Author: AMA_admin

One of the main issues faced when releasing a new product or service is how much to charge. There are many different pricing strategies; however, few companies use a pricing strategy that is focused on the customer as opposed to the product or service. Value-based pricing is a pricing strategy which sets the price of the product or service on the perceived or estimated value to the customer rather than on the cost of the product, competitor prices, or historical prices.

Traditional pricing strategies do not incorporate market research to determine the optimal price for the product or service. With value-based pricing, research (typically in the form of a survey and multivariate statistical modeling) is conducted so the product or service is launched with minimal to no adverse effect on consumer perception due to incorrect pricing. Determining the optimal price for a product or service is critical to its success. Charge too much, and the product or service will not sell; charge too little, and your product or service is fixed in the market at a low level. Of the two, charging too little is by far the worst choice as raising a products’ price often proves to be extremely difficult.

Calculating the optimal price point is a science. According to a McKinsey & Company analysis of the typical S&P 1500 company, a price rise of 1%, if volumes remain stable, can lead to a profit increase of 8%. However, the opposite also stands true, a price of 1% less than the optimal price can lead to a loss of 8% of its potential profit. Changes in variable costs such as lower material cost and labor do not impact profit margins nearly as much as having correct pricing. While some companies believe that a lower price will lead to increased sales volumes, this rarely happens. In the same McKinsey & Company analysis, volumes have to rise by almost 19% to offset a 5% price cut.

So how do we determine the value of a product or service to consumers to determine the optimal price? There are several methodologies that may be employed on their own or in conjunction with others. One of the classic approaches is using the Van Westendorp method with a Revenue Forecast Extension. The method asks consumers a series of questions relating to their purchasing intent based on price. Next, a range of acceptable prices and an optimum price point based on an analysis of price and value ratings obtained from consumers is calculated. The Revenue Forecast Extension is then used to determine the optimal price taking purchase intent into account.

Another approach used is the Discrete Choice Model. Consumers are asked to choose between two or more hypothetical products or services at different price levels. The resulting model includes a simplified description of reality that provides a better understanding of how consumers make their choice. A well-constructed model allows for multiple scenarios within the model and can optimize price and brand position. With Discrete Choice, a company can project their potential market share among key competitors.

A newer methodology is Maximum Difference (Maxdiff). Maxdiff uses customer trade off rather than usual rating scales responses. Consumers identify the best and worst choice from a variety of groupings of three or more products or services at different prices. The order of questions is randomized and price levels are randomly assigned. A discrete choice model and a simulator are developed. Modification of price within the simulator allows the client to quickly identify what happens to demand as price increases or decreases.

The application of Monte Carlo Simulation to pricing takes in to account the customer’s price value perception, product, variable fixed costs, and market size. Several levels of price are tested for a given product. The resulting analysis shows the penetration of the product or service at each price point. Typically the model output is presented in an Excel spreadsheet. The key benefit of this approach is that it allows the client to run multiple “what if” scenarios by changing the parameters in the worksheet.

There are various methods to determine the optimal price for a product or service based on the perceived or estimated value to the customer. A value-based pricing strategy allows companies to launch new products and services with reduced risk and confidence that the success will not be hindered by sub-optimal pricing.

Xavier Alvarez is a Project Analyst at Q2 Insights, a market research consulting firm with offices in San Diego and New Orleans.

Qualitative market research is often aimed at increasing understanding of consumers’ thoughts and feelings toward brands, products, concepts, advertising, social issues and other important topics. Projective techniques are indirect methods used in qualitative research. These techniques allow researchers to tap into consumers’ deep motivations, beliefs, attitudes and values. This is important because psychology has told us for a long time that much of what drives behavior can be emotional and irrational in nature. To some extent, these emotional drivers of behavior lie below conscious awareness.

Consumers tend to be aware of their conscious motivations and decision-making processes. Therefore, when a researcher directly asks a consumer why they like a product, favor a brand, or prefer a competitor, responses tended to be rational and purposeful. However, we know that our connections to brands and our preferences for some products over others stem from motivations and values in which consumers are not consciously aware.

Projective techniques are useful because people tend to have limited understanding of their own behavior; likewise, people often have difficulty articulating their motivations and desires. While direct questioning works well most of the time, sometimes market researchers want to investigate consumers’ deeper values and beliefs. In such cases, projective techniques are typically used in conjunction with direct questioning in qualitative research.

The Use of Projective Techniques Originated with Clinical Psychologists

Projective techniques and tests are rooted in clinical psychology. The Rorschach Inkblot Test, probably the most famous projective test, comes from the psychoanalytic branch of clinical psychology and was popular in the 1960’s. The Rorschach Inkblot Test involves the use of ambiguous images (inkblots). Individuals are asked to name what they see and responses are interpreted by a psychologist specifically trained to do the test.

The Thematic Apperception Test (TAT) is a widely used projective technique used in mainstream clinical psychology where an image of an ambiguous social scene is shown and an individual is asked to create a story to explain the image. The assumption is that sub-conscious or non-conscious feelings and beliefs will be “projected’ onto ambiguous stimuli.

Many other traditional projective techniques have their origins in clinical psychology, too, such as word associations, role-playing and sentence completion. Projective techniques allow psychologists to uncover deep associations, emotions and thought processes.

The Use of Projective Techniques in Market Research

Although market researchers are interested in deep emotions and thought processes specific to brands and products, the purpose is still to get at those feelings, motivations, attitudes, biases and cognitions that are below rational, conscious awareness.

Some projective techniques, such as the Rorschach Inkblot Test, are specific to clinical psychology but many other techniques are quite useful in market research. Not all projective techniques involve projection in the classic, psychoanalytic sense; rather, the idea of tapping into subconscious associations and emotional connections is the goal of projective techniques in market research. Good market researchers will always confirm their findings through various sources. It is likely that findings from projective techniques would be subsequently confirmed with survey research, as are most qualitative findings.

Some common projective techniques include word associations, imagery associations, grouping and choice ordering techniques, imagery associations with consumer personalities, and personification activities.

Projective techniques are typically used in depth interviews or traditional focus groups. The techniques tend to yield rich and accurate information and they do not require sophisticated verbal literacy or forethought. Research participants often like these exercises even though the main purpose is not always clear to them

Projective techniques can be fundamental to consumer research, particularly when the goal is to understand deep emotional connections and cognitions toward brands, products, and services.

Evette Joyce is an Account Director at Q2 Insights, Inc., a market research consulting firm with offices in San Diego and New Orleans.

When making a restaurant choice what is often first discussed is the proximity of the restaurant, the time available to dine (a quick bite to eat or a leisurely meal) and the type of cuisine desired. However, there are many other critical drivers of restaurant choice that are at work in our minds though not often discussed with our dining companions. These elements may be summed to the way a restaurant makes us feel. People don’t usually discuss how a restaurant makes them feel when making a restaurant choice. These feelings tend to be subliminal, though they are critical. How a restaurant “presents itself” overall tends to have a huge impact on choice.

Restaurateurs often engage researchers to identify what attracts guests to their restaurant, what they need to keep doing or do more of to keep guest coming back, and what changes they need to make to attract more guests. Too often the research conducted focuses on the obvious, such as the menu, and it fails to uncover all the critical elements of the restaurant experience that drive restaurant choice. (Menu optimization is, of course, critical to any restaurant … but that’s a topic for another blog post.) Restaurant choice is not just about the menu, but the way the restaurant makes people feel.

Any researcher specializing in restaurants worth her salt will delve deeply into understanding not just the rational and oft discussed drivers of behavior, but the emotional drivers of behavior. As we delve into understanding behavioral drivers of restaurant choice we must also consider the atmosphere, the servers, the interactions, operations, environmental factors and other factors.

Let’s delve more deeply, beyond menu selection and flavor or quantity of food, into two of the several key attributes to consider when generating insights about the drivers of restaurant choice.

Atmosphere

Consumers are not particularly adept at describing a restaurant atmosphere. To crack this nut, it is useful to employ projective techniques to uncover both the rational and emotional elements of atmosphere. Some restaurants are sophisticated and exciting, some are a comfortable hole in the wall and are the best kept secret in town, some are edgy, hip and cool. In addition to what might be visually apparent, some restaurants might make some feel like they are “snuggled up in a comfy quilt” while others might make them feel “rushed, unimportant, and just a number.”

It is important to describe the restaurant atmosphere and it is crucial to marry a thorough understanding of atmosphere to other critical factors such as:

• The personality characteristics of those who are most likely to be attracted to the restaurant
• The place and time of the person, couple or group making the decision (e.g. a midday work lunch or just completing a 30 mile morning bike ride)
• Whether the restaurant lends itself to planned or spur of the moment dining

Service

Most of us know that how we are treated from the time we walk in the door to the time we walk out the door can make or break a dining experience. But what are the underlying emotional drivers that affect the service experience? Often, during qualitative depth interviews with restaurant guests, examples of not feeling welcomed, not feeling appreciated, and to some extent being ignored or forgotten are shared both when researchers probe directly as well as spontaneously when guests answer seemingly unrelated questions. Some restaurants leave guests feeling they are “one in the herd” while others leave guests feeling “they are happy to see me” or even “part of the family.” How one feels they are served is woven through the entire dining experience and affects restaurant choice.

It is important to cross-examine these feelings and needs with factors such as:

• Guest profiles
• The frequency with which guests visit the restaurant
• Needs states addressed by the restaurant

There are many drivers of restaurant choice beyond the assumed menu selection and food flavor, portion, and value that is often associated with it. Proximity of the restaurant, the time available to dine (a quick bite to eat or a leisurely meal) and the type of cuisine desired are obvious drivers, but a strong undercurrent of emotional drivers often trump the rational drivers and should be explored thoroughly to understand their impact on choice.

Kirsty Nunez is founder and President of Q2 Insights. Lori Enfield is Senior Market Research Project Manager at Q2 Insights. Q2 Insights, Inc., is a market research consulting firm with offices in San Diego and New Orleans.

The term “insights” is an oft-bandied-about term in marketing circles. As often as the term is used, it is clear that not everyone understands the difference between an insight, a research finding, a data point, and an opinion.

In the world of market research, an insight is something that was not previously articulated or understood by the brand. A rich insight is something that pushes the brand forward in a unique way. An insight is typically a discovered fact about the market that when leveraged will ultimately generate additional or increased profits. Most of the time insights are ancillary to the answers clients desire but are always well received.

Insights come about in a few ways. Qualitatively, they are borne of listening, really listening to customers. Alternatively, it is that ah ha moment that occurs after pushing for greater and greater depth of understanding. Quantitatively, insights might be the result of multivariate statistical modeling that allows the researcher to view patterns of data in different ways. It is often the case that insights occur when we consider data (qualitative and / or quantitative) holistically rather than looking at individual variables.

Regardless of how insights come about, they are often (but not always) unique to brand need states, customer motivations, or unspoken brand truths. Insights must be believable, actionable, and have practical applications. Rich insights are critical to the development of value propositions, brand positioning, and brand strategies and they often form the basis marketing communications.

An insight is not a data point, a personal opinion, or an answer to a research objective.

Not so long ago we conducted an advertising pre-test of a series of television commercials that were designed to curb drunk driving among young males. We tested advertisements that were generally very successful in their shock value but did not seem to have the desired outcome of causing the viewer to consider changing their attitude and behavior. During the course of this evaluation we discovered that what the target audience really cared about was how much of a hassle it is to get a DUI, which involves traffic court, fines, and community service. Ah ha! We reported a series of insights around this finding along with the general study findings about the advertisements tested, and conclusions and recommendations. The following year the anti-DUI campaign focused on the sentiments these young men had about DUIs, thus becoming more relatable and therefore more likely to cause the target audience to consider changing their attitudes and behaviors.

Data-based findings, whether from qualitative or quantitative data, answer clients’ questions. The value add comes from gleaning those little gold nuggets we call insights from the research and is why it is important to dig deep for rich insights. Identifying insights as opposed to a finding or data point or personal opinion is tough. But those who do become masters.

Kirsty Nunez is founder and President of Q2 Insights, Inc., a market research consulting firm with offices in San Diego and New Orleans

Data are constantly generated by multitudes of systems and processes around us. Every digital process and social media exchange contributes to Big Data. Systems, sensors, and mobile devices transmit data that are compiled as Big Data. These data are used by some to describe and predict human behavior and interactions. Big Data is also used for tracking and extraction of meaning.

Researchers often strive to answer five basic questions. Some refer to these as the “Five W’s:” Who, What, When, Where, and Why. Traditionally, market researchers employ methodologies to answer all five questions.

Four components of the Five W’s are provided by structured Big Data and other data sources.

• The who question identifies the various players in a problem or solution.
• The what question tries to ascertain what consumers are buying, trends, and services used.
• The when question considers various time based events and activities such as when customers are buying products or services, e.g. day part, date range, or life stage, etc.
• The where question addresses geographic and/or logistical aspects of a solution.

Big Data allows market researchers to answer some questions without interviewing or surveying existing and potential customers. However, with the advent of Big Data and sophisticated data mining techniques there is no need to create data if the data already exists. Of course, traditional methodologies such as surveys still need to be employed when there isn’t a data set for every question or set of questions. Also, market research methodologies are still required to tackle the most important question of the Five W’s – the Why. Knowing why our customers and clients choose to behave the way they do is highly critical to being able to tailor our products and services to them.

Why is the why question the most important and hardest to discern? Simply put, humans are inconsistent, impulsive, dynamic, and subtle. Emotional, rational, and irrational drivers of behavior cannot be explained by Big Data and analytics. Additionally, as Big Data becomes more and more prevalent and accessible, the number of questions pertaining to customers’ emotional, psychological, and irrational motivations will increase. Answering the why question is most effectively achieved by the integration of quantitative and qualitative research methodologies with qualitative being used to answer the why question and quantitative being used to verify and quantify the findings.

Qualitative methods used to answer the why may include focus groups, in-depth interviews, observation (ethnography), social networks, and guided online chats. Applied appropriately, these methods will result in a collection of textual, visual and oral data that will need to be analyzed through textual analysis. This qualitative analysis provides insight into customers’ attitudes, behaviors, and their thought processes.

While Big Data is sometimes touted as the magic bullet to address all market research questions, it is not the answer to all questions and insights to be obtained. Big Data has its place in the array of market research methodologies and is an ever growing presence. Before Big Data, primary research conducted by market researchers focused on what was happening. Now with that requirement increasingly solved by Big Data, market researchers can focus on why there are deviations from trends. Nothing beats knowing why people make the choices they do. Big Data finds the patterns, market researchers test the hypotheses.

Xavier Alvarez is a Project Analyst at Q2 Insights, a market research consulting firm with offices in New Orleans and San Diego. He can be reached at (985) 867-9494 or xavier.alvarez@q2insights.com.

Whether or not search engines continue to evolve and incorporate author credibility as a ranking factor, authority and influencer tools enable brand publishers to have even more control over the quality and credibility of their content.

Your goal as a marketing or public relations professional is no longer to have SEO-heavy content on your brand’s newsroom, website or blog. Today’s goal is more about increasing the amount of powerful and magnetic content on your site while following optimization best practices and finding the right authors to create that content.

Content marketers, would you like to know the secret to getting in good with Google’s search engine spiders? Come closer and I’ll whisper it in your ear. . . .

LinkedIn is the number-one social network for professionals, but that doesn’t mean you have to treat your profile as a traditional, boring resume.

When someone puts up a profile without giving any thought to it, it’s likely to end up as a big mess. These generic profiles have muddled marketing messages and lack of focus…

We’re joining our friends at the Ad Club, PRSA, and IABC for a joint, after-work, holiday mixer. With professionals from Ad Club, PRSA, IABC, and AMA there is a great opportunity to meet, network and talk about the exciting upcoming year in communications with peers in the industry.

We’re still working out the details, but you’re not going to want to miss this event! Mark Dec. 4th on your calendars and we’ll see you then!

Looking for insight on how to best integrate Social Media & Content Strategy? Check out this webinar on October 23rd from AMA!

Description

Everybody knows a strong social media presence requires relevant content for users to react to, engage with, and share. However, making this a reality is easier said than done, especially if your content strategy and social media teams aren’t working together to develop strategically calendared content and in-the-moment posts.

Moderated by Jay Baer, New York Times Best-Selling Author of YouTility, and featuring Benjie Pressman, Social Director at ethology, and Anna Hrach, Head of Content Strategy at ethology, “How to Integrate Social Media and Content Strategy” will help ensure your social media and content strategy efforts work in tandem to support business objectives, engage audiences, and produce more meaningful results.

Key Takeaways

• Understand how content strategy and social media play a role in the success of content development and audience interaction
• Learn how to set your brand up for success by establishing a strong content strategy foundation and engaging social media connections
• Learn important tips, tricks and how-tos that make integration and workflows seamless

Moderator:

Jay Baer, NY Times Best-Selling Author & President, Convince & Convert

Speakers:

Benjamin Pressman, Director of Social Media Strategies, ethology
Anna Hrach, Senior Manager, Content Strategy, ethology

More info at the webinar page