Imagine you work for an automobile company, e.g., Honda.

1
Marketing Management at Honda Motor Car Company

• Imagine you work for an automobile company, e.g.,
  Honda.
• You are asked to provide strategic
  recommendations about a potential new product
  line to be introduced in 2009.

2
Boss says Broad Ideas

• Product Line Design
• Positioning and Advertising
• Pricing
• Distribution

3
How Do We Go About Doing This?
4
Charles Lazarus, Founder, Toys R Us
Assortment
Breadth (Kinds)
Depth (sizes)
X
X
Price
Convenience
5
Customer Analysis
Industry Analysis
Competitive Analysis
Technology and Government
Self Analysis
Marketing Strategy for New Product Line
Product Line Design
Positioning and Advertising
Pricing
Distribution
Manufacturing
Long Run Sustainable Competitive Advantage
6
Market Research

• Problem Definition
• Exploratory Research
• Questionnaire Design
• Sample Design
• Data Collection
• Analysis
• Strategic Recommendations
• Implementation

7
Exploratory Research
Consumers
Potential Purchasers of a Competitive Brand
Purchasers of a Competitive Brand
Potential Purchasers of the Brand
Purchasers of the Brand
Age or income
Dealers and Salespersons
Automobile Executives etc..
8
Example of Data Which Needs to Be Collected
1. Information on Households Existing Stock of
Automobiles
2. Rate the following cars on various attributes
using a 7 Point Scale
(1disagree, 7agree)
Olds
Nissan
Honda
Ford
VW
Thunder
Porsche
BMW
Your
Mobile
Sentra
Accord
Mustang
Rabbit
Bird
Ideal
YYY
XXX
3. Demographics
9
Outside the Black Box
What factor analysis does -- estimates ?s



F

X
X
?
?
?
?
?
?
?
?
?
.
.
.
X
X
1
1
3
11,1
1
1
2
1
2
3,1
11
,
,
ROOM
QUALITY
MPG
LUXURY
Variance of F1 is maximized



F
X
?
?
?
?
???
?
?
.
.
.
X 1
X
X
2
11
1,2
2, 2
3,2
3
11
, 2
2
Variance of F2 is maximized F2 uncorrelated with
F1
original variable





?
1,1
factor
F

X
?
?
?
?
?
u3,11 X11...u11,11X11
X
11
1
1
11
2
11
2
,
,
10
How Many of 11 Factors to Retain?
11

• Run Factor Analysis

Manager Needs to

• Determine number of dimensions which describe
  market

• Name these dimensions

Performance
Economy
Family
Quality
FACTOR 1
FACTOR 2
FACTOR 3
ROOMY
0.29
-0.27
0.86
QUALITY
0.89
0.22
0.00
MPG
0.07
-0.94
-0.06
POWERFUL
0.66
-0.52
-0.24
SPORTY
0.66
-0.18
-0.51
PRESTIGE
0.84
-0.27
-0.06
INEXP
-0.53
0.66
0.00
FAMILY
-0.19
0.15
0.87
ACCL
0.76
-0.34
-0.31
PERF
0.81
0.34
-0.23
LUXURY
0.71
0.48
0.19
12
FACTOR 2
1.25
NISSAN SENTRA
IS1
HONDA ACCORD
1
0.75
VW RABBIT
IS 3
0.5
0.25
Economy
0
FORD MUSTANG
-0.25
BMW
-0.5
PORSCHE
THUNDERBIRD
-0.75
OLDSMOBILE
-1
-1.25
-1
0
1
2
FACTOR 1 Performance/Quality
13
FACTOR 3
1.5
OLDSMOBILE
1.25
1
0.75
0.5
THUNDERBIRD
HONDA ACCORD
0.25
BMW
FAMILY
0
NISSAN SENTRA
-0.25
VW RABBIT
-0.5
FORD MUSTANG
-0.75
-1
PORSCHE
-1.25
-1.5
-1
0
1
2
FACTOR 1 Performance/Quality