Whether or not to invest heavily in market research How important is it to understand these weaknesses? Critical, because there has been a sales slump in some of the best performing restaurants. Though the present sales slump of 6% per store only works out to overall loss in sales of around 2%, if it continues, it can result in more significant losses for the company. Is speaking to customers one on one enough to understand the situation?
Doubtful, because the slump seems to be on a much larger scale, and there are many new actors that could have contributed to the decline in sales (obsolescence of marketing campaigns, bad training, competition analysis) that cannot be understood by simply speaking with a few customers. Will a deeper understanding of the customers’ feedback help to improve the situation? Definitely – factors like brand image, pricing, service satisfaction levels, etc. An be much better understood. 2. If to invest, which method to use? What options are available? Individual customer interviews, Focus Groups, SIMS, CUES, Taste tests, Quality Inspections How much does each method cost, and is it worth the investment? See table below. Low cost methods chosen as the company cannot afford extremely expensive market research. Is the targeted sample relevant to understanding the problems at hand? How accurate will be the feedback based on each method?
Method Target Sample Cost Notes The Coop- Marketing Research By rattlebrain Customers at stores Free Small sample size – inaccurate representation of overall problem Focus Groups Customers from declining Coop stores 5000 / group More than 1 group would be required to get accurate data, costs would increase BINS Random market segment, competitors customers included 0,000 – 50,000 With a low incidence rate in the random data sample, there would be insufficient data to solve the problem CUES Anonymous customers 45,600 Only 30 customers would be covered at a considerable cost Taste Test Loyal Customers in the vicinity of R kitchen Salaries of staff + Possible building renovation Target sample may not be relevant to study Quality Inspection Employees Unknown May not get “insider experience” to understand true problems Feedback cards Customers Printing costs Number and quality of feedback would be vague without equal. Research 3. Understanding the Sales Slump Cause of the sales slump- quality, brand perception, competition? Does the sales slump Justify large scale spending on market research? – 4. Corporate strategy / direction- which growth opportunity to take? What are the possible growth strategies – increase menu offerings, rework branding, keyboarding, home delivery?
What are the benefits / disadvantages of each strategy? Is the tension between the VSP causing a dissent in overall organizational direction? Does the chosen growth strategy align with the company image? Should they use feedback cards? Qualitative research is always required before quantitative research. In its current form, the feedback given would be too vague to take action on. Focus groups would help understand the root causes of the problem and the quantitative analysis of the feedback forms will lend credibility to the hypotheses proposed by the focus groups. Criteria on which the feedback should be given – this can only be accurately obtained after in depth research.
Which market research proposal would I choose? The focus groups, for the following reasons: 1 . Economical way of reaching out to customers . In depth analysis of relevant target sample 3. Can use data from focus groups to better frame a quantitative feedback form Options I would completely eliminate: 1. BINS – the random market sampling method is too vague to Justify such a huge cost 2. CUES – Too expensive a program, targeting too few customers 3. Taste test- Being studied under a controlled environment vs.. Being in an actual store, customer behavior changes. 4. Quality Inspection – While it may correct organizational changes required, it will not Judge the response of the customers.