defining the marketing research problem and developing an approach.final

7/29/2019 Defining the Marketing Research Problem and Developing an Approach.finaL

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Chapter Two

Defining the Marketing Research

Problem and Developing anApproach


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Chain Restaurant Study

One day I received aphone call from aresearch analyst whointroduced himself asone of our alumni.

He was working for arestaurant chain in townand wanted helpanalyzing the data he

had collected whileconducting a marketingresearch study.


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When we met, he presented me with a copy ofthe questionnaire and asked how he shouldanalyze the data. My first question to him was,


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When he lookedperplexed, Iexplained that

data analysisis notan independentexercise.

Rather, the goal of data analysis is to PROVIDEINFORMATION RELATED TO THE PROBLEM

COMPONENTS.


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I was surprised to learn that he did

not have a clear understanding ofthe marketing research problemand that a written definition did notexist. So before going any further, Ihad to define the marketingresearch problem.

Once that was done, I found thatmuch of the data collected was notrelevant to the problem. In this sense,

the whole study was a waste ofresources. A new study had to bedesigned and implemented to addressthe problem defined.

Source: Naresh Malhotra, MR


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REAL RESEARCH:

Harley Goes Whole Hog


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LISTEN To Your Customer

- Ford sends one representative

every four months (avg.)

- Toyota sends one representative per month (avg.)

MR helps to fill Information Gaps


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Iceberg Effect

Identify Symptoms vs. Causes

Complex Interactions

10% is

visible

90% is

invisible

Competition

TechnologyConsumer

Behavior

Marketing Mix


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Problem Definition

Analyze the situation (use exploratory research

methods) evaluate secondary data, focus group,pilot study etc

State clear research objectives -

Research Maxim: if you do not know what youare looking for, you will not find it


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Degree of Problem Definition& Research Design

Uncertain Aware Certain

(Vague problem)

Exploratory Descriptive Causal

Research Research Research

Three major types of research studies

Research Design is a master plan for research studies who,what, where, when, how?


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IMPORTANCE OF DEFINING THE PROBLEM

Problem definition is the most important step

Problem definition involves stating thegeneral problem and identifying the

specific components of the marketingresearch problem.

All the effort, time, and money spent will be

wasted if the problem is misunderstood or illdefined.


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The Problem Definition Process

DiscussionwithDecision Maker(s)

InterviewswithExperts

SecondaryDataAnalysis

QualitativeResearch

Management Decision Problem

Marketing Research Problem

Tasks Involved

Environmental Context of the Problem

Step I: Problem Definition

Step II: Approach to the Problem

Objective/TheoreticalFoundations

ResearchQuestions

Hypotheses

Step III: Research Design

Analytical

Model: Verbal,

Graphical,

Mathematical

Specification

of

Information

Needed

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THE PROCESS OF DEFINING THE PROBLEM

The tasks involved in problem definition:

Discussions with Decision Makers

Interviews with Industry Experts

Secondary Data Analysis Qualitative Research

help to understand the background of the problem byanalyzing the environmental context.

This facilitates the identification of the managementdecision problem.

Then the management decision problem is translatedinto a marketing research problem.

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TASKS INVOLVED

Discussions with decision makers:

The problem audit provides a useful frameworkfor interacting with the DM and identifying theunderlying causes of the problem.

It is a comprehensive examination of a marketingproblem with the purpose of understanding itsorigin and nature.

The problem audit involves discussions with the DMon the following issues that are illustrated with aproblem facing McDonald's:

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The Problem Audit

The problem audit is a comprehensive examination of a marketing

problem with the purpose of understanding its origin and nature.

1. The events that led to the decision that action is needed, or the

history of the problem.

2. The alternative courses of action available to the DM.

3. The criteria that will be used to evaluate the alternative courses ofaction.

4. The potential actions that are likely to be suggested based on the

research findings.

5. The information that is needed to answer the DM's questions.

6. The manner in which the DM will use each item ofinformation in making the decision.

7. The corporate culture as it relates to decision making.

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THE PROCESS OF DEFINING THEPROBLEM:REAL RESEARCH:McDonald

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2-17THE PROCESS OF DEFINING THEPROBLEM

Problem audit needed because the DM, inmost cases has only a vague idea of what theproblem is.

e.g. the DM may know that the firm is losing marketshare but may not know why, because DMs tend tofocus on symptoms rather than on causes.

Inability to meet sales forecasts, loss of marketshare, and decline in profits are all symptoms.

The researcher should treat the underlyingcauses, not merely address the symptoms.

e.g. loss of market share may be caused by asuperior promotion by the competition, inadequatedistribution of the company's products, or anynumber of other factors.

Only when the underlying causes are identified canthe problem be successfully tackled

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Your Task.

Obtain as much information as possible about a troubledbrand by visiting its website. Write a brief report.

As the brand manager for that brand you are concernedabout improving the performance of the brand.

Identify possible symptoms that indicate to you thatthe performance is below expectations.

You are conducting marketing research to help improve theperformance of the brand.

Identify possible underlying causes that might becontributing to the lack of performance.

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THE PROCESS OF DEFINING THE PROBLEM

In order to be fruitful, the interaction between the DM

researcher should be characterized by the seven Cs: Communication. Free exchange of ideas between the DM and

researcher

Cooperation. Marketing research is a team project in which bothparties (DM & researcher) must cooperate.

Confidence The interaction between the DM and the researchershould be of mutual trust.

Candor. There should not be any hidden agendas, and an attitudeof openness should prevail.

Closeness. Feelings of warmth and closeness should characterize

the relation between the DM and the researcher. Continuity. The DM and the researcher must interact continually

rather than sporadically

Creativity. The interaction between the DM and the researchershould be creative rather than formality

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Interviews with Industry Experts

These experts may be found both inside and outside thefirm.

Information is obtained by unstructured personalinterviews, without administering formalquestionnaire.

It is helpful to prepare a list of topics to be covered

The order in which these topics are covered and thequestions to askshould not be predetermined

This allows greater flexibility in capturing the insights ofthe experts.

The purpose of interviewing experts is to help definethe marketing research problem rather than todevelop a conclusive solution.

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REAL RESEARCH

Cherry Picking: The Repositioning ofDiet Cherry Coke

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Secondary Data Analysis

Secondary data are data collected for somepurpose other than the problem at hand

Primary data, on the other hand, are originatedby the researcher for the specific purpose of

addressing the research problem. Secondary data include information available by

business and government sources, commercialmarketing research and computerized databases.

Analysis of available secondary data is an essentialstep problem definition process Primary data should not be collected until the

available secondary data have been fully analyzed.

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Qualitative Research

Qualitative research is unstructured, exploratory in

nature, based on small samples Popular qualitative techniques such as focus groups

(group interviews), word association (asking respondentsto indicate their first responses to stimulus words), anddepth interviews (one-an-one interviews that probe therespondents' thoughts in detail), exploratory researchtechniques, such as pilot surveys and case studies,may all be undertaken to gain insights into thephenomenon of interest.

Pilot surveys tend to be less structured than large-scale surveys in that they generally contain open-endedquestions and sample size is smaller.

Case studies involve an intensive examination of a fewselected cases of the phenomenon of interest

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Role of qualitative research in defining themarketing research problem

REAL RESEARCH: P&G's Peep into Privacy

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ENVIRONMENTAL CONTEXT OF THE PROBLEM

The insights gained from qualitative research, along with

discussions with decision makers, interviews withindustry experts, and secondary data analysis help theresearcher to understand the environmental context ofthe problem.

Other Factors to be considered for understandingthe environment of the firm:

past information and forecasts pertaining to the industryand the firm

resources and constraints of the firm objectives of the decision maker

buyer behavior

legal environment, economic environment, and

marketing and technological skills of the firm

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Factors to be Considered in the


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Factors to be Considered in theEnvironmental Context of the Problem

PAST INFORMATION AND FORECASTS

RESOURCES AND CONSTRAINTS

OBJECTIVES

BUYER BEHAVIOR

LEGAL ENVIROMENT

ECONOMIC ENVIROMENT

MARKETING AND TECHNOLOGICAL

SKILLS

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Past Information and Forecasts

Past information and forecasts of trends withrespect to sales, market share, profitability,demographics, and lifestyle can help

understand the underlying marketing researchproblem.

e.g. if a firm's sales have decreased but industrysales have increased, the problems will be verydifferent than if the industry sales have alsodecreased. In the former case, the problems arelikely to be specific to the firm.

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Objectives

Decisions are made to accomplish objectives.The formulation of the management decision

problem must be based on a clearunderstanding of two types of objectives: (I)the organizational objectives and

(2) the personal objectives of the decisionmaker (DM).

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Buyer Behavior

Buyer behavior is a central component ofthe environmental context.

In most marketing decisions, the problemcan ultimately be traced to predicting theresponse of buyers to specific actions bythe marketer.

The buyer behavior factors that should beconsidered include:

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Buyer Behavior

The number and geographical location ofthe buyers and non-buyers

Demographic and psychological

characteristics Product consumption habits and the

consumption of related product categories Media consumption behavior and

response to promotions Price sensitivity Retail outlets patronized Buyer preferences

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REAL RESEARCHHow "Got Milk?" Got Sales

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Legal Environment & Economic Environment

The legal environment includes public policies,laws, government agencies, and pressure groups

Economic environment: purchasing power, gross

income, disposable income, discretionary income,prices, savings, credit availability, and generaleconomic conditions

After gaining an understanding of the

environmental context of the problem, researchercan define the management decision problem andthe marketing research problem.

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MANAGEMENT DECISION PROBLEM AND MARKETING


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MANAGEMENT DECISION PROBLEM AND MARKETINGRESEARCH PROBLEM

The management decision problem : ShouldHarley Davidson invest to produce moremotorcycles?

The marketing research problem: Determine

if the customers would be loyal buyers of HarleyDavidson in the long term.

The management decision problem asks what the

DM needs to do, whereas, marketing researchproblem asks what information is needed and howit can be obtained

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MANAGEMENT DECISION PROBLEM

AND MARKETING RESEARCH PROBLEM

Research can provide the necessary information tomake a decision.

The management decision problem is actionoriented. It is concerned with the possible actionsthe DM can take.

The marketing research problem isinformation oriented. It involves determiningwhat information is needed, how that information

can be obtained effectively and efficiently. Management decision problem focuses on

symptoms, the marketing research problemfocuses on underlying causes.

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Example: Defining the Problem

After discussion, analysis of secondary data, andqualitative research, the problem was identifiedas follows:

Management Decision Problem:

What should be done to improve the patronageof Sears( A Retail store)?

Marketing Research Problem:

Determine the relative strengths & weaknessesof Sears viz-a viz other major competitors withrespect to factors that influence store patronage

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MANAGEMENT DECISION PROBLEM AND


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MANAGEMENT DECISION PROBLEM ANDMARKETING RESEARCH PROBLEM

MANAGEMENTDECISION

PROBLEM Asks what the

decision maker needsto do

Action oriented

Focuses on symptoms

MARKETINGRESEARCHPROBLEM

Asks what

information isneeded and how itshould be obtained

Information oriented

Focuses on theunderlying causes

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DEFINING THE MARKETING RESEARCH PROBLEM

The general rule to be followed indefining the marketing researchproblem is that the definition should

(l) allow the researcher to obtain all theinformation needed to address themanagement decision problem, and

(2) guide the researcher in proceedingwith the project.

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DEFINING THE MARKETING RESEARCHPROBLEM

Researchers make two common errors inproblem definition.

The first arises when the researchproblem is defined too broadly. A broad

definition does not provide clear guidelinesfor the subsequent steps.

Some examples of overly broad marketingresearch problem definitions are: (1) improvethe competitive position of the firm, or (2)improve the company's image. These are notspecific enough to suggest a research design.

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DEFINING THE MARKETING RESEARCH

PROBLEM

The second type of error is the opposite: Themarketing research problem is defined toonarrowly.

A narrow focus may preclude consideration of somecourses of action or prevent the researcher fromaddressing important components of themanagement decision problem.

For example, in a project conducted for a majorconsumer products firm, the management problemwas how to respond to a price cut initiated by acompetitor.

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DEFINING THE MARKETING RESEARCHPROBLEM

The alternative courses of action initiallyidentified by the firm's research staff were:(1) decrease the price of the firm's brand to matchthe competitor's price cut; (2) maintain price but

increase advertising heavily; (3) decrease the pricesomewhat, without matching the competitor's price,and moderately increase advertising. None of thesealternatives seemed promising.

When outside marketing research experts werebrought in, the problem was redefined as improvingthe market share and profitability of the productline.

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Management Decision Problem Vs


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Management Decision Problem Vs.Marketing Research Problem

Management Decision Problem Marketing Research Problem

Should a new product be To determine consumer preferences

introduced? and purchase intentions for the

proposed new product.

Should the advertising To determine the effectiveness

campaign be changed? of the current advertising

campaign.

Should the price of the To determine the price elasticity

brand be increased? of demand and the impact on sales

and profits of various levelsof price changes.

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Proper Definition of the Research Problem

Marketing Research Problem

Broad Statement

Specific Components

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Your Task.

Coca-Cola co. changed its flagship brand of approx.100yrs to New Coke & subsequently returned to the oldfavorite, Coca Cola Classic.

Working in a group, read as much material as you can on

this marketing bungle

Identify the decision problem the Coke managementfaced

As a team of researcher define the marketing research

problem & its specific components

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Your Task.

Marketing Research Begins at Home (orNear the Campus)

Visit a local business located near your campus.Interview the business owner or

manager/decision maker and identify some of themarketing challenges facing this business. Also,interview an expert in this industry. Search andanalyze secondary data pertaining to this

business and the industry. 1. Define the management decision problem.

2. Define the marketing research problem.

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DO IT YOURSELF

State the research problems for each of the managementdecision problems.

Should a new product be introduced?

Should an advertising campaign run for three years bechanged?

Should the in-store promotion for the existing productline be increased?

What pricing strategy should be adopted for a newproduct?

Should the compensation package be changed tomotivate the sales force better?

defining the marketing research problem and developing an approach.final

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