DATA 5013 Module 5 Market Research Report and Recommendations Example

Readers Will Join, but Not for the Discount: Research Report and Recommendations on a Bookstore Membership

Student Name

American College of Education

DATA5013: Market Research

Module 5 Assignment

Instructor Name

May 29, 2028

Introduction

The owners of Northstar Books asked whether to launch a $45 paid membership. Over this course, the question became a research problem with five objectives, a mixed-method design, a 22-question survey and four focus groups. This report presents the results to the owners. It summarizes how the data were collected, reports findings for each objective, converts stated intentions into cautious estimates, works through the economics and recommends a course of action, with limits and next steps.

How the Data Were Collected

Thirty customers took part in four focus groups in early June. The email survey went to 3,000 active loyalty members selected by stratified random sampling across five stores and three purchase-frequency groups; 642 completed it, a response rate of 21.4 percent. Respondents spent more on average than nonrespondents, about $410 against $330 a year, so results were weighted by stratum to match the membership, a standard correction when strata respond at different rates (Malhotra, 2019). The in-store intercept survey produced 304 completed interviews with customers without a card, and 61 members without email permission answered the mailed version; their answers differed little from the email sample. Each price, $35, $45 or $55, was shown to about a third of respondents.

Summary for the Owners

In short: at the $45 price, roughly one surveyed member in nine gave one of the two strongest answers about joining, which a cautious adjustment turns into roughly 2,000 members. They would join mainly to belong to a local store and to attend author events, not for the discount. At 10 percent off, the discount would cost more than the fees and added sales bring in, because most of it would go to purchases members already make. A redesigned membership with a smaller discount and more events looks profitable on the same assumptions. The recommendation is to pilot that redesign at two stores for a year while keeping the free card for everyone.

Demand at Three Prices

Among members, the weighted share saying they were very or extremely likely to join was 14.8 percent at $35, 11.2 percent at $45 and 6.9 percent at $55. Stated intentions overstate behavior, however. Morwitz et al. (2007), analyzing many studies, found that purchase intentions are positively related to later purchases but are often inaccurate, with the relationship varying by product and how intentions are measured. A cautious estimate counts two thirds of extremely likely and one third of very likely answers. At $45, where 3.4 percent said extremely and 7.8 percent very likely, that gives about 4.9 percent of 41,000 active members, or roughly 2,000 people. Among non-members, interest was lower, about 4 percent very or extremely likely at $45.

Price and Benefits

The four price sensitivity questions suggested an acceptable range of about $28 to $52, with most respondents describing $45 as beginning to feel expensive but not too expensive. Benefit rankings split by segment, as the focus groups had suggested. Frequent buyers ranked the 10 percent discount first more often than any other benefit, 48 percent of them. Occasional buyers most often ranked members-only author nights first, 39 percent of them. Supporting a locally owned store, added after the focus groups, was ranked first by 22 percent of all respondents and second by many more. Free special-order shipping was rarely ranked first by anyone.

Spending and the Free Card

Members likely to join expected to buy about four more books a year from Northstar, worth roughly $95, but also said that about 58 percent of what they already spend would continue with or without membership. On the free card, 18 percent of respondents unlikely to join said a paid program would make them feel more negative about the chain unless the free card continued unchanged, echoing the fear heard in the focus groups. When told the free card would stay, that share fell to 6 percent, which supports keeping it.

The Economics at $45

Using the cautious estimate of 2,000 members, fees at $45 would bring about $90,000 a year. A 10 percent discount on members' average spending of about $620 would cost about $124,000, most of it on purchases that would have happened anyway. If members delivered half of their expected added spending, about $95,000 in extra sales at the chain's typical gross margin of 42 percent would add about $40,000. Events and shipping would cost about $22,000. The net result is a loss of roughly $16,000 a year, before staff time. The proposed package, in short, gives a large discount to the customers least in need of one.

A Redesigned Membership

The research points to a different design. Members valued belonging and events, and a cut in the discount reduces the largest cost. A redesigned membership at $45 would offer 5 percent off, four members-only author evenings a year instead of two, early ticket access, a birthday book credit and visible recognition as supporters of a local store. Re-estimated with the same cautious assumptions and a modest drop in joiners, fees would be about $81,000, the discount would cost about $56,000, added sales would contribute about $36,000 and events would cost about $30,000, for a gain of roughly $31,000. These figures are estimates, which is why a pilot comes first.

Why Not Simply Drop the Idea

The economics of the original package might suggest abandoning the membership altogether. The research argues against that. Interest was real across segments, and the strongest motives, belonging and events, are ones a large online seller cannot easily match. A long-term study of a convenience store loyalty program found that light and moderate buyers changed their behavior most (Liu, 2007), and our occasional buyers were the ones most drawn to author evenings. An events-led membership could therefore reach the customers whose spending has the most room to grow, rather than rewarding those who already shop most.

Recommendation

I recommend that Northstar pilot the redesigned membership for twelve months at its two event-focused stores, keeping the free card unchanged everywhere. The pilot will track four measures: memberships sold against the cautious estimate for those stores; members' spending compared with matched non-members' over the year; event attendance and satisfaction; and renewal intentions at month ten. Prior research suggests that loyalty program membership can strengthen retention even when service has lapses (Bolton et al., 2000), so renewal will be the most important measure. A chainwide launch should follow only if the pilot meets its targets.

Limits and Ethics

Several limits apply. Intentions remain uncertain even after adjustment, the economics depend on assumptions about added spending and margins, and the survey reached members with email permission more fully than others. The focus groups explored views but did not measure them. On ethics, purchase data were used only in aggregate, individual reading choices were never examined, survey data were stored separately from names and focus group recordings were deleted after transcription, as promised in Module 1. If the pilot proceeds, members' data should be governed by the same commitments.

Conclusion

Readers are interested in a Northstar membership, but mainly for belonging and events rather than the discount. At $45 with 10 percent off, the program would likely lose money by rewarding purchases that would happen anyway. A redesigned membership with a smaller discount, more author evenings and recognition for supporting a local store, piloted at two stores while keeping the free card, offers a better balance of value for members and the business.

References

Bolton, R. N., Kannan, P. K., & Bramlett, M. D. (2000). Implications of loyalty program membership and service experiences for customer retention and value. Journal of the Academy of Marketing Science, 28(1), 95-108. https://doi.org/10.1177/0092070300281009

Liu, Y. (2007). The long-term impact of loyalty programs on consumer purchase behavior and loyalty. Journal of Marketing, 71(4), 19-35. https://doi.org/10.1509/jmkg.71.4.019

Malhotra, N. K. (2019). Marketing research: An applied orientation (7th ed.). Pearson.

Morwitz, V. G., Steckel, J. H., & Gupta, A. (2007). When do purchase intentions predict sales? International Journal of Forecasting, 23(3), 347-364. https://doi.org/10.1016/j.ijforecast.2007.05.015