Every day companies face a variety of marketing challenges that need solutions. Sometimes deciding how to effectively solve them is difficult. Generally, the more complex the challenge, the more elusive the solution can be.
For complex marketing problems, research often plays a large part in developing the solution. Determining the type of research that fits the current challenge is often daunting unless you are lucky enough to have a team of research experts on staff.
IDG has recently written an eBook to serve as a guide when facing five common marketing challenges. The following is a selection from the eBook which illustrates one such challenge, including the solution and justification for the research approach.
The Challenge – Pricing and Selection – Gaining Share from the Competition
Your company has recently introduced a new line of products and is in the process of optimizing the selection of products and their assortment and price points to maximize sales to consumers.
This includes testing the “what if” scenarios regarding assortment and pricing changes against the assortment & pricing for your main competitors.
Your company also wants to have a predictive tool to model share of preference of each SKU (and full assortment) in your current, short-term, and two long-term assortment plans to ensure you capture the maximum share of sales from your main competitor.
The Research Solution
Design and program two surveys/conjoint designs-one for consumers and one for professionals who use these products for business purposes.
Use a full-profile online choice-based conjoint (CBC)/discrete choice study to measure the impact and preference for varying product brands/SKUs and price points.
Screen consumers to ensure they have purchased this type of product within the past 3 months or plan to in the next 3 months. Screen professionals who use these products to ensure they have purchased this type of product within the past 6 months or plan to in the next 6 months.
Why This Solution
Conjoint analysis is a research method used to measure the trade-offs people make in choosing between products and service providers. It is also used to predict consumers’ choices for future products and services.
For example, a car has attributes such as color, price, size, miles-per-gallon and model style. Using conjoint analysis, the value that individuals place on any product is equivalent to the sum of the utility they derive from all the attributes making up the product.
The key benefit of conjoint analysis is the ability to produce dynamic market models that enable a company to test out the steps they would need to take to improve their market share, or determine how a competitor’s behavior will affect their customers.
By using market simulators based off of conjoint analysis results you have the ability to test any product, service, or brand combination using the conjoint model and immediately see the results on market share or preference share.
Using market simulators also affords the unique ability to test cannibalization of current product lines with the introduction of new products to the market.
Conjoint analysis adds to brand research by its ability to measure brand equity {the equivalent of a dollar amount that the brand name is worth} as well as brand elasticity (where can a brand name go without sacrificing its worth.)