Market Research: Segmentation, Concept & Product Testing

Posted on Jan 30, 2025 in Marketing

I. Segmentation and Positioning Studies

How Can We Identify Homogeneous Groups of Consumers or Segments?

  1. A Priori Segmentation: This is done before the study starts, using basic variables such as age, sex, socioeconomic level, lifestyle, etc. (traditional approach).
  2. Cluster Segmentation: This is done afterward, when the analysis of results is ready. It is more oriented toward psychographic variables and attributes of products.

Techniques Used in Cluster Segmentation and Positioning Studies

  • Quantitative
  • Very large samples
  • Probabilistic sampling methods
  • Very long questionnaires
  • Scales highly used
  • Multivariate analysis techniques:
    • Multiple Correlation
    • Factor and Cluster Analysis
    • Multidimensional Scaling

II. Concept Testing

Concept testing attempts to predict the success of a new product idea before it is marketed. It involves getting people’s reactions to a statement describing the basic idea of the product. As such, it is usually pass/fail, go/no-go. A much more fruitful approach is concept development: the gradual refinement of new ideas into a form that is most likely to be accepted in the marketplace. It not only gives promising ideas a fighting chance, it provides guidance for the communication of benefits, uses, packaging, advertising, sales approaches, product information, distribution, and pricing.

Risk: A Risky Undertaking

Reasons:

  1. People cannot be expected to know or tell you how they would behave in the future, especially in hypothetical situations.
  2. People are often skeptical of new ideas, and occasionally hostile to them. Radically new products shake up people’s established way of doing things, putting them at or over the edge of their own incompetence. So, new ideas are unsettling at best and a threat at worst.
  3. People often do not have the imagination to see how the new product would benefit them.

How to Do It Right

  1. Principle #1: An idea is not a product.
  2. Principle #2: For an idea to become a viable product, it must be more than just superior.
  3. Principle #3: It is not what you know your product is, but what others think it is, that determines product acceptance.
  4. Principle #4: To develop your product in the psychological world, you need a psychological marketing laboratory.
  5. Principle #5: Concept “testing” should be a development process.
  6. Principle #6: Concept development is a process of successively refining, amplifying, and enhancing the basic idea of the product.

Who Should Do Product Concept Testing?

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III. Product Testing

  • Important Attributes: Which attributes play a major role?
  • Usage or Laboratory Testing
  • Blind Testing: (single, paired, other)
  • Predicting Trial Purchase

Techniques

  • Quantitative
  • Small samples
  • Laboratory or field experiments

IV. Market Tests

Market tests allow the researcher to test the impact of the total marketing program, with all its interdependencies, in a market context as opposed to the artificial context associated with concept and product tests.

Main Benefits

  1. Gain information and experience with the marketing program before making a total commitment to it.
  2. Predict the program’s outcome when it is applied to the total market.

Types of Market Tests

  1. Sell-in Market Tests:
    • Selecting the Cities:
      • Representativeness
      • Data availability
      • Media isolation and costs
      • Product flow
    • Implementing and Controlling the Test
    • Timing
    • Measurement
    • Costs
  2. Controlled Distribution Scanner Market Tests: Projecting trial, repeat, and usage rates, using panel data.
  3. Simulation Tests