Category: Market research

Market Research

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Conducting market research periodically is important for commodity companies. The market intelligence provides input for course correction in the marketing strategy. Survey can be with the channel partners, influencers and end users.

Attributes of Survey

The survey questionnaire for market research may not be very detailed. It need not be one involving several hundreds of respondents. However it should be systematic, fearless and unbiased.

Systematic means that the responses should be sought on similar questions from one type of respondents. There should be enough responses on any parameter to arrive at a conclusion from market research.
Fearless means that the respondents should be able to give their opinion in a free manner. Generally avoid to ask channel partners for feedback in front of company sales personnel as often they tend to give more negative feedback so to extract more benefits from the company. Some of them do not speak for fear of losing the goodwill of the company.

Ensure to cover all types of channel partners in the sample. This makes the survey unbiased. So, seek feedback from all types of respondents from the target segment in the survey- big and small, exclusive and multi-brand, young and old promoter-driven stores.

Objectives of Market Research

Collecting market intelligence can have various objectives. It can be done to understand customer preferences priorities. It can be done to estimate the market size. It can be done to evaluate the brand health or customer satisfaction with its products. It can be done to estimate the viewership or reach of its advertisement or what has been its impact on purchasing behaviour of customer. It can be done to gather competitor information.

Then companies also need to collect some information about the channel partners. They should be regularly updating their database of the retail counters and wholesalers present in the market, potential of each, financial background, brand preferences, market potential, etc. This will help in targeting specific channel partners who can add value to the existing network.

Company can conduct market surveys through its own staff or outsource the task to an agency.

Health Focused Campaigns

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Similar to sustainability, healthy living has also become an area of interest for the consumers. A few health focused campaigns have been done by companies in which the message has been that their product causes lesser hazard to health than other products in the market.

Messages in Health Focused campaigns

Campaigns like product is dust-free or does not release any VOC (Volatile Organic compounds) or does not emit any harmful chemicals during their lifetime have caught lot of tractions among the building material manufacturers. Asian Paints ran a campaign around their paints being dust-free, which caused a lot of interest among the buyers.

With several types of diseases/ pandemics arising due to microorganisms, building materials have also done their advertisement that their products do not allow mold development or does not allow bacteria/ virus growth. One of the three benefits advertised for Supercolour was that it is Anti-fungal and it helped in attracting the end users.

Then there are other properties which build on the product being favourable to healthy life. Easy to clean, good light reflectance, and abrasion resistance are a few of the features which promote comfortable living and are used by the commodity companies in their health focused campaigns.

Health is an ever-evolving field. All health focused campaigns need to be backed with proper market research and scientific study so that the campaign does not backfire later and cause damage to the brand image.

Why should we have Data Driven Approach

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Data is a collection of numbers, labels, or symbols, collected through observation. It can be qualitative or quantitative variables about one or more persons or objects. When there is no structure to data, nobody can make meaning out of the numbers and names. Data organized in rows and columns carry specific meaning. A commodity company with a data driven approach takes decisions basis the data. Its transition to a brand will be faster than one which ignores data, other factors being constant.

To look at data and to make meaning out of it needs focus. It has to be inculcated as a culture in the company. It is necessary that all decisions are based on a data driven approach. All reviews must be backed with data.

Types of data

Types of data available with the company fall in three categories:

  • System data: This includes data registered in company’s system through a standard software. Chances of error in data due to human estimation is minimal. A few examples of system data are sales volumes of customers, number of outlets selling our brand, purchase frequency of the customers, company’s production figures, number of quality complaints logged, etc. Company’s ERP system captures this data from the invoices.
  • Market data: This includes data where the employees make estimates of numbers like competitor brands’ sales volume or shop share, retailers profile, number of outlets selling competition brands, production volumes of competition, quality of the competition brands, competition pricing, etc. are examples where of market data where the employees make estimate basis the interaction of people operating in the market. This is often accepted with a pinch of salt by the management as the biases of the sales person creep into this data collection.
  • Agency data: This includes data collected by agencies either independently or for a commodity company when asked to do so. Data collection happens either by sample survey of consumers or through interaction of the trade partners/ influencers. Changes in consumers’ consumption behavior, growth trend of the industry, market share of the various brands, media consumption trend of the consumers, etc. are examples of agency data. This data is considered more credible by the management as there are no biases from the market research company.

Benefits of Data Driven Approach

There are several decisions which can be taken with more diligence if data is looked closely. They will yield better results. A few examples are below:

  1. Sales planning- If the sales team closely follows the purchase frequency of trade partners/ consumers, seasonality of the product and recent growth trends, it will be able to predict the sales forecast with more accuracy.
  2. Trade scheme devising- Last scheme’s achievement, timing of the last scheme, type of scheme influencing various types of trade partners, are important parameters, which if tracked will help in devising the next schemes. Often companies do not evaluate the scheme’s performance after scheme closure, thereby not learning from the failures.
  3. Pricing decision- The pricing strategy of a commodity company will be successful only if it has information of the price waterfall existing in the market vis-à-vis competition or various element of the value chain.
  4. New product launch or capacity expansion- Companies should invest in new production facilities or storage facilities only if it has concrete information on the existing market size and competition market share. Basis this information only, the company will be able to decide the positioning strategy for its product. Similarly, when coming out with new products, the company must have all market data including consumers’ changing consumption trends.
  5. Advertising strategy- An important input is the media consumption data of the target audience. This data driven approach helps commodity company strategize media campaign diligently.
Importance of Data Driven Approach
Importance of Data Driven Approach

In a nutshell, data driven approach avoids decisions being taken on a gut by an individual. In a way, the decision maker takes the responsibility of the decision.

Brand Architecture- 3 Types

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Most of the commodity companies have two or more brands. The question of which brand architecture to follow primarily arises at the time of introducing a new brand. The dilemma is similar to other industries:

Should you operate with Brand Extension strategy or Endorsed Brand strategy?

Should the identity of the new brand be completely away from the existing brand?

What is perception of the present brand in the consumers’ mind?

When to use which Brand Architecture?

Companies adopt various brand architecture for managing their brands, depending on their strategy.

Brand Extension or Branded House:

This brand architecture strategy is used when the brand equity of the existing brand is high and can be transferred to the new brand. It is generally used when a premium brand wants to introduce an even more premium brand.

Ultratech Cement launched an even more premium product Ultratech SUPER. The mass media advertisements were mostly for mother Ultratech brand, though at the retail counters, Ultratech SUPER was also promoted.

Endorsed Brand or Sub-brands:

For some companies, the trust level is high on the existing brand but it is seen more as a value brand than premium brand. The new brand to be launched is desired to be positioned in the premium segment. Then endorsed brand strategy is used. It is also used when the company is a conglomerate diversified in multiple products and wants to extend the brand equity to the new businesses.

When Lafarge entered India, it wanted to encash on the existing brand strength of Lafarge. So the brands it launched were Lafarge Duraguard and Lafarge Concreto. The focus on Lafarge was less, visible from the packaging of the product. All in-house developed Tata products have a mention of Tata in their brand name.

Standalone Brand or House of Brands:

This strategy is used when the image of the existing brand is quite negative and will have an adverse impact on the new brand if the consumers come to know that it from the same manufacturer. Alternatively, it is used when the brand perception of the existing brand is so strong that consumers will not be able to associate the new brand with a premium segment. A value brand from can potentially erode the premiumness associated with the existing brand.

Bangur Cement and Rockstrong Cement are from the same parent company Shree Cement but have no mention of Shree Cement on any of their marketing communications.

Brand architecture
Brand Architecture- 3 Types

Mixed strategies:

Then there are variants which are midway between the strategies. The focus on the parent brand ranges from high to low and are used by commodity companies, depending on the market feedback and requirement.

Brand Architecture defines the communication on the product packaging, advertisement in media and in-shop promotion, along with other things.

Competitive Intelligence- 5 Buckets

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Companies need to keep a tab on the competitor activities. Market research is the act of gathering competitive intelligence and is done by a company to find its own standing against the competitors or when a company is entering a new market or industry where there are already existing players. The most fundamental question being tried to answer is what is the market share of the various companies in the market. Market share by revenue might be different from market share by volume shipped.

Types of Competitive Intelligence

Research questions for gaining competitive intelligence can be one or more among the following but not restricted to these only.

Channel PartnersNew productsConsumersMarket shareSelf-assessment/ NPS
1. What are the competitors doing to attract new channel partners?1. Have new competitors or alternative products entered any new market?1. What category of consumers are targeted by the competition? Is there a niche market serviced by competition?1. What is the market share of the major competitors or has there been recent changes in the market share of companies?1. How efficient company’s systems are in terms of accounting, complaint redressal, scheme disbursement, etc?
2. What short term and long term schemes are being run for the channel partners?2. Which innovations are the competitors bringing in their product?2. What has been the recent changes in the competitor marketing communications?2. What is the market share of the unorganized sector competitors?2. How satisfied are the customers with the company’s marketing/ supply chain activities vis-à-vis those of the competitors?
3. What are the billing and wholesale prices of competitors?3. What is the feedback on the product quality compared to competitor’s product?3. What are the consumer schemes being run by the competition?3. What activities by the company will have the highest impact to increase the market share?3. How likely are the channel partners (promoters) to recommend our product?
Market Research questions pertaining to Competitive Intelligence

Though superficially all the research questions for getting competitive intelligence look different, there are deep relationships among them and response on one question impacts the response on another.

Competitive intelligence
Competitive Intelligence