The sales at Chicken Coop have been growing at the rate of 10% per annum for the last 20 years exceeding the growth rate of the Quick Service restaurant industry which has been only 5% per year. In 1995, 20 stores of the 76 total stores which account for 32% of retail sales have shown a decline of 6%. Analyzing internal sales data and descriptive data of the struggling stores has not yielded any conclusion on why the sales are declining. Performing external secondary research like analyzing competitors and the local economy also does not show any pattern which could lead to declining sales. The management at Chicken Coop is faced with the following decision problem:
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This includes recruiting the members for the focus groups based on some basic screening questions (Exhibit 1). The cost of the proposed research will be $18,278 is outlined below under Cost Analysis section.
Study: To perform primary research, we propose conducting focus groups studies. Two independent sessions will be conducted near the problematic stores. Two locations will be chosen randomly among the 20 store locations. Each focus group session will be a 2hr-session. A discussion guide (Exhibit 2) will be formulated and an external moderator will be conducting these sessions allowing the management to observe the discussions from an adjacent room without the knowledge of the members of the focus group. The data/information collected will then be analyzed and presented to the management of Chicken Coop.
Research Objectives: Below are the research objectives of the primary market research we propose to conduct.
* Explore the customer perceptions of Chicken Coop’s products in the target segment
* Identify opportunities which might help boost sales of Chicken Coop products
* Identify the problem areas which may lead to customer dissatisfaction.
Design: The target segment of Chicken Coop consists of customers of Quick Service Restaurants in the age group ranging between 18 and 45 years to prefer carryout food or drive-through. The members of the focus group are chosen based on some basic screening questions to match the above mention criteria. We will obtain a random sample list from the sales record from local quick service restaurants and contact them through phone or email to screen the participants for the focus group study. We will pick 15 members per focus group. To account for drop-out rates after initial commitment, we will choose 20 members per focus group which will come up to be 40 in total. The sample of participants will be picked randomly to avoid any bias. We will make sure that the final sample is well representative of the target segment in all respects. The moderator will conduct the 2-hr focus group session based on the discussion guide outlined below.
Comments: We encourage you to observe the focus group while they are being conducted. The details of the participants will remain anonymous.
Cost Analysis: We arrive at a market research budget of $18,278, computing budget based on the analysis below.
Parameters | (in millions) |
Total Sales in 1994 | 58.9 |
Sales in 20 problematic stores in 1994 (32% of total sales) | 18.848 |
Sales in 20 problematic stores in 1995 (6% slump) | 17.71712 |
% Contribution(% of sales) in 1994 (assuming that it remains same for the following year) | 0.404074703 |
Total Slump in sales in 1995 in 20 stores | 1.13088 |
Lost contribution margin due to slump in sales in 1995 | 0.45696 |
K (% Contribution * Sales of problematic stores) | 0.45696 |
R (Aiming for 20% reduction in odds) | 0.2 |
F - ROI on the cost of research should be...