Market Research and Advertising

Kent WolfeDecember 4th, 2002

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Why Market Research?

“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

Other Market Research Uses Produce manager survey Aquaculture Pelletized Poultry Peanut shelling facility Marketing cooperative Needs assessment Rabbit market analysis Clam market analysis

Pricing Suggestion Research suggests rounding prices

to the nearest Os.

Consumers don’t distinguish between a price of $1.50 and $1.59.

However, they do perceive a price difference between $1.59 and $1.60

How Consumers Found Out About The Farmers Markets They Patron

Source Percentage Roadside Signs 50% Newspapers 49% Passing by 49% Word of mouth 42% Flyers 15% Magazines 1% Television 1% Radio 1% Internet 0.3%

Promotional Technique Effectiveness Ratings Promotional Technique Mean RatingsIn-store displays 4.52In-store signs 4.20in-store feature advertising 4.04price reductions 3.99In-store demonstrations/taste tests 3.91Packaging 3.85Free standing displays 3.83Waterfall displays 3.61Newspaper inserts 3.55Coupons 3.52Individual product stickers 3.49Cross Merchandising 3.42television advertising 3.38Providing educational material 3.32Shelf talkers 3.30Produce manager bulletin with marketing ideas,information and recipes 3.30Radio advertising 2.88

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.

Types of Market Research Focus groups Taste tests in-depth interviews Surveys - mail, telephone and

intercept

New Agribusiness Opportunities – First Step is Target Market Identification

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

Demographic

US Pop.Hot Sauce Enthusiasts

Pork Consumers*

Frozen Pizza Consumers

Gender

Male 50% 80% 43% 8.9%

Female 50% 20% 57% 90.8%

Age 35.5 29 55 47

Income $34,076 $60,000 $31,000 $43,641

Education – College grad.

23.6% 78% <10% 26%

Household Size

2.65 1.45 2.65 2.47

Target Market Examples

Market SegmentationProduct Age Group Consumption %

Vodka 30-39 44%

Bourbon 60+ 50%

Gin 60+50-59

29%29%

Tequila 20-29 52%

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.

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

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 Analysis Two groups were identified

Local Market - area residents Metro Atlanta ethnic markets

Local Market Interviewed 232 potential customers residing

within 60 miles of Toccoa 71 people (232) indicated they did not eat fish 69% of area residents are fish consumers

Ethnic Markets Visited 8 ethnic markets in Metro Atlanta

Local Market Customer Base

Product Likelihood to Buy

No. Customers (30 miles)

Shrimp 31.7% 23,658

Striped bass 30.4% 22,688

Flounder 29.2% 21,793

Perch 27.9% 20,822

Large mouth bass

23.6% 17,613

Eel 12.4% 9,254

Tilapia 13.0% 9,072

Likelihood to Visit a Pick Your Own

60%45%

31% 39%29% 30%

19%

17%

23%36% 26%

29% 30%

20%

0%

20%

40%

60%

80%

100%

Very Likely Somewhat Likely

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

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.EASYDEMOGRAPHICS.COM)

Easy Demographic Data (WWW.EASIDEMOGRAPHICS.COM)

Miles 20 15 10 Population: 82,683 59,644 36,409Households: 31,974 22,806 13,773 White Population: 77,003 56,126 34,497Black Population: 4,881 2,901 1,506 Asian Population: 623 473 307Hispanic Population: 719 518 275Median Age: 37.0 36.7

36.4 Med. HH Inc.($): $29,572 $30226 $32,214 Av. HH Inc. ($): $40,855 $41,877 $43,165

Consumption and Usage 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 is Marketing? “Marketing is the process of

planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”

-American Marketing Association

What Exactly Does That Mean?

Marketing is...

All the actions you & your employees take that promote the sale of your products.

Building good relationships with your customers.

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.

Advertising/Promotion Advertising – Delivers information Promotion – Involves generating

consumer response Publicity – inexpensive or free

advertising

Types of Advertising

Newspaper Advantages

Broad mkt coverage Immediate

Short lead time Flexible ad size

Visibility of product Color

Use of coupons People believe what

they read!

Disadvantages Inconsistent

reproduction One day life span

Limited demographics “Lost in the Crowd”

Lack of movement & sound

Radio Advantages

Demographic selection High frequency

Immediate Sound reinforcement

Quick flexibility

Disadvantages Restrictive message

length Need for repetition Short recall factor

Cluttered placement

Television Advantages

Use of sight, sound, motion, & color

Mass coverage Immediate

Demographic selection

Disadvantages Short exposure

Expensive production Expensive to air

Cluttered placement Viewing time drops as

income increases

Direct Mail Advantages

Demographic selection Unlimited message

length Consistent reproduction

Direct response by order or coupon

Disadvantages Expensive

Difficult to obtain “pure” mailing lists Long lead time

Negative reaction to junk mail

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

Examples of Advertising Costs and Exposure

Media Company Cost Exposure

Radio WSKX-FMSavannah

$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 month

Dependent on location

Direct Mail Your business 1.68/Contact Limited to mailing list

Signage is important Information that should be included on

your sign: Location Business hours Special Promotions Seasonal Products Other attractions

Sign should reflect the stands personality

Signage Is Important

Words Read At Various Speeds

Number of Words at Speed

Distance(ft)

LetterWidth

(inches)

LetterHeight(inches)

30(mph)

40(mph)

50(mph)

60(mph)

50 d 1 ¾ 4 2 1 0

100 ¾ 3 ½ 8 5 4 3

200 1 d 7 15 11 8 6

300 2 3/16 11 22 16 13 10

400 2 f 14 30 22 17 14

500 3 ½ 17 ½ 38 28 22 18

Source: Should I Grow Fruits and Vegetables? Roadside Stands,” Loyd, Renee, M. and Daniel S.Tilley. Oklahoma State University Extension Service, Facts, No. 186.

Packaging Counts – Specialty Food Expert 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 3-pack,

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

$6.95 (5 oz)$6.29 (5 oz) $7.59 (4 oz)

Jams and Jelly Packaging Examples

                                           

$4.50 (16 oz) $5.25 (10 oz)

$5.00 (9.9 oz)

Know Your Target Market Where and when does my target

market look for information What is the most effective means

of reaching my target market ? i.e., television, radio, print material, etc..

What type of packaging are they expecting

“Adding Value to Georgia’s Agricultural Economy Through Research and Extension”

www.agecon.uga.edu/~caed/

College of Agricultural & Environmental Sciences

Cente

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