Advanced Marketing Solutions For Strategic Decision-Making

Advanved Research Solutions For Strategic Decision-Making

THE MARKETING ANALYSTS is concerned with helping clients identify, select and implement successful marketing strategies.   Our intent is to provide our clients with advanced research solutions to improve the quality of strategic decision-making.

Clearly, the right strategic decision-making produces the positive outcomes that every organization seeks.  However, wrong decisions may produce disastrous results.  As example, here are some startling statistics from well-known American retailers:

•             1990 – 2004         Circuit City grew from $2 billion to $9.75 billion.  Five years later, the company filed for bankruptcy.

•             1930’s   Sears Roebuck and Montgomery Ward were about equal in sales and profits.  Twenty years later, Sears was about three times larger than Montgomery Ward.  In 2001, Montgomery Ward closed all of its remaining stores.

•             1991       Walmart surpassed Sears and Kmart to become the largest US retailer.  Today Walmart is the largest retail company in the world and is becoming one of the largest grocers in the US.

While these examples are dramatic, every organization is affected by strategic decisions. Thus every company must plan and act strategically.  You can uncover the information you need through numerous ways—from online research to focus groups to predictive models.  With effective market research, we can help you determine the need for your service or a product’s likelihood to sell, target-market demographics, and determine desirable store locations. To help you meet your target market’s needs, we offer a leading collection of tools, resources and professionals.

THE MARKETING ANALYSTS can help you.

Conjoint Analysis • Marketing Mix Models • Brand Maps • Market Segmentation • Product Line Management • Sales Forecasts • Advertisement Optimization • Data Mining • Market Basket Analysis • Customer Retention/Predictive Customer Churn

Dallas, Texas • Fort Myers, Florida • Sofia, Bulgaria • Cologne, Germany • Moscow, Russia

US TOLL FREE: 866-371-4863
INTL: 239-243-0767
FAX: 480-393-5183
Email: info@themarketinganalysts.com

Discriminant Analysis, Marketing Segmentation & Perceptual Maps

Perceptual Map Created With Discriminate Analysis

Perceptual maps are used to visualize the differences and similarities in perceptions and choices between products, brands or customers.

For example, a manufacturer of salon brand hair care items wants to see whether a lifestyle variables such as being a NASCAR racing fan, education level, ethnicity and demographic variables such as personal income, sex and a number of other factors are useful in distinguishing purchasers of their products from purchasers of other salon hair care brands.   Based on this classification, customer profiles will be developed in order to plan targeted advertising campaigns.

Discriminate analysis, a multivariate technique used for market segmentation and predicting group membership is often used for this type of problem because of its ability to classify individuals or experimental units into two or more uniquely defined populations.  The discriminant score is the basis for predicting to which group (a purchaser of the manufacturer’s brand or a competitive brand) the particular individual belongs. The discriminant weights of each predictive variable (age, sex, income, etc) indicate the relative importance of each variable.  For instance, if age has a low discriminant weight then it is less important than the other variables.

With this information, a classification matrix can be developed that indicates the accuracy of our model that will be used to construct our map.  For instance, if our discriminant model correctly classified 94.5-percent of users of our brand, then only 5.5-percent were incorrectly classified.  Conversely, if the model correctly classifies 92-percent of the competitive brand users, then only 8-percent were incorrectly classified.  We consider this a strong model because the number of correct classifications is much higher than what might be expected by chance.

Other Applications of Discrimant Analysis

While our example illustrated how discriminant analysis helped classify users and nonusers of salon brand hair care products based on independent variables, other uses of discriminant analysis include the following:

Product research – Distinguish between heavy, medium, and light users of a product in terms of their consumption habits and lifestyles

Perception/Image research – Distinguish between customers who exhibit favorable perceptions of a store or company and those who do not

Advertising research – Identify how market segments differ in media consumption habits

Direct marketing – Identify the characteristics of consumers who will respond to a direct marketing campaign and those who will not

Conclusion

While discriminant analysis is often used in marketing research for marketing segmentation and predicting group membership, there are more powerful and accurate techniques available.  We invite you to learn more about our solutions by contacting us today.

US TOLL FREE: 866-371-4863
INTL: 239-243-0767
FAX: 480-393-5183
Email: info@themarketinganalysts.com