Definition

Customer attitude measurements are taken on either potential or existing clients in order to identify their characteristics. Why should the competent market engineer conduct extensive customer research? Customer or end-user surveys can provide the researcher with a wealth of information valuable to the marketing function.

Detailed information regarding the end-users in your market will provide you with the basic platform for all your marketing decision-making. Marketing decision-makers need descriptive information about their markets. How many end-users are there? What are the total potential unit and dollar sales in each segment of the overall market? You also need to know your ranking in the total market and in each market segment. Perhaps most important, you need to be aware of the relevant objectives and needs of end-users and how these objectives might best be served by your products.

Methods of Measurement

Along with standard demographic analysis, which is explained later, you can use several reliable methods to make measurements on your customer base:

• End-user surveys
• Focus groups
• Beta sites
• Test marketing
• Trade show research

End-User Surveys

End-user surveys are among the most efficient ways to determine end-user perceptions of your company and to get an accurate idea of your company's image in the marketplace. Such a survey is a direct way to acquire reliable information on the beliefs, attitudes, and perceptions of customers and potential customers. Three basic methods for the completion of end-user surveys are telephone surveys, mail surveys, and personal interviews.

These techniques and methods can easily be applied to customer research to identify predominant trends in the opinions of end-users and the direction of market demand. Interviews with end-users, whether conducted through mail surveys, in person, or over the phone, can prove vital as sources of information.

Focus Groups

A focus group interview is a potentially vital source of data in the customer research process. A focus group interview involves bringing a small group of respondents together for in-depth interviewing. Focus group interviewing is quite different from individual interviews. Information flows are not as closely guided between respondents and interviewer. Each opinion of a member of the focus group is discussed by all group members, leading to consensus on trends and attitudes.

Beta Sites

Beta site testing involves actual preliminary use of the product by a carefully selected sample group of end-user representatives of the market or niche you intend to serve. Beta site testing is actually the second step in the end-user testing cycle adopted by many companies. Alpha site testing is the initial phase and involves the placement of a single product prototype with an end-user for a time. The principal shortcomings overlooked in laboratory testing are generally revealed during alpha site testing.

Beta sites are a form of product use testing. Before placing any product on the market, the product prototypes are placed in the customer's working environment. The goal in the majority of companies is to minimize the time to general product release. So, beta site testing is usually skipped to reduce the time to market. Beta site testing can tell you a lot about the strengths and weaknesses of your product without significantly delaying market introduction. A redesign at the product design stage is significantly less expensive than at the introduction stage.

Test Marketing

A rapid growth area of customer research over the past two decades has been test marketing. Test marketing is a type of marketing introduction experiment conducted in a small, carefully chosen segment of the total marketplace. The list below shows the primary objectives of this type of customer attitude measurement.

Objectives of Test Marketing

• The primary goal of test marketing is to test the viability of the product and market strategy on a subsegment of the market.
• Test marketing is often used in new product marketing or the marketing of enhanced versions of existing products.
• Test marketing is the final method of determining the potential reaction of end-users to a product.
• Test marketing can be designed to test any component of the market strategy; price, packaging, promotion, and so forth.
• Test marketing is much more cost-effective than launching the product worldwide and then learning about the mistakes.

Test marketing is when a company launches a new product or a new market strategy on a limited segment of the market. Typically, it is a measurement performed in consumer industries. Usually we see it on new food products. We have yet to see an industrial product company use this technique. However, we have seen that many companies will launch their products in their own countries first and then expand into other countries, though this is usually not done so much as a test but more as a delay caused by limited production capabilities. Often the structure of the test marketing program will mirror a planned national or regional marketing program for the product, but on a limited scale and with a smaller geographic scope.

Trade Show Research

The use of trade shows as a source of customer attitude measurements during the research process can save time and money. The trade show represents an ideal place to conduct preliminary research as a multitude of existing end-users and prospective end-users are under one roof. It presents industry participants with a unique opportunity to gain a superior understanding of their end-users' needs and general technological and market trends in only a few days.

At a trade show, researchers may use several techniques to determine prevailing end-user perceptions regarding their products and their companies. Surveys are the most effective way to get an impression of an end-user opinion or attitude.

What Do Customer Attitudes Really Tell You?

The measurement of customer attitudes is a vital source of information to help keep your company marketing-oriented. Knowing what customers think, how they act, why they buy, when they buy, and what makes them angry or happy are key inputs to your product marketing strategy.

We have all seen many large and successful companies that eventually got into trouble or went out of business because they got out of touch with their customers (for example, the U.S. automotive industry in the 1970s and 1980s). The list below gives you a more-detailed look at some of the information available through customer attitude measurements.

Customer Attitude Measurements

• Factors which influence the customer to buy
• Purchasing patterns
• Attitudes about competitors' products
• Price sensitivity
• Perceptions about your company
• Opinion of your product
• Satisfaction index of various products
• Future needs of customer base
• Requirement for customer service
• Media utilization habits: newspapers, magazines, TV, and so forth

Case History: Minicomputer Software for Data Center Management

No matter how much a firm's management may discount the importance of market engineering, it simply cannot avoid using market engineering as a way to keep in contact with its customer base. The client in this case study was a fairly new company (about ten years old) that had developed minicomputer software for data center management.

Over its ten-year history, the firm had expanded relatively well. However, there was a consensus that growth was not fast enough and that new avenues for growth were required.

To uncover these growth opportunities, we decided to develop a customer survey to establish which types of new products and marketing strategies were needed. In designing the survey, we decided to ask a few questions about product recognition, company recognition, product quality, and end-user satisfaction. As we were dealing with a blind questionnaire (the manufacturer would remain anonymous), we were able to gain information on all existing competitors' users in addition to our own customers.

What We Discovered

The results were astounding. First, we were surprised to learn that of the 112 respondents, 77 percent could not recall our client's name when asked to supply a list of suppliers for this type of software. There were only four software suppliers named, and the competitors had the following recall rates:

• 64 percent
• 75 percent
• 64 percent
• 23 percent (our client)

Our client had a very long high-tech-sounding name made up of four separate words that no one could seem to remember. To be frank, we had trouble getting all the words in the right order ourselves. The finding came as a surprise because the firm in question was one of the older suppliers in the market and had been mailing out product literature for over five years.

We did find, however, that more users could remember the product name. In that case, the recognition rate went up to 49 percent. The next thing we determined was that the customers who had purchased our client's software were most satisfied with its ease of use, and the software received the highest overall ranking in reliability and product quality, as shown in Figure 1:

Figure 1 - Customer Attitude Measurements: Customer Satisfaction Analysis

Vendor	Ease of Use	Reliability	Quality	Customer Training	Service Support
A	3.7	3.0	3.6	2.0	2.4
B	3.5	3.4	2.9	3.1	1.5
C	2.9	2.7	2.7	3.4	3.1
D*	4.7	4.8	4.6	2.9	3.0
Key - Average Rating: 1=Low, 5=High *Our Client

Note: All figures are rounded. Source: Frost & Sullivan

The company's management was surprised to see this. They had no idea that their end-users were far more satisfied with their software than the users of their competitors' products. The survey revealed a number of other things about purchasing patterns, including which clients were ready to purchase products and which types of new products were most in demand. However, the results that caused the most interest were the customer satisfaction analysis and the company name recognition problem.

The Response

The first thing we advised the firm to do was to find a public relations firm to design a new name and logo for the company. The current name and identity simply were not assisting in customer recognition.

Second, we now knew that although the firm had the smallest share of the market it had the highest customer satisfaction rating. This message had to get out to potential users and so, with the assistance of an advertising agency, the client performed a second step of redesigning its advertisements around the survey results and reworking its direct mail campaign from the ground up, again focusing on the survey results. The goal was to educate the client base on the superior performance of the product.

Third, the firm was not happy with the low rating it received on service, training, and support. As a result, it doubled the size of its customer support department and established a goal that every customer receive a response to a service or support request on the same day. This cut the firm's previous average response by three days.

The company also added new training programs that were held four times a year around the U.S. and in Europe, doubling the extent of training programs and refreshers. The additions to service and training unit prices were reflected in a 20 percent price increase to cover increased costs.

The Result

Within two months, the client was able to close the largest sale in the industry's history - a government order for multiple systems, which represented 50 percent of the company's annual turnover. The company president indicated that the survey results that they presented were a prime factor in influencing the government's decision.

The cost of goods sold (COGS) for the software on this sale was probably about 5 percent, not a bad return on a $20,000 investment in market engineering! Four months later, a major computer manufacturer began recommending our client's software as a package with its hardware. At the end of the year, it had a 40 percent sales growth rate, even excluding the government order. Growth has maintained that pace in subsequent years.