Transcript Team Agriculture Georgia, May 15th 2003

Market Research and
Advertising
Home-Based/Micro Business
Workshop
Kent Wolfe
September 3rd, 2002
First Step: Market
Research
WHY?
“It is easier to sell something people want
than it is to sell something that is easy to
produce”
Market Research
 Exposed to market research each and every
day (TV & Radio programming, cell phone
packages, beverage products, shelf space,
restaurant location).
 Used to determine customer perceptions,
attitudes and preferences (i.e., Georgia Grown,
war with Iraq, package or container size)
 Who uses what, when, how much, and what
are they willing to pay
Questions Market Research Can
Answer
Age
Average Expenditures
Environmental analysis
Race
Financing needs
Pricing
Income
Payment methods
How to effectively communicate
Gender
Current usage
Perceptions
Occupation
When is it purchased
Attitudes
Household size
Where do customers shop
Preferences
Primary competitors
Trends
Unmet needs
Types of Market Research




Focus groups
Taste tests
in-depth interviews
Surveys - mail, telephone and intercept
Focus Groups
 Six to nine users.
 Discuss issues and concerns about product or service.
 Focus groups often bring out users' spontaneous
reactions and ideas
 Let you observe some group dynamics and
organizational issues
 The group typically lasts about two hours
 Run by a moderator who maintains the group's focus.
 First step in market research.
 Powerful tool in system development, you shouldn't
use them as your only source of usability data
In-depth Interviews

An in-depth interview is a conversation with an individual conducted by trained staff that usually collects
specific information about one person

Provide a history of behavior. When conducted more than once or when conducted with someone who has
been in the community for a long time, interviews can show if any change has occurred over time.

Highlight individual versus group concerns. Topics that may not arise in a group situation can be
addressed in individual interviews.

Reveal divergent experiences and “outlier” attitudes. Groups often do not allow you to see that
experiences may vary person to person.

Provide a shortcut to community norms. Interviewing key community leaders (bartenders, favorite
teachers, police officers, sex club managers) can give a fast overview of a community and its needs and
concerns.

Develop other research tools. Results from an interview can be used to generate focus group questions or
help form questions for a survey.In-depth interviews can be different from focus groups in several ways:

Easier. It is often easier to speak to one person and keep her attention than to address a group. You can also
avoid major scheduling hassles with only one person.

More detailed. In an interview you have a chance to follow-up on questions and probe for meaning.
Source: Good Questions, Better Answers
Surveys - mail, telephone
and intercept
 a method of gathering information from a sample of
individuals
 Mail - low in cost, problems with low response rate,
most effective when directed at particular groups
 Telephone - efficient for collecting large amounts of
data quickly and when the length of the survey is
limited.
 In-person - more expensive, necessary when complex
information is to be collected.
Telephone Survey Example- Fish
 53% eat fish once a week or more often
 Roughly 19% purchase fresh fish weekly
 The households eat roughly 4.0 pounds of fresh fish per month
 Aided awareness of all species except tilapia was high (>80% and 44%,
respectively)
 One-quarter to one-third of respondents would be likely to purchase the various
species (large mouth bass, perch, striped bass, prawn, and flounder) excluding
tilapia and eel which was significantly lower (12%).
 Sixty percent or more of the respondents have eaten the various species (large
mouth bass, perch, striped bass, prawn, and flounder), again excluding eel and
tilapia where the number is significantly lower (20% and 34%, respectively).
 42% would purchase live, unprocessed fish from a local fish market
 Respondents would travel approximately 27 miles to a local fish farm
Center Examples of
Research Results
 Aquaculture – people would drive 30 miles to
purchase fresh water shrimp from pond bank
 Trail riders take 8 trips annually
 Georgian’s consume 2.1 pounds of honey
every year
 Specialty food buyers are generally older and
affluent
 Sod producers are very interested in pelletized
poultry litter as a fertilizer/soil builder
Additional Market Research
Uses
 Market research guides your
communication with current and potential
customers
 Market research helps you identify
opportunities in the marketplace.
 Market research minimizes the risk of
doing business.
New Agribusiness Opportunities –
First Step is ID Target Market
 Target Market – A segment of the population
that is most likely to use your product or
service.
 Usually described using demographic variables
like, Gender, Income, Race, Age
 Used to:




Determine market potential
Develop product packaging
Choose marketing channels
Develop marketing mix and advertising strategy
Who is your Target Market?
Target Market Examples
Demographic
US Pop.
Hot Sauce
Enthusiasts
Pork
Consumers*
Frozen Pizza
Consumers
Gender
Male
50%
80%
43%
8.9%
Female
50%
20%
57%
90.8%
35.5
29
55
47
$34,076
$60,000
$31,000
$43,641
23.6%
78%
<10%
26%
2.65
1.45
2.65
2.47
Age
Income
Education –
College grad.
Household
Size
Market Potential
 Market Potential – the maximum sales
opportunities achieved by all sellers in
the market.
 Sets the upper limit on consumption units
Estimating Market
Potential
 MP=NxQ; where
 MP= Market Potential
 N= number of buyers (Target Market)
 Q= average number purchased by each buyer
Market Segmentation
 A 1995 National Pork Producers Council
study identified five very different pork
consumer segments and they are as
follows:
 Main Street Today
 Quality Carnivores
 Good N’ Plenty Guys
 Apathetic Eaters
 Politically Correct Eaters
Market Segmentation
Product
Age Group
Consumption %
30-39
44%
60+
50%
Gin
60+
50-59
29%
29%
Tequila
20-29
52%
Vodka
Bourbon
Main Street Today
Segment





Main Street Today
Largest segment of the population
Consist of strong pork supporters.
Very price sensitive- cost conscious shoppers.
Purchasing decisions are price based rather than product
preference.
• Women (57%)
• Middle aged - (20%) being 50-59 years of age
• Lowest income $31,000 median household income
• Least educated – less than 10% have college degrees
• Blue collar occupations
• 19% widowed/divorced (more than the other five segments)
• Average household size
• Most non-white group (29% are African American or Hispanic)
Quality Carnivores
Segment
 Quality Carnivores




Generally males
Prefer family and fine dining restaurants
Not concerned with nutrition
Indulge in food and prefer premium cuts of meat
•Males (77%)
•On average 36 years old
•Not primary shopper
•High incomes ($48,500 household incomes)
•Have some college (62%) or a college degree (26%)
•Married (66%)
•On average is non-white
•Smaller households
Good N’ Plenty Guys
Segment
 Good N’ Plenty Guys
 frequent fast food and take-out restaurants
 meat lovers
 second most responsive to pork behind the Main Street Today
segment.
•Mainly male
•Young (49% of the segment is under 35 years of age)
•$38,000 median household income
•45% have some college
•Employed- split between blue and white color
•61% were married
•Have large households 47% have 4+ family members
•Primarily non-white
Market Potential
 Market Potential – the maximum sales
opportunities achieved by all sellers in
the market.
 Sets the upper limit on consumption units
Estimating Market
Potential
 MP=NxQ; where
 MP= Market Potential
 N= number of buyers
 Q= average number purchased by each buyer
Estimating Market
Potential
 Information needed to estimate market
potential
 Market Area - US, State, County, city
 Roadside stands 10-20 mile draw
 School field trips – 45 miles or 45 minutes
 Demographic composition of the specified area
 Number of people in area with similar characteristics
 Consumption or usage levels
Estimating Market Share
 A market area and the target market
within that area will support a certain
level of sales
 A companies portion of these total sales
is referred to as its market share
 Estimating market share is not easy but
essential
Three Steps to Estimating
Market Share
 Estimate the total market potential
 Identify each of your competitors and
estimate their market share
 Decide or estimate what you think your
market share might be or what portion of
the market you intend to capture
Example Market Share
Calculation
 Market share for new hot sauce to be
marketed locally
 A supermarket visit identified 10 sauce
competitors
 Market share data is not available,
assume each product captures and equal
share of the market (10%)
Example Market Share
Calculation- Con’t.
 New product will mean there are 11
competing products
 Assuming equal market share, you can
assume to capture roughly 9.1% of the
market
 Does 9.1% of the market generate
enough sales to make your business
feasible?
Estimated Retail Sales
 The potential retail sales for a specific retail operation can be
estimated by using a standard formula:
ES= P x EXP x (ADI/MDI) x MS where
 ES= Estimated Sales
 P= Trade Area population
 EXP= Average expenditures for retail outlet category
 ADI = Area Estimated Average Household Disposable
Income
 MDI = Georgia Average Household Disposable Income
 MS= Estimated Market Share
Estimated Retail Sales
Example
 50% of Americans consume beer
 Thirty-six percent of microbrew drinkers are 25 -34, 27% are 34 - 45 and
20% are 45 and older.
 Microbrew consumers have average incomes of $54,000
 Microbrew consumers spend between $250 annually on these products
 Microbrewery Market Area Demographic Information





50,000 residents
15% are 25-34
16% are 34-45
29% are 45+
25% have incomes over $54,000
Income Information
 Area Estimated Av.e Household Disposable In.=$67,000
 Georgia Average Household Disposable Income =$30,240
Trade Area Sales Estimate
 ES= P x EXP x (ADI/MDI) x MS
 P= 50,000 x 50% (percentage of beer drinkers) =25,000
 25,000 x 15% = 3,750
 25,000 x 16% = 4,000
 25,000 x 29% = 7,250
15,000
 37% of area residents have incomes over 50K
 15,000 *37% = 5,550
 EXP=$250
 (ADI/MDI)=($67,000/$30,240)
 MS = Estimated Market Share = 10%
 ES= 5,550 x $250 x ($67,000/30,240) x 10% = $307,416
Estimated Retail Sales
(market potential)
 The potential retail sales for a specific retail operation can be
estimated by using a standard formula:
ES= P x EXP x (ADI/MDI) x MS where
 ES= Estimated Sales
 P= Trade Area population
 EXP= Average expenditures for retail outlet category
 ADI = Area Estimated Average Household Disposable
Income
 MDI = Georgia Average Household Disposable Income
 MS= Estimated Market Share
Micro Brewery
 Micro brewed consumers consume an average of $250
worth of beer annually.
 Younger people were more likely to have tried a
microbrew. Thirty-six percent of beer drinkers between
the ages of 25 and 34 had tried a microbrew.
 In contrast, 27% of beer drinkers between the ages 34
through 45 and 20% of those 45 and older had tried
microbrews.
 The appeal of micro brewed beer was strongest among
White beer drinkers were almost twice as likely as black
Americans to try a microbrew.
Estimated Retail Sales
Example
 Specialty food shoppers spend between $500 and $1,000
 Condiments constitute 12% of specialty food purchases – or a
$128 annually per specialty food shopper
 Area Estimated Average Household Disposable Income/Georgia
Average Household Disposable Income ($67,000/30,240)
 MS = Estimated Market Share = 10%
 ES= $83,616 x $128 x ($67,000/30,240) x 10% = $2,371,332
Easy Demographic Data
(WWW.EASIDEMOGRAPHICS.COM)
Miles
20
Population:
82,683
Households:
31,974
White Population: 77,003
Black Population:
4,881
Asian Population:
623
Hispanic Population: 719
Median Age:
37.0
15
59,644
22,806
56,126
2,901
473
518
36.7
10
36,409
13,773
34,497
1,506
307
275
36.4
 Med. HH Inc.($): $29,572
 Av. HH Inc. ($): $40,855
$30226
$41,877
$32,214
$43,165
Demographic and
Population Sources
 Sources for Demographic Information:
 Chamber of Commerce
 University (www.agecon.uga.edu/~caed/)
 www.georgia.stats.uga.edu
 US Census Bureau (WWW.CENSUS.GOV)
 Easy Demographics (WWW.EASIDEMOGRAPHICS.COM)
Consumption and Usage
Data Sources
 Sources for information on Consumption
and usage:
 USDA – per capita food consumption
estimates
 Trade Associations
 Commodity Groups (e.g. Nation Pork
Producers Association)
 University Research
Marketing
 There is no “silver bullet” or formula for
success
 Marketing is more like an art than a
science
What Exactly Does That
Mean?

The Company Name
 Company Goals
 Location
 Pricing
 Packaging
 Promotional Activities
 Advertising
 Sales Techniques
 Business Cards
 Employee Uniforms
The Goal of Marketing
To present your products/services to the
market in a way that makes them more
attractive than the products/services of
your competitors.
Packaging Counts – Important
Aspect of Marketing
 Have a beautiful product, including jar and
label
 Use expensive beautiful glass
 Go to trade shows to show product as well as
find out what the competition is doing
 Make your product presentation count-90%of
the purchases of these niche products is based
on product presentation.
Packaging
 First Line of Promotion is Product Packaging and is
your silent salesperson
 Evaluate your target market and create a package that
is consistent with their expectations- i,e. single jar or 3pack,
 Packaging should reflect a product’s desired
personality (Tennessee Toe Jam)
 Packaging Considerations (size, plastic glass, dressy)
 Selling a 8 oz. Jar of Jelly for $6.95, it needs to be
packaged accordingly
Packaging Examples
Hot Sauce Packaging
Examples
$6.29 (5 oz)
$6.95 (5 oz)
$7.59 (4 oz)
Jams and Jelly Packaging
Examples
$4.50 (16 oz)
$5.25 (10 oz)
$5.00 (9.9 oz)
Examples of Advertising
Costs and Exposure
Media
Company
Cost
Exposure
Radio
WSKX-FM
Savannah
$14.00 30 Sec
Spot; 6-10 am
676,481 persons
Newspaper
Metropolitan
Newspaper
$52.50 per sq.
In. per week in
Travel section
250,000 persons
on Sunday
Television
ABC Savannah
$15 - $120 for
a 15 Sec.
Rotating spot
Dependant on
Time- slot
Outdoor
Lamar Bill board
$500-7,500 per Dependent on
month
location
Direct Mail
Your business
1.68/Contact
Limited to mailing
list
Additional Marketing Events*

Public Relations - getting local, trade or national press write-ups about new
products, or other company news.

Sponsorship - contributing towards the cost of an event or publication and getting
your name and logo featured prominently in return.

Corporate hospitality - treating existing customers or prime prospects to a 'jolly' in
the hope they will think kindly of you in future.

Conferences - speaking at conferences raises your profile considerably and
provides a networking opportunity. In addition, it provides the opportunity to obtain
a comprehensive attendee list, which may identifying likely new customers and
potential competitors.

Exhibitions – Go where people are shopping for new products, trade fairs. It is
possible to pick up quite a bit of new business and a considerable number of new
leads as people wander up to your stand.
*mailerhttp://www.bcentral.co.uk/marketing/basics/DirectMail.asp
Routes to reach the
customer
 After defining the sales pitch, it's time to decide the best way of
communicating your message to your chosen target customer
group.
 How to communicate your message.
 First define the market area, local, regional, national and/or
international.
 Determine the most effective means of communicating with your
target market , keep your budget in mind. There a many marketing
channels to reach customers, i.e., TV, radio, print media, online, direct
mail, bill boards and poster campaigns. The combination you choose
is called the marketing mix.
Key Attributes of a Good
Customer Proposition*
1. KISS – Keep It Simple Stupid - don't expect
customers to work hard to understand the material
2. Be Concise - deliver your message in as few words
as possible
3. Clarity - deliver a single message that doesn't
confuse
4. Consistency - make sure everyone in your team
delivers the same message
5. Message - above all focus on benefits not features
*mailerhttp://www.bcentral.co.uk/marketing/basics/DirectMail.asp
Direct Mail
 Advantages
 Disadvantages
 Demographic selection
 Unlimited message length
 Consistent reproduction
 Direct response by order or
coupon
 Expensive
 Difficult to obtain “pure”
mailing lists
 Long lead time
 Negative reaction to junk
mail
Direct mail marketing guide
 Use direct mail marketing to get your message
straight to the right consumer in the right
market. With this concise guide to direct mail.
 Direct mail marketing can provide a tailored
offering directly to your target market and
group. However it only gives the best results
when it's planned and implemented with care
and dedication.
Designing Direct Mail
Material*
Direct Mailing Responses:
 Grab Their Attention - make them open it
 Create Interest - make them read it
 Create Desire - make them care about it
 Get Action - make them do something
about it
*mailerhttp://www.bcentral.co.uk/marketing/basics/DirectMail.asp
Newspaper
 Advantages
 Disadvantages
 Broad mkt coverage
 Immediate
 Short lead time
 Flexible ad size
 Visibility of product
 Color
 Use of coupons
 People believe what they
read!
 Inconsistent reproduction
 One day life span
 Limited demographics
 “Lost in the Crowd”
 Lack of movement & sound
Radio
 Advantages
 Disadvantages
 Demographic selection
 High frequency
 Immediate
 Sound reinforcement
 Quick flexibility
 Restrictive message length
 Need for repetition
 Short recall factor
 Cluttered placement
Television
 Advantages
 Disadvantages
 Use of sight, sound, motion,
& color
 Mass coverage
 Immediate
 Demographic selection
 Short exposure
 Expensive production
 Expensive to air
 Cluttered placement
 Viewing time drops as
income increases
Outdoor
 Advantages
 Reaches large audience
 Long-term exposure
 Color & graphics
 Forms include billboards,
posters, illuminated signs,
moving vehicle signs, bench
ads
 Disadvantages
 Limited message length
 Expensive to produce &
place
 Difficult to obtain the best
locations
 Legal restrictions for use
Conclusion:
 Understand both your customer and your product to help focus
your efforts
 Before you begin your marketing efforts you should consider what
you are selling and exactly who you are marketing to.
 When it comes to your customers, remember that only a
proportion of the population is likely to purchase any product or
service, so the more accurately you pitch your sales and
marketing efforts to this group, the less your efforts will be wasted.
As a result, targeting and segmentation are designed to use the
right sales message for each potential purchaser.
 What ever you do, make sure you get 'the biggest bang for your
buck”.