Q1: We need to understand and research why the Spaniards are spending relatively less on Pasta than its European neighbors.
Current market research done by AEFPA offers insufficient data, so we need to improve data quality. The main goal is the get a clear demographic segmented market overview. One of the problems is that we cannot clearly identify the potential and current pasta consumers clearly – we simply do not know enough about of core target group. In addition we need insights on consumer behavior and habits as we do not know what drives the consumer decision when choosing pasta and when declining pasta. Another advantage of a broad market study would be that it would become clear if there are segments in the market currently not being explored. As a result we will be able to clearly identify the market entry barriers for pasta.
According to our calculations (Appendix 1), there is an underutilized yearly market gap of EUR 87Mln. Given this significant amount we find it justified to spend 0.2% (Eur 175.000) of the market gap initializing the market research plan, collect the data and conduct the analysis. Costs to marketing strategy, marketing planning and implementation are not included in this figure. We estimate the overall cost of the market research will be Eur 132.800 Judging from informal discussions with contacts in Unilever and Kraft Foods, our estimate seems to be on the low side.
Q2 - Methodology:
We are interested in conducting both quantitative and qualitative research. In our opinion we need both elements to fully understand the market. This will allow us to better segment the market.
Starting point of the quantitative research is the detailed quantitative research already done by AEFPA. The Geographical sales overview, distribution channels and sales pr. pasta type, must be investigated further. We suggest conducting a demographic segmentation overlay to this data, as the segmentation will serve us by dividing a large population/sample into specific customer groups.
We are opting for the demographical segmentation as we expect to receive a large amount of data that otherwise would not be feasible to analyze. Therefore, we cluster the information to make patterns of sub-groups visible and will enable to identify consumer profile and behaviors. We refer to this as top-down market research.
The consumer behavior can only be partly captured in the demographic segmentation, so to ensure we have a bulky sample of data, we introduce a bottom-up process by initiating “Shopper Insights” research. “Shopper Insights” will in addition to bring to additional data on behavior also provide invaluable insights to the customer’s perception of pasta. The aim with “Shoppers Insight” is to passively monitor the customer’s behavior in the situation of purchase at point-of-buying to learn about the “conversion rate”. Unilever defines “Shoppers Insight” as ” focus on the process that takes place between that first thought the consumer has about purchasing an item, all the way through the selection of that item”. This is further underlined by practical examples from Kraft Foods Switzerland, who has provided access to their methodology to this group. We will be adopting the methods of “5 S’s” to conduct our “Shopper insights” research and conduct this across the difference distribution channels mentioned in the case. Detailed explanation in Appendix 2 By making use of both top-down and bottom-up quantitative research, we feel we have adequate data quality. However it is critical to maintain a satisfactory sample size. We assume our sample pool will be the entire Spanish population. There are many considerations when choosing a sampling size. We consider it a tradeoff between costs and sampling quality as there is a linear relationship between the sampling size and the cost. We estimate that the sampling size must be at least 384 people. See further details in appendix 3.