A market segment is a part of a larger market with similar features. In effect these smaller segments contain a set of products that can be substituted for one another. For example, someone who wishes to purchase a Lemon-Lime flavoured soft drink may prefer Sprite, but if that brand is unavailable they can readily substitute it with another similar soft drink.
With the strength of other brands in the Lemon-Lime segment of the soft drinks market it was easy for everyone to guess that new entrants would find it very difficult to gain a significant market share. However, preliminary research conducted by Sprite found that the current lemon-lime brands in the market did not have deep appeal to teenagers, or ‘teens’, as they tended to target families. However, teens represented a large percentage of the Irish population, with increased spending power, created by a strong economy that saw many young consumers with part time jobs.
Sprite’s global positioning is that of a soft drink for teens. Therefore, it was identified that both a volume opportunity for sales existed and that a profitable market niche within the lemon-lime segment could be created. If Sprite could target their soft drink at this sector, a profitable market niche within this segment could be created. A market niche is a sub-section of a market in which a small number of products very closely match the needs of consumers. As a result of this, Sprite initiated a process of market research in order to better understand Irish teens and their needs.
Market research is a process that links consumers to a company through information and data gathering. The market research process consists of four steps:
1. Defining the Research Objectives
Defining the objective is often the most difficult step in the research process. A poorly defined objective can lead to inappropriate research and a waste of valuable time and money. Exploratory or preliminary research is often required to help define the issue to be investigated. In the case of Sprite, sales figures from other markets indicated that their brand would appeal to young people if the right marketing messages are created.
2. Developing the Research Plan
Having defined the objective, Sprite then created a research plan to help gather the information management needed. Market research information comes in the forms of Primary and Secondary Data.
Primary Data is new information collected by a researcher specifically for the project in hand. This data is often very expensive to gather and may vary in terms of quality.
Secondary Data is information that already exists somewhere else, whether that is inside the company or in an external source e.g.newspapers, magazines, the internet etc. Secondary data is very useful for providing background knowledge to a problem and is used by most companies as a starting point in a research process.
Innovative Focus Groups
For the purposes of Sprite, management decided that the information required about Irish teens could best be gathered by conducting new primary research.
When choosing a research method, Sprite marketing management was aware that an inappropriate choice of research setting would dissuade some teenagers from getting involved.
The target group might feel intimidated or uncooperative if invited to a formal research setting such as an office or hotel conference room. As a result it was decided to create a new and innovative research environment. The aim was to design an informal atmosphere where teens would feel comfortable, speak honestly and have fun.
The setting also had to enable the researchers to gather all the opinions and data they needed through both observations and contact research.
The advantage of this approach was that it allowed great flexibility in interviewing technique. It would also allow a very large amount of
information to be collected at one go. The main disadvantage was the cost of hosting these sessions and the fact that the sample groups had to remain small to be manageable.
3. Implementing the Research Plan
Having decided on an approach, the researchers then invited a number of teens to come and talk with them.This sample of teens had to be chosen in such a way as to represent the wider Irish teen population. In particular, the Sprite researchers were eager to understand the attitude of ‘Leading Edge Teens’. ‘Leading Edge Teens’ are young people who are regarded as trend setters by their peers. These individuals are innovators and are among the first to adopt new fashions and styles. As such, it was important that Sprite understood how to target this group.
The teenagers were asked to bring along some of their personal items, for example, CDs, books or videos, and to talk about them. They were also encouraged to chat about life as a teenager in Ireland. The purpose of these sessions was to allow these young people to ‘get deep’ and to reveal the values most important to them. In this way the researchers attained a very revealing insight into what makes Irish teenagers tick.
4. Reporting on the Results
Reporting is a standard business practice and can cover many areas, for example, financial reporting, health and safety reporting and production reporting.The aim when reporting research results is to identify the most important findings that have arisen. The research conducted by Sprite proved extremely important for isolating the attributes and values of young Irish people. These results, together with findings from other research, could then be used in the creation of an innovative new marketing strategy for the re-launch of Sprite.
We will talk about Marketing Mix in our next article…
*’Sprite’ is a registered trademark of the Coca-Cola Company.