Glue Dots International (GDI), Keighley, has approached us to carry out Market Research for a new range to their product line, Glue Dots, within the Craft sector.
However, in order to clearly understand how to target the right audience and obtain relevant and measurable data, outlined below are the areas that we need to address.
* Who are the potential buyers
* What is the most efficient research technique
* How to analyse the data received
* Customer Satisfaction
Viking Industrial Products is a company based in Keighley supplying Safety Wear / Work Wear/ Tapes and Adhesives into the Industrial Sectors. In 1998, Colin Bennett was approached by an American company to become the UK distributor of Glue Dots. In 1999 Viking began producing the Dots in the UK with machinery brought over from the United States and a ‘joint venture’ began and Glue Dots International was set up. However, because of the size of the company it was decided that GDI would not supply UK customers direct but sell to Viking, who would then sell to their customers, become the ‘middle man’ in the process, this continues today. However, the exception to this is the overseas market because it is growing rapidly and the consignments are larger, GDI trade directly with export customers but only within the Industrial Sectors.
Over the years Viking have developed various ranges within the product line and are continually trying to produce for new target markets.
It has now been decided to venture into the Craft Sector but as within the Industrial side only dealing direct with the Retail Outlets and not the end user.
GDI have over the past few months attended several Craft Fairs and believe this is an un-tapped area of the market. The majority of GDI competitors still only deal with industry. So they have come to us for advice and recommendations.
WHO ARE THE BUYERS
One of the initial problems we need to look at is buying behaviour and understanding who the buyer actually is and the difference between the customer of a product and the consumer of a product.
Traditionally people thought that the consumer of a product was the buyer, however this is not generally the case. It is now accepted that purchasing of goods and services is not generally done by just one person, but a whole range of people having their own input into the decision, this group is known as the decision-making unit (DMU).
Members of the DMU will have one or more of the following roles:-
The User and the Payer
Are those people who will actually use the product.
Is a User but does not always finance the purchase.
The person who finances the purchase
Selects suppliers and negotiates the terms of the sale. Often the buyers will also be the decider.
We also have to look at how the decision is made and the different stimulus that prompts the prospective customers.
Endogenous – is one that has a clearly identifiable effect
i.e. well-targeted advertisements
Exogenous – an effect that is much harder to define and quantify,
i.e. What is a person’s expectation for the future or the results of the decisions taken
in the past.
Within the decision process there are also external and internal variables, which affect the decision.
External – factors outside the customers’ control
Internal – concerns the customers’ attitudes and desires.
The above have been placed into what Marketeers classify as consumer models; of which there are simple and complex models.
Simple – attempts to analyse only certain key influences on demand.
Examples of Simple Models
* Black box models
Based on observed behaviour and are guided by external models
Personal variable models
Based on observed behaviour and are guided by internal models
As the black box – but having your own input – e.g. if you want to buy a coat and you see a style you want and is at a price you want to pay, then under the black box version you would buy it, however in this version if the coat was of Leather and your beliefs were against using animal products then you wouldn’t buy it.
Complex – use a more comprehensive approach into include all aspects of the buying process.
We also need to look at why customers will buy from GDI. What are their motives?
Psychological – They may have a loyalty to the company
Socio-Psychological – These may be affected by a number of factors
* family / friends / work groups / motivation etc
Sociological – Again a number of influencing factors
* Status / Social Class / Mobility
Economic – Price / can I afford it / its it value for money
Cultural – Will it have an effect on our cultural beliefs or values
Do they have brand loyalty?
What is market research?
Businesses striving for excellence and success require objective, reliable and evaluative information about:
* what their stakeholders know (awareness or familiarity)
* what they think and value (opinions and beliefs)
* what they feel (attitudes and emotions)
* what they do, and are likely to do (usage and behaviour)
* drivers, motivations and reasons for the above
* emerging issues which could impact your organisation
This enables organisations to improve their planning and decision making.
Information that is original and obtained outside the firm. Obtained by research conducted by or on behalf of a company. Information gathered can be described as ‘qualitative – information about the opinions and preferences’ or ‘quantitative – produces figures that can be examined statistically’
Examples : Telephone Interviews / Face to Face Interviews / Questionnaires /
Cold Calling / Experiments
Advantages : Relevant Information Disadvantages: Time consuming
Up To Date
Information obtained from internal sources.
Examples : Databases / Knowledge Sharing / Intranet & Internet / Consultants /
Catalogues / Directories
Advantages : Cheap Disadvantages : Irrelevant data
Quick Out of Date
Compare data Slow
Data Analysis and Customer Satisfaction
Dependent on the kind of information you require will determine the data to be supplied.
Example Number of questionnaires sent out and received back
From the answers various output can be retrieved.
Number of responses
Numbers of people answer the different questions and how.
All this kind of information can be analysed by graphs and percentages. (see appendix A)
It is difficult to quantify customer satisfaction, but if you use the Market Research company again indicates you were happy with the results.
Task 1. Consider what issues must be researched by the company.
Include such items are the Product, Location and Competition
Because Glue Dots, within the Craft Sector are new concept, we can look at the Innovation and Diffusion of the product,
Within Innovation there are 3 different forms.
a completely new idea that changes something we do.
a product is continually ‘improved’ with relatively small changes
a new concept that offers a new or improved way of doing things.
Within Diffusion there are 5 different areas
Vastly superior to its predecessors
Will it fit in with customers needs / wants
Can the customer easily use it
Can the customer have samples
The more the potential customer sees the product, the quicker the diffusion
As we can see from the above tables, GDI are very well placed to venture into a new market. It is a very simple process to adapt the quantity / size / adhesive of the Dot to accommodate all prospective customers. This will enable them to become market leaders within the Craft Sector.
What areas topics we need to research and why? – What products do ‘Crafters’ currently use
Before time and money are wasted on producing new products for the Craft Sector we need to look at what products Crafters currently use and the pro’s and con’s of each product. If a Crafter has been using the same product with good success for a long period of time, then it is going to be a challenge to sway them into purchasing your product. You need to know your market and tailor your product to suit their needs and requirements, with the minimum of financial input.
Who are our target Market and Customers
Since GDI have attended recent Craft Fairs and from talking to the people attending the Fairs, the decision of who is the Target Market has already been decided by Mr Bennett, this being the Retail Outlets. As already identified, GDI are not aiming at the end user but the Retailers where the customer would purchase the product from.
Who are the competition?
Within the Dot industry there are very few competitors in the UK, US or Europe. The main competitors are :-
Billy Blobs – UK based
Part of a larger company
Larger sales force
Only supply within UK
All adhesives removable
Limited choice of products
Superdots – UK based
Part of a larger company
Holder for the industrial box
Only supply within UK
All adhesives removable
Only supply in a 7,000 dot box
Zots – US based
Removable and Permanent Dots
A variety of products
US based so only deal with large companies
Limited choice of products
Sticky Dots – US based
Lots of little dots on sheets
A variety of products
Hard to use
Task 2. Consider what target markets the company would investigate to complete the
market research and how these potential buyers would be expected to act
What buyer behaviours are involved and how can we investigate this and can these be represented by buy behaviour models.
As already identified, because GDI are not targeting individuals but Retail Outlets of the Craft Sector their buying behaviour is different than if the product was being bought by an individual. More influences are placed on the buyer and the DMU is larger, more people having a say in what is bought but generally the motive is the cost and how much mark-up they can put on a product. It can be represented by the ‘Black Box Model – please see page 4’.
We can investigate this further by asking relevant questions when conducting the Market Research.
i.e. Who is the buyer
Is Cost a major factor when looking at new products
Task 3. Discuss how you would go about completing the research. Include such factors
as the research methods, quantitative and qualitative techniques, and also
primary and secondary data sources.
Because GDI are part of Viking and they have been established for over 20 years, they have a vast database which could be utilised when conducting Market Research
Below are some examples of the techniques and sources we would utilise to conduct the Market Research, which will then enable us to produce facts and figures to support our recommendations.
Sources of Information
Quantitative / Qualitative
Primary – external sources – original
– Telephone Interviews
Quantitative – can produce figures that can be examined statistically
Secondary – internal/external sources – not original
qualitative – information about the opinions and preferences of the customer
Importance of researching a potential product.
By conducting quality and in-depth research could eliminates the possibility of producing goods that the anticipated target market will not purchase
Costs and Benefits
In man hours and product research costs the benefits of conducting such research into the new target market will significantly benefit GDI, reducing costs from producing products that won’t sell to being able to target your audience with the product they will and will want to buy
Task 4. What would be the expected results and how would you analyse them? Consider the response rate, answer quality and time scales.
By questioning not only the Retailers but the Crafters themselves, will give a comparative set of answers that will not only be qualitative but quantitative.
Expectations: From a questionnaire we would expect a 30% response rate
We would expect a better answer quality from the telephone interviews
A timescale of 3 weeks should be allowed for questionnaires to be returned.
Getting the questions right – the importance
If you do not ask the right questions then the answers may not actually generate a result.
I.e. If you ask too general a question then instead of getting an answer that can be quantified you get an essay this is very hard to present in an analytical.
So it is vital to ask DIRECT questions – How much? When? Where?
Analysing the results
Because we would target the Retailer and the end user and by asking similar questions, then we would be able to produce comparative figures.
i.e. Is the cost a major factor
Retailer End User
Yes 75% 40%
No 35% 60%
You can deduce that even though the retailer thinks the price is a major factor and may affect what the end user purchases, they themselves are not as concerned because it could mean that the are prepared to pay a little extra for a product that will same them time and thus money in the long term.
Why use us?
Because we have the skills and ability to produce cost effective and reflective results quickly and easily. We have the contacts to enable the process to be as smooth as possible and the tools to produce the data in a format which best suits your own companies needs.
– Cheaper than using in-house staff who will have to incorporate this within the working day
– Expertise on what is relevant data
– Produce measurable and comparative data
– Because the target market is comparatively small, then we can target all the retailers without having to do sampling
– You know your product better than anyone
– The research will be compiled off-site
Market Research Companies – Benefits / Reliability
Many companies prefer to have an outside company, as they do not have any hidden agendas. If you study data gathered by your own company then the information may be biased towards the new product/service etc. To measure the reliability of a product you must first specify exactly what you are trying to achieve in your survey, if you are unclear then the results are more than likely to be unclear.
The diagram below sets out how we would carry out a research study
The following is a simple list of our recommendations :-
* Utilise your existing databases to carry out telephone research of your customers to find out if any of their businesses supply to Craft Retailers
o Send out literature on the new products
* Compile a list of Craft Retailers – possibly buying a list from Yell.com or a similar database company
o Send out a questionnaire asking if they had heard of the product
o Who would make the decision in buying the product
o What would make them stock your products
o Would a display box encourage them to buy your products – because it would come in the same box that could then be displayed
o Is the cost of the product a major factor
o Of the 4 products produced is there 1 that the retailer thinks would be the better seller
* Conduct telephone research of the Craft shops asking similar questions as you would the Retailer – obtaining this information from either the internet, database lists bought / craft magazines. Asking :-
o Do they know the product
o Is price a big factor of purchase
o What do they currently use
o What problems have they encountered with their current choice
o Out of the 4 products produced is there 1 that the Crafter thinks is the better product.
Once all the information is gathered then we can produce comparative analysis between the Retailer themselves and the Crafters.
This will then enable you to produce the product the customer wants and will buy.
Glue dots are a simple product that has a great potential