Friday, August 17, 2012

Case Study : Application of Focus Group Interviews in Marketing

Solution to case study  Based on  article in  Journal of Marketing, January 1976   written by   KEITH K. COX, JAMES B. HIGGINBOTHAM, AND JOHN BURTON

The focus group interview is an effective qualitative  technique in marketing research. Three actual marketing applications illustrate the usefulness of this approach for marketing mix problems.
Although focus group interviews have been used  by many marketing research firms since the 1950s.

Focus Group
The Focus Group Interview 

Basically, there are two types of group interview  studies. 
1.      One is nothing more than a question and answer session: the group moderator asks questions and the respondents give verbal or written answers.

2.      A second type is the focus group  interview, where a group of people (generally eight to twelve) are led through an open, in-depth discussion by a group moderator.
Such interviews   can be used to develop hypotheses in the  planning or qualitative stage of the  marketing research process.

Marketing Applications
Focus group interviews can be effective research  tools in many types of marketing decision situations. The  usefulness of the technique in three distinct decision areas is discussed in this case study:

(1)  Pricing and advertising,  (By a  Power distribution Company)
(2)  A new product    (To be launched by Car Accessory Manufacturer), and
(3) Packaging   (of a  food company).

Example 1: Alpha Power and Light   ( Pricing and advertising)
The Alpha company had requested an electricity rate increase  of 6%, in its trading area for the first time in 20 years and wanted to know

(1) customer opinions of the rate increase, and
 (2) reasons for customer resistance to the rate increase, such as general service problems.

The company used a three stage marketing research program to address this problem :

Stage 1 (Qualitative)   :   Personal Interview of Company executives and analysis of past data.
Stage 2 (Qualitative)  :  Focus group interviews (12  groups of 10 persons in each  group), each interview session videotaped.
Objectives  :
·         Evaluate consumer attitudes  toward utility companies in  this area generally.
·         Develop hypotheses on rate  and service problems of customers
Stage 3 (Quantative)   :   Telephone interview of 700  persons  from 7 districts 100 users in each.
Objectives  :
·         Evaluate Hypotheses  about consumer attitude.
·         Develop communication Ideas

The information obtained in the first stage was used in guiding the researchers in the second stage of the research, where focus group interview sessions were conducted.

The focus group interviews uncovered a "rate bargaining" phenomenon among the groups,

In general, consumers wanted assurances of available utilities and were willing to pay for these services.

Johnson Car Air Conditioning Filter  : (New Product Launch)
The Johnson company developed a new filter to be used in car air conditioning systems. 
A two-stage research process was followed.
Focus group interviews were used in stage 1

  • ·         to help develop hypotheses
  • ·         to identify potential markets,
  • ·         to determine advantages and disadvantages of the  product.

Based of the FG  it was found  that  the target customers can be :

1.    1.      Families in which one or more members had allergy or respiratory problems might be the best prospects for the new product.
2.       Persons seriously concerned about air pollution were also identified as good potential buyers.

The major disadvantages of the product were the performance capability of the filter and the cost of replacement cartridges.

·         Some individuals feared that the filter would cause their car's air conditioning system to malfunction.

·         Non allergic consumers ex-pressed doubt about their need for the product.

·         An unexpected resistance occurred when consumers were informed that the filter would need to be changed periodically.

An analysis of 1500 respondents in five cities showed that the original marketing strategy for introducing the new product was not economically feasible. This led to the development of an alternative marketing plan.

Example 3: Harris Meat Company  (Packaging) :

In this case, the focus group interviews exposed a serious packaging problem and minor problems in shelf space allocation and competitive pricing.

Evaluation and Implications :

Focus group interviews have several advantages for marketing management.
·         First, they help generate hypotheses in the qualitative stage of research.
·         They can provide a stimulus to creative people (copy writers, creative directors, new prod-uct managers, etc.),

Focus group interviews can also give direction and guidelines for constructing questionnaires. Lists of relevant areas of interest of the target audience to be measured can be developed from the groups. With these lists, the risk of addressing the wrong problem is minimized.

Limitations in using focus group interviews.

·         First, the moderator can bias the group results if he or she does not have adequate training and experience in conducting focus group sessions.

The focus group interview is one of a number of qualitative research techniques that can be profitably employed along with quantitative techniques to help marketing managers make better decisions.