Market Research Methods: Primary, Secondary & Segmentation

Posted on Feb 27, 2025 in Marketing

Primary Research Methods

Observational methods: Collecting behavioral data where the researcher acts as a spectator without intervening. This method may not reveal people’s motivations. Techniques include visual observation and technical means.

Experimentation: Conditions are controlled, and independent variables are manipulated to measure effects on dependent variables. Independence is crucial to prevent contamination. Includes an experimental group (exposed to the treatment) and a control group. Focuses on the effect of changing one variable.

Group techniques: Obtaining ideas/solutions from a group of experts to understand motivations and reasons. Types include:

  • Focus groups
  • Interviews (one-on-one or with two people)
  • Brainstorming
  • Role-playing
  • Phillips 66 (6 persons, 6 minutes)
  • Delphi method

Uses: exploratory and descriptive studies, qualitative/quantitative predictions, probabilistic estimates. Involves internal experts (marketers, managers, executives) and external experts (customers).

Delphi Method

Aims to minimize subjectivity of personal opinion. The degree of agreement indicates the degree of objectivity. Differences are gradually reduced to reach the broadest consensus. Conducted by mail to reduce inhibitions, avoid consequences of leadership, allow longer meditation, and be more economical. Suitable for experts from different locations but not recommended for urgent information. Uses: create ideas, study evaluation plans, study relationships between manufacturers/distributors, and understand public attitudes/motivations.

Panels

Analyzes a fixed and representative sample of the population using surveys. Types include: consumers (households), retailers (Nielsen), and audience panels. Europanel is an organization grouping all panelists in Europe. Information collection methods: post, personal (Dustbin-Check), mechanical. Applications: Nielsen (food retail stores and drugstores: stocks rotation, market share by type of establishment), TNS (Families: sales volume by DYM geographical areas, by brand, sensitivity of sales to price, frequency of purchase), Audience (Media: audience media, characteristics, loyalty. Advertiser: media planning).

Secondary Research Methods

Types of managing promotional activities:

  • Up-selling: Increase a customer’s total purchase (e.g., receive a €10 voucher for purchases exceeding a certain amount).
  • Cross-selling: Encourage customers to purchase products they don’t usually buy.

Ratios Analysis

Market growth = (data2015 – data2014) / data2014. Rating: 0-4 (disaster situation: decisions not related to the market), 5-10 (questionable situation: must make effort to improve), 11-15 (ideal situation: doing well).

External Secondary Sources

  • Official organizations: INE, IVE, ICEX, IVEX, CIS, Mercantile register, Ministries.
  • Private organizations: SABI, DBK, Chamber of Commerce, Spain Economic Yearbook of La Caixa.
  • Publications: Distribution and Consumption, Alimarket, Ipmark.

Market Segmentation

Marketing proposal for heterogeneous consumers: Form homogeneous groups of consumers to satisfy them in a profitable way, segment the market. Segmentation (due to range of Demand) ≠ Differentiation (range of the Supply) ≠ Positioning (based on the image in the mind of Consumer).

Principle of “False majority” (not considering the competition): Never do what everybody does.

Maslow’s Hierarchy of Needs: Physiological, safety, belonging, esteem, self-actualization.

Segmentation Process

  1. Market division
  2. Segment analysis
  3. Evaluating/selecting segments

Segmentation Variables

  • Descriptive: Demographic, geographic, socioeconomic, psychographic, specific.
  • Functional: Purchase reasons, expected benefits.
  • General subjective: Personality, lifestyle.
  • Specific: Perceptions, attitudes, buying behavior.
  • General objective: Independent product, objective of the individual.

Segmentation Methods

  • One variable: Least squares, AID (dichotomous, variance analysis, average), CHAID (not dichotomous, chi-square test, frequency table) (specify segment variable, explanatory variable).
  • All variables: Distances, cluster analysis (specify number of segments).

Distances

Measures similarities of 2 components in the market: Quadratic media (subtract parallel values and raise to 2, add to the following doing the same, and with the results fill in the comparison matrix, the smallest value will be the closest elements, create a column joining them, averaging the pairs by rows “centroid”).

Dendrogram

Tree diagram of segments, showing distance. Never more than 7 segments (3-5 advisable): segment size always measurable, with descriptive/functional info., clear differences between segments.

Assessing a Segment as Target

  • Consistency with goals/image company
  • Structural analysis (competition, threats, growth forecast, bargaining power)
  • Economic analysis (static/dynamic criteria: Profit/NPV method)

Marketing Strategies

Undifferentiated, concentrated, differentiated (advantage: ↑ profit/fidelity, ↓ risk (high/medium differentiation), barriers to entry for new companies; disadvantage: greater effort, + risk for low diff).