www.dupont.com) Fibres Division was wondering: could carpets move ‘upmarket’ into the fashion-conscious world typically associated with clothing and
furniture? The long-time market share leader in the carpet industry, DuPont was
searching for new ways to expand in a slow growth market, which had been growing
at approximately 5% per annum over the period 1990–7 and was predicted to remain
level or even decline in following years. Earnings were down by 1.7% as of 31 March
1998 for DuPont fibre operations, and the carpet industry was flat. In addition, in the
residential segment of the market, DuPont needed a way to differentiate its nylon fibre
carpets from increased competition, including the strong challenge of Amoco’s new
polypropylene fibre carpets.
The carpet industry can be divided into three end-use segments:

Commercial carpets for offices, hospitals, hotels, schools, government facilities
and industrial sites

Contract residential carpets for large residential purposes like apartment
complexes or subdivisions

Residential carpets for homes.
DuPont estimated that 30% of carpet sales were from new residential construction,
and the other 70% were from replacement purchases. In addition to different end-use
segments, each segment’s consumers were quite different from the other segment’s
consumers and each segment was serviced through different channels. Interior
designers, architects or specifiers for their clients typically bought commercial
carpets. They had to be durable and, especially for some end-uses like hotels,
fashionable.
Contract residential carpets were bought by designers or by the contractor who
typically focused on price and durability. The residential segment differed from the
other two because the purchaser was also the end-user. Typically, the householder
purchased carpeting from a retail outlet in order to create the atmosphere wanted in
their home. In a recent trade journal article of Buildings, carpet industry experts were
quoted as saying that ‘retail stores (are) an important and effective component of the
retail (environment)’. Ninety-seven percent of all carpeting is produced from manmade fibres derived from petroleum. The leading fibre in the industry has been nylon,
which was invented by DuPont in the 1930s. Though the leader in the industry,
DuPont was challenged by other high quality nylon producers, like Monsanto, Allied,
and BASF, and a host of generic low-end fibre producers. DuPont had 27% of the
global nylon market and 58% of the nylon-6/6 market (the most advanced nylon
fibre).
Fibre producers sell their output to carpet mills that then produce the carpeting. Until
the 1980s, competition in the residential segment was based on the technical qualities
20
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
of the fibres, the mill price of fibre, and reliability in shipping, none of which directly
affected the consumer. As such, the industry tended to be very production oriented. In
the early 1980s, a major breakthrough benefiting the consumer emerged, stain
resistant carpets. By applying a chemical coating to the carpet fibre during production,
the carpet was protected from permanent staining arising from most household soiling
agents. Stains could be wiped off the carpet, thus alleviating the concern many people
had about entertaining or ‘living’ on their carpet. The four major fibre producers
quickly announced their versions of the stain resistant carpets in an effort to remain
competitive.
Amoco also entered the market when it announced a ‘new revolution in carpeting’,
carpets made from polypropylene (PP) fibres rather than nylon. As a fibre, PP is
inherently stain resistant, thus it offered the best overall protection from stains and it
costs less to produce than nylon. However, it did not as readily accept dyes as nylon,
nor was it as soft to the touch, thus making it less fashionable. As such, PP initially
had difficulty entering the residential segment, but was well received by the
commercial segment. Approximately 24% of the total US carpet fibre market is PP.
In the mid-1980s, technical advancements in dyeing allowed Amoco to seriously
compete in the residential segment. Their objective was to lead the introduction of PP
fibres to the residential market and they were strongly committed to doing just that.
DuPont, who desired to be the unquestionable leading fibre producer to the residential
segment and relied more on marketing than other companies, seemed to sense the
threat of PP towards nylon fibres when it purchased Hercules fibres, a large PP
extruder. However, DuPont believed that nylon was still the fibre for residential
carpets and was determined to let the consumer cast the deciding vote.
DuPont believed that the consumer needed to be given a greater role in the carpet
industry and it believed it could use its well-respected company name to attract
consumers. As such, DuPont created the first fibre-producer backed carpets, DuPont
Stainmaster carpets, which carried a guarantee backed by DuPont on stain resistance,
wear and anti-static, and was branded as a DuPont carpet. The results of the
programme were highly successful with DuPont creating high brand recognition
among consumers, the first time this had ever been achieved by a fibre company, thus
differentiating it from the other fibre producers. DuPont took its Stainmaster carpet
business and converted it to a premium carpet brand by increasing prices and reducing
its distribution channels. DuPont spent over $10 million on television advertising
beginning in 1995. A survey conducted by Video Storyboard Tests, Inc. rated the
DuPont Stainmaster television commercial the fourth ‘most popular television
commercial’.
Based on its success with DuPont Stainmaster, the industry leader decided to forge
new ground. For most of its history, the residential segment had typically been the
most blasé segment of the carpet market. Styles tended to be simple, colours passive,
and features uniform across all competitors in the industry. Technically, industry
players maintained that differences did indeed exist, but in the words of one industry
analyst, ‘The differences were there in style and fibre quality, but the householder out
shopping for carpet did not really know or care, they only like what they could see
and feel.’ As such, DuPont wondered if the styles and designs so popular in the
commercial segment could be transferred to the residential segment. Was the average
21
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
household willing to make carpeting more than just a backdrop for other furnishings?
If the programme were to be successful, it would mean further differentiation from
other nylon fibre producers by creating a new segment based on fashion and status for
residential carpets, increasing brand awareness among consumers for DuPont
(resulting in increased demand for DuPont fibres), and bringing in a new dimension to
residential sales which would be difficult for PP carpets to duplicate and would
solidify DuPont as the leader in the residential segment. However, it would be an
expensive undertaking, involving a significant amount of publicity and risking its
reputation with its major fibre clients. In addition, if DuPont were to proceed with the
Designer Collection, it would have to move fast. The largest trade show in the
industry, in which the companies announced their major designs and programmes for
the coming year, was due in three months. If DuPont wanted the Designer Collection
to have a maximal impact, it would have to have carpet samples and promotional
materials ready for distribution at the show, and their marketing programme in line to
begin shortly thereafter. Thus, the go or no-go decision would have to be made within
six weeks.
References
DuPont 1997 Annual Report.
DuPont Quarterly Report, 31 March 1998.
Gregory Morris, ‘DuPont Canada brings on nylon-6/6 expansion’, Chemical Week (29
April 1998): 19.
Marc Reisch, ‘New texture in carpet fibres’, Chemical & Engineering News 76(4) (26
January 1998): 20–1.
Andrew Wood, ‘DuPont wants to hitch up nylon’s performance’, Chemical Week (29
October 1997): 42.
www.dupont.com
22
© Pearson Education Limited 2003
Questions
Chapter 1: Introduction to marketing research
1. Marketing research involves the identification, collection, analysis and
dissemination of information. Explain how each of these phases of marketing
research applies to DuPont's problem.
2. Is the problem facing DuPont a case of problem identification research or problem
solution research? Explain.
Chapter 2: Defining the marketing research problem and developing a
research approach
3. What is the management decision problem facing DuPont?
4. What is the marketing research problem facing DuPont?
5. Break down the general marketing research problem statement into component
parts.
6. What theoretical findings can assist in developing an approach to the problem?
Chapter 3: Research design
7. Can exploratory research be used in this case? How?
8. Can descriptive research be used in this case? How?
9. Can causal research be used in this case? How?
Chapter 4: Secondary data collection and analysis
10. What published sources of secondary data can you identify which would be
helpful?
11. How may the Internet be of help in tracking down secondary data and
intelligence?
Chapter 5: Internal secondary data and the use of databases
12. What internal sources of secondary data can you identify which would be helpful?
13. Which computerised databases can be used? What is their biggest disadvantage?
33
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Chapter 6: Qualitative research: its nature and approaches
14. What makes the word ‘designer’ a qualitative issue?
15. How may an ethnographic approach help to understand how consumers choose
carpets?
Chapter 7: Qualitative research: focus group discussions
16. Develop a moderator's outline for a focus group to assess consumer desires in
residential carpets with respect to the Designer Collection.
17. DuPont has hired a marketing research firm to conduct focus group sessions. What
are the ethical considerations of DuPont managers sitting in on these focus group
meetings?
Chapter 8: Qualitative research: depth interviewing and projective
techniques
18. What potential would there be to use depth interviewing in this project?
19. Design sentence completion techniques to uncover underlying motives.
Chapter 9: Qualitative research: data analysis
20. How may the social and cultural background of qualitative researchers,
moderators or interviewers affect how they pose questions and interpret answers?
Chapter 10: Survey and quantitative observation techniques
21. Match the criteria for selecting survey methods with the survey method(s) offering
the best results for DuPont.
22. Which survey method would you recommend to DuPont to conduct descriptive
research? Why? What are the limitations of this mode?
Chapter 11: Causal research design: experimentation
23. Based on the DuPont project, give an example of each of the conditions of
causality for the relationship between purchase of designer carpets and income
level.
24. Is causal research necessary in this case? If so, which experimental designs would
you recommend and why? If not, devise a scenario in which causal research
would be necessary.
34
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
25. What extraneous variables are threats to the internal and external validity in the
design you have selected?
26. Can a field experiment be used to conduct the test? Explain.
Chapter 12: Measurement and scaling: fundamentals, comparative and
non-comparative scaling
27. What types of non-comparative scales can be used to gather the information
needed on psychographics, motivations, attitudes and intentions?
28. In designing scales for the survey, which scales do you recommend?
29. How would you determine the reliability of the scales?
30. How would you assess the validity of the scales?
Chapter 13: Questionnaire design
31. Are each of the following questions well formulated? If not, what is the error?
a. What is your favourite construction of carpet fibres?
Nylon BCF __________
Nylon Staple __________
Polypropylene BCF __________
Polypropylene Staple__________
Polyester __________
b. What style of carpeting do you have in your office?
Uniform colour; Conservative Style __________
Uniform colour; Fashionable Style __________
Multicolour; Conservative Style __________
Multicolour; Fashionable Style __________
c. Do you intend to buy a new carpet soon?
Yes __________
No __________
35
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
d. Do you believe, as most Europeans do, that European citizens should buy
European-made carpets?
Yes __________
No __________
e. Will you buy designer carpets given that they cost slightly more than traditional
carpets?
Yes __________
No __________
32. Design a questionnaire to be used in a survey.
Chapter 14: Sampling: design and procedures
Answer questions 33 through to 36 assuming that an in-home interview is being
conducted.
33. What is the target population for this study?
34. What sampling frame can you use?
35. What sampling technique do you recommend for this study? Why?
36. What non-response issues must be considered and how can they be overcome?
Chapter 15: Sampling: final and initial sample size determination
37. Suppose DuPont conducts a preliminary market study of 30 respondents to
determine the price they are willing to pay for carpets in the Designer Collection.
The mean response is calculated to be €30.00. If DuPont wants to be 99% sure
that the true value lies within €1 of this figure, how large a sample do they need to
survey given that the population standard deviation is €5.00?
38. Suppose DuPont wants to know how many households are interested in the
Designer Collection. To do so, they conduct a pilot study and learn that 21 of 30
respondents expressed an interest in designer carpets.
a) How large a sample does DuPont need to draw in order to be 99% sure that this
result is within 5% of the true value?
b) What if they wanted it to be only within 20% of the true value at a 99% level of
confidence?
c) What if DuPont only required an 80% level of confidence at a 20% level of
precision?
36
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
Chapter 16: Survey fieldwork
Answer the following questions assuming an in-home interview is being conducted.
39. What characteristics would you look for when hiring fieldworkers for this survey?
40. What issues are most important in training your fieldworkers for this survey?
41. What issues must you as the supervisor be most concerned with during the
interviewing?
42. How would you validate the fieldwork?
43. How would you evaluate the success of your fieldworkers?
Chapter 17: Data preparation
44. Suppose, after receiving completed questionnaires, the following results were
obtained from three different respondents: respondent one consistently used the
lower end of the scale, respondent two consistently used the middle of the scale
and respondent three consistently used the upper end of the scale. Correct for the
response style of the respondents in order to ensure meaningful results on Q6.
Assume the following means and standard deviations.
Mean
Standard
deviation
Sample
5
1.2
Respondent 1
2.5
1.5
Respondent 2
3.8
1.8
Respondent 3
5.75
0.5
Chapter 18: Frequency distribution, cross-tabulation and hypothesis
testing
45. Suppose you administered the survey designed in Chapter 13, and you collected
data from 240 respondents (see Appendix for details). Run the following analyses
on the data and draw conclusions from the results obtained.
a) Run descriptive statistics and obtain frequency distributions for all variables.
b) Cross-tab Q3 (Is carpeting important?), Q4 (Is carpeting fashionable?), Q5 (Is
carpeting central?) and Q6 (Is carpeting durable?) with the demographic
variables in Q20 to Q23. If results are poor, you may have to create dummy
variables in order to obtain valid results.
37
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
c) Conduct a t-test for each of the seven attributes listed in Q7 (Importance
ratings of attributes) by each of the four responses to Q2 (What carpet do you
own?), i.e. there will be 28 t-tests run.
Chapter 20: Correlation and regression
Question 45 continued:
d) Regress each of the four styles of designer carpets in Q9 (Rating for styles) on
the seven attributes of Q7.
e) Regress each of the styles in Q9 on all attributes in Q10 (Desirability of
attributes), i.e. there will be four regressions.
f) Sum the seven attributes in Q10 to get one score for each respondent. Then use
the stepwise procedure to regress this variable on Q15 (AIO items).
Chapter 21: Discriminant analysis
Question 45 continued:
g) Conduct four two-group discriminant analyses on Q9 (a–d) using the attributes
in Q10 as the independent variables. For each style A–D in Q9, group the
respondents as low or high on their rating of the style. Let a low rating be 1–4
and a high rating be 5–7. Use this new variable as the dependent variable in
your discriminant analysis.
Chapters 22–23: Factor analysis, Cluster analysis
Question 45 continued:
h) Run a factor analysis of Q15 and cross-tabulate the factor scores with the
responses in Q2. Cluster the results of the factor analysis into three clusters in
order to segment the respondents on psychographic measures. Run crosstabulations on the cluster centres to determine whether any relationship exists
between the clusters and the current ownership of carpets, Q2.
Chapter 26: International marketing research
46. Due to the sluggish nature of the domestic carpet market, DuPont wants to explore
the possibilities of moving into international markets. Before they design an
international marketing research study, however, they want to determine which
end-use segment (commercial carpets, contract residential carpets or residential
carpets) would offer the most potential, and just concentrate their marketing
research efforts on this segment for their initial foray into the international arena.
How should they do this?
38
© Pearson Education Limited 2003
Malhotra and Birks: Marketing Research, 2nd Euro edition, Case studies
39
© Pearson Education Limited 2003