Methods in Business Research: Report on Philips Argenta Komfort
This reports is aimed at Methods in Business Research for a Live case of Philips Argenta Komfort. The management problem is that sales of Argenta Komfort have been falling for the past six months, hence this study will analyze data around issue from different dimensions.
Table of contents
Organization of the report———————————————————– 3
Time and financial requirements————————————————— 4
Management Problem and Objectives——————————————– 4
Situation Analysis————————————————————————– 5
Research Problem————————————————————————– 5
Research Objectives———————————————————————– 6
Research Methodology—————————————————————– 7
Method of Administration—————————————————————— 8
Structure of Questionnaire—————————————————————- 8
Sampling Process————————————————————————– 12
Sampling Frame and Sampling Unit—————————————————— 13
Sampling Method and Sample Size——————————————————- 13
Analysis of Retailers’ Questionnaires—————————————– 16
Analysis of Customers’ Questionnaires——– Error! Bookmark not defined.
Hypothesis Testing—————————- Error! Bookmark not defined.
Summary of Findings————————– Error! Bookmark not defined.
The project has been given to us by the Lighting Division. Lighting is a star division of Philips in the sense that it is the market leader. The sector is growing at approximately 7% a year. Their main products are General Lighting System (GLS), tube lights and Energy savers. GLS includes the common bulb, candle bulb for chandeliers, glare and luster bulbs and finally the milky white bulb, that is, Argenta Komfort. The respective shares of these products in the market are as follows:
Although Philips commands 54% of the total market share for lighting products, Khyber is a major threat. Khyber is competing on the basis of lower price as compared to Philips and it is also providing retailers with higher margins so that it has gained almost a 30% share of the market. General Electric with its worldwide recognition is also a major threat. Another entrant is Syed Bhai Kumho, again one of the competitors.
Organization of the report
The report has three major sections. The first section gives information on the company that has given us the research problem. It is followed by a statement of the management problems and objectives. The research problem and research objectives are also given. The second section deals with data collection procedures, questionnaire administration and sampling.
The third section deals with analysis of the data collected. It gives a summary of the findings. It gives the results of tests conducted to accept or reject hypothesis.
Time and financial requirements
Our time was spent on a number of activities, which include questionnaire administration and data collection. Tabulation and data coding required considerable time. Data analysis and testing of the hypothesis were also two of the most significant activities carried out.
Management Problem and Objectives
The management problem is that sales of Argenta Komfort have been falling for the past six months. According to the management of Philips there is no problem with the place, promotion and product of the marketing mix. They believe that price could be a factor influencing the sales of Argenta Komfort. The objective of this research is to evaluate the four dimensions of the marketing mix. We intend to evaluate the price, promotion, place and product aspect of Argenta Komfort.
An analysis of the lighting division of Philips has revealed that overall sales of the lighting division are on the increase. Philips tubelights and bulbs, in general are preferred by consumers. Majority of the retailers stock Philips bulbs and tubelights. Therefore managements concern with the decline in sales of Argenta Komfort is well founded. It is clear that Argenta Komfort sales have not kept pace with increasing sales of the lighting division.
The research problem is to find out the reasons for the decline in sales for Philips Argenta Komfort. Argenta Komfort is one of the products of the Lighting Division and sales have been dipping nationwide for the past six months. The specific problem is to find out which of the factors among the four P’s, that is, price, product, promotion or place, is predominantly responsible for the decline in sales.
Our research objective is to find out which of the following factors are responsible for the decline in sales of Argenta Komfort.
There are four factors that we are considering which are price, place, promotion and product.
Price: The decline in sales can be because of price. The price of Argenta Komfort is higher than other bulbs and this could be a reason for the decline in sales of Argenta Komfort. The consumers could be perceiving the bulb as being priced higher than what it should be priced and could therefore refrain from buying the bulb.
Place: Another factor that could cause a decline in sales of Argenta Komfort is the bulb not being widely available. Retailers could be stocking Philips bulbs in general but they may not be stocking Argenta Komfort. Therefore since the bulb is not widely available consumers could be purchasing other bulbs. As a result of this the sales of Argenta Komfort sales could have declined. The purpose of our research is to find out if availability is a significant factor in causing sales to decline.
Product: Another reason why sales of Argenta Komfort could be declining is that the bulb may not be of good quality. The life of the bulb may be very short and the bulb might fuse in a very short time. Therefore consumers could be dissatisfied with the product and may not purchase it. The purpose of our research is to determine whether the quality aspect is affecting sales of the bulb or not.
Promotion: Another factor affecting sales could be lack of promotion. Argenta Komforts advertisements may be ineffective. Other forms of promotion may not have attracted customers. As a result of an ineffective advertising campaign customers may be unaware of the product and may not purchase the bulb. The purpose of our research is to find out whether ineffective promotion is the factor that has caused a decline in sales.
Our target respondents consist of two separate tiers of Philips customers:
- End consumers
Method of Administration
The method of administration is personal interviews. We have chosen structured direct form of interviews because we developed questionnaires for both retailers and end consumers in advance. We personally visited retailers at their shops to ask them the questions and marked their answers without any personal interpretations.
Structure of Questionnaire
The majority of the questions are multiple choice or close ended so that there is no possibility of interviewer bias. Only a few are open ended because they were needed to test the customers’ attitude towards bulbs in general and Argenta Komfort in particular. In the questionnaire we have gone from unaided recall to aided recall in a series of steps. There are a few irrelevant questions too just to hide the identity of the sponsor, otherwise all questions are absolutely essential for purpose of analysis. We have tried to make use of the techniques studied in this course to the best of our abilities. The semantic differential scale has been used to rate various brands on the four attributes to be tested.
Pretesting questionnaires is one of the most important steps in questionnaire design. It helps to reveal flaws in the questionnaire, which can be corrected. We pretested the questionnaire to examine the following issues:
We wanted to know whether the vocabulary of the questionnaire could be understood
We wanted to know if information on all five P’s of the marketing mix was being collected.
We wanted to ensure that the sentence structure was correct and that respondents did not have any problem understanding it.
We took a 10% sample size to pretest the questionnaire and found a number of problems. Several people told us that they used a combination of lighting systems in their house and our questionnaire had no questions related to this aspect. Also our questionnaire did not measure the usage proportion i.e it did not measure which lighting system was used the most. Many respondents felt that they purchased tubelights after two or three years and bulbs within one or two weeks and questions relating to this had not been incorporated in the questionnaire. The original questionnaire was also unable to measure advertising and brand recall. There were several problems with the way questions were phrased.
Several changes were made in the questionnaire and the questionnaire was reprinted and distributed so that responses could be accurately gauged.
The changes made are as follows:
- A question relating to which lighting equipment is used more than any other has been incorporated. We will now be able to collect information about the usage pattern and the consumer’s preference for a particular lighting equipment.
- Since consumers buy bulbs more frequently than tubelights this aspect has been incorporated in the questionnaire by inserting more alternatives related to frequency of purchasing bulbs or tubelights.
- More alternatives with respect to the lighting equipment purchased have also been incorporated. The initial questionnaire restricted the purchase to bulbs and tubelights but now it includes energy savers as well.
- Respondents were unable to understand what we meant by chandelier bulbs, milky white bulbs etc so we incorporated a question, which asks whether consumers purchase white light or yellow light bulbs.
- The buying behavior of consumers was adequately tested but there were no questions testing the advertising recall of the consumers. Hence questions relating to these were included.
- Questions relating to how different brands rated on the different attributes were also included so that we could gauge what attribute the Philips Argenta Komfort lacked according to the consumer.
- Questions were also incorporated which asked the respondent if she/he had ever used Argenta Komfort and was still using it to determine current users.
- Other open ended questions relating to why a respondent had stopped using Argenta Komfort were incorporated so that one could determine the reason for dissatisfaction of the consumer.
- Questions were inserted which asked the respondent still using the bulb what he/she likes about Argenta Komfort.
After making theses changes the questionnaires were once again administered. Therefore the responses obtained after the pretest were most accurate. The pretest revealed problems in the questionnaire designed for customers. Therefore the changes mentioned above were made primarily to the consumer questionnaire. The questionnaire administered to the retailers did not reveal any flaws so therefore no changes needed to be made.
We have targeted two sets of respondents, retailers and customers separately. The population for both is defined as under:
All retailers in the specified areas of Karachi, namely, Nazimabad/N. Nazimabad, Saddar, Bahadurabad, F.B. Area and Clifton/Defence, who deal in bulbs at the time of our research.
All customers in Karachi over the age of 20, who have bought bulbs for their households in the past one year.
Sampling Frame and Sampling Unit
In case of customers the sampling frame and sampling unit are identical because we have not used any particular frame of reference. However, in case of retailers, our frame is the list of retailers in each of the five areas of Karachi and the sampling unit is the retail store itself.
Sampling Method and Sample Size
We have chosen to interview 70 respondents for our final consumer survey and 50 retailers for the intermediary’s survey. In case of customers, we will divide them according to income groups. For this purpose we have targeted 20 respondents in the low-income group (Rs10000-25000), 35 in our middle income group (Rs25001-40000) and 15 in our high-income group (Rs40001 and above). The sampling method is non-probability, based on convenience as well as purposively selected as the middle income is deliberately over-represented for good reason. The largest market for consumer products is the middle income group.
For retailers we have made use of judgement sampling method first within which we did probability sampling. So we used a multistage sampling method. Based on judgement we selected these five areas, namely, Nazaimabad/N. Nazaimabad, Saddar, Bahadurabad, F.B.Area and Clifton/Defence. Within these areas we did probability sampling.
The limitations that we had to deal with are as follows:
- One of the limitations was our lack of experience as researchers. Nevertheless we have tried to apply the concepts we have learnt in this course in our report as much as we could.
- Another problem was a lack of awareness on part of the customers about the names of Philips competitor brands. We have kept an error margin of 5.7%.
- Another problem that we faced was with retailers. Many retailers were reluctant to answer our questions because they thought that we were collecting information for their tax assessment. Therefore they were quite reluctant in their responses.
- Another problem was that respondents often lost interest in the questionnaire towards the end. Therefore the responses were often biased towards the end. The respondents found question 9 of the consumer questionnaire difficult. They had difficulty in rating the brands on a number of attributes.
- Another problem was the strength of the Philips brand name. Since the Philips brand name is always on the minds of the consumers because of the number of products offered by Philips people without thinking said Philips bulbs when asked about the brands available in the market.
- In the case of the questionnaires for retailers there is a probability of telescoping upto 3% in one question the retailers were asked to recall the brands of bulbs sold in the past one month, three months and six months. The possibility of telescoping occurs because the retailer could feel that a particular brand was sold most in the three month category instead of the six month category. Also there is great probability of exaggeration. Many retailers complained that they could not recall the brand of bulbs in either of the categories and therefore their responses were vague.
Analysis of Retailers’ Questionnaires
Do you sell bulbs?
The objective of this question was to make sure that the retailer sells bulbs, otherwise he would not qualify as a respondent.
As can be seen from the table as well as Figure 1 on the next page, all 50 of the retailers answered in positive, that is all of them sold bulbs. Retailers who did not sell bulbs were not included in the survey at all because they would not be in analysis position to answer the questions. However, no distinction was made between retailers selling Philips and those selling other bulbs.
|Federal B. Area||10||0|
[The table shows the number of retailers who keep bulbs in the areas specified in the table]
[The bar chart shows the number of retailers who stock bulbs in the 5 areas specified. The response was 100% for all retailers]
Which bulb do you buy the most (in order to sell)?
The question was asked in order to ascertain that which bulbs are most profitable for the retailers to stock. It also indirectly tells us which brands are more in demand.
The table and Figure 2 show that most retailers buy more than one brands of bulbs most. However, the greatest majority is claimed by Philips bulbs. That is to say analysis total of 39 retailers out of 50, analysis percentage of 78% expressed favour for Philips. For Hitachi, 26 retailers, that is, 52% of the retailers said they buy it the most and for Kumho and Khyber the percentages were 14% and 6% respectively. The column “Others” include bulbs like Tungzrem, Shafaq and Osram which are not significant enough to report separately. In Clifton, F.B. Area and Nazimabad, Philips has analysis clear majority whereas in Saddar and Bahadurabad Hitachi has a majority.
|Federal B. Area||10||8||5||1|
[The table represents which bulbs the retailers in each area buy most often. We can see that Philips has a majority with 78%]
[The stratified bar chart shows the relative popularity of the four major brands in every area. Philips has the majority as can be seen from the blue area]
Which bulbs sold the most in the last one month?
The objective of the question was to see if there is any change in sales of Philips over the last six months. This part of the question is for the most recent estimate of sales, that is last month.
We see that 74% of the retailers say that they sold Philips most in the last one month; 12% said they sold Hitachi; 8% said they sold Kumho; and finally, 6% said they sold Khyber. The percentages do not necessarily add up to 100% because most retailers declared more than one choice. We see that Philips bulbs outrank the bulb next in line that is Hitachi by a factor of 6 which indicates high popularity. Individually also we find a strong bias towards Philips bulb as most retailers report Philips as the most selling brand in the last month.
|Federal B. Area||7||2||1|
[The table shows for each of the five areas the most sold bulbs among the four brands. Philips is leading with 74%]
[The bar chart shows the bulbs that sold most in the five areas. Philips is represented by the blue area and forms the majority]
Which bulbs sold the most in the last three months?
This is a continuation of the previous question. The objective is to see if there is any difference between the sales of Philips between the last month data and the last three months data.
From the table and Figure we can see that the sales of Philips bulbs are reported to the extent of 60% of all bulbs; Hitachi sold upto 32%; and the rest share equally between them a total of 6%. The results are again strongly in favour of Philips, however the ratio of Philips to Hitachi is less than 2 times as compared to around 6 times for the one month old data. This actually represents an increase in the popularity of Philips as compared to Hitachi.
|Federal B. Area||5||4|
[The table shows the bulbs that sold the most in the last three months in each of the five areas. Again, Philips has a majority with 60% of the retailers saying it sold the most]
[The bars represent each of the five areas and the bulbs that were sold most in the last three months. The blue area shows Philips, commanding a 60% majority. The second highest number belongs to Hitachi]
Which bulbs sold the most in the last six months?
This is again a continuation of the previous two tables. The objective is to extend the trend of sales to the last six months also.
Philips comes out strongly in all five of the areas in relation to its competitors. In totality 66% of the retailers said that Philips sold the most; 22% said they sold Hitachi most; 8% were of the opinion that Kumho sold the most and only 4% were of the view that Khyber sold the most. So Philips was again the most sold brand over the last six months. The ratio of Philips to Hitachi according to the six-month data is 3:1. It supports the fact that overall sales of Philips bulbs have increased in the last month as compared to the older figures.
|Federal B. Area||7||1||1||1|
[The table shows the bulbs most sold in the last six months for the brands specified. 66% was commanded by Philips followed by Hitachi with a 22%]
[Philips, represented by the blue area is the bulb that sold the most in the past six months. It has a big lead over Hitachi]
Which brand do most of the customers ask for?
This is another way of judging the popularity various brands. The specific objective is to compare Philips with other brands in terms of customer demand.
We see that 72% of the retailers think that most customers ask for Philips bulbs. The percentages for Hitachi, Kumho and Khyber are 16%, 8% and 4% respectively. In Clifton all the retailers interviewed think that Philips is most in demand. In Bahadurabad 7 of them think Philips is most in demand, in F.B. Area 5, in Nazimabad block 8 and in Saddar 6 out of ten retailers expressed the same viewpoint. Again the data go strongly in favour of Philips.
|Federal B. Area||5||3||1||1|
[The table shows that Philips is most popular with customers with popularity rating of 72%]
[The stratified bar chart shows that Philips, represented by the golden area is the bulb most demanded by customers followed by the pink area which is Hitachi]
If a customer does not have a particular brand in mind, what do you suggest?
This question is included in order to ask the retailers about their role in the purchase of various brands by customers.
A number of retailers gave the names of more than one brand that they suggest the customer should buy if his favourite bulb is not available. However, around 10% of the retailers from the five areas thought that they could not advice the customers as it did not affect their purchase at all. This is in conformity with the findings of our Customer Survey where Retailers’ Advice was rated as least important in the purchase decision. 52% of the retailers said they suggest Philips, 58% said they suggest Hitachi, 10% Kumho and 4% Khyber. We see that the most popular alternative after Philips is Hitachi.
|Federal B. Area||5||6||2||1|
[The graph shows figures for what the retailers suggest to customers if the bulb demanded by them is not available. Hitachi leads with 58% frequency]
[The blue part represents Philips and the maroon part represents Hitachi. The bars show which bulbs do the retailers suggest as a substitute when the bulb demanded by the customer is not available. Hitachi leads with 58%]