Chapter Two

Defining the Marketing Research Problem and Developing an Approach

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Chain Restaurant Study

One day I received a phone call from a research analyst who introduced himself as one of our alumni.
He was working for a restaurant chain in town and wanted help analyzing the data he had collected while conducting a marketing research study.

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Chain Restaurant Study

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

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Chain Restaurant Study

When he looked perplexed, I explained that data analysis is not an independent exercise.

Rather, the goal of data analysis is to PROVIDE INFORMATION RELATED TO THE PROBLEM COMPONENTS.

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Chain Restaurant Study

I was surprised to learn that he did not have a clear understanding of the marketing research problem and that a written definition did not exist. So before going any further, I had to define the marketing research problem. Once that was done, I found that much of the data collected was not relevant to the problem. In this sense, the whole study was a waste of resources. A new study had to be designed and implemented to address the problem defined.
Source: Naresh Malhotra, MR

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REAL RESEARCH: Harley Goes Whole Hog

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MR helps to fill Information Gaps

LISTEN To Your Customer

- Ford sends one representative every four months (avg.)

- Toyota sends one representative per month (avg.)

Iceberg Effect Identify Symptoms vs. Causes 10% is visible

90% is invisible
Complex Interactions
Consumer Behavior

Competition

Marketing Mix
Technology

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 you are looking for, you will not find it

Degree of Problem Definition & Research Design Uncertain (Vague problem) Aware Certain

Exploratory Research

Descriptive Research

Causal 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 the general problem and identifying the specific components of the marketing research problem. All the effort, time, and money spent will be wasted if the problem is misunderstood or ill defined.

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The Problem Definition Process

Tasks Involved
Discussion with Decision Maker(s) Interviews with Experts Secondary Data Analysis Qualitative Research

Environmental Context of the Problem

Step I: Problem Definition

Management Decision Problem

Marketing Research Problem

Step II: Approach to the Problem

Analytical Model: Verbal, Graphical, Mathematical Specification of Information Needed

Objective/ Theoretical Foundations

Research Questions

Hypotheses

Step III: Research Design

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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 by analyzing the environmental context. This facilitates the identification of the management decision problem. Then the management decision problem is translated into a marketing research problem.

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TASKS INVOLVED

Discussions with decision makers: The problem audit provides a useful framework for interacting with the DM and identifying the underlying causes of the problem. It is a comprehensive examination of a marketing problem with the purpose of understanding its origin and nature. The problem audit involves discussions with the DM on the following issues that are illustrated with a problem 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 of action. 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 of information in making the decision. 7. The corporate culture as it relates to decision making.

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THE PROCESS OF DEFINING THE PROBLEM: REAL RESEARCH: McDonald

THE PROCESS OF DEFINING THE PROBLEM

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Problem audit needed because the DM, in most cases has only a vague idea of what the problem is. e.g. the DM may know that the firm is losing market share but may not know why, because DMs tend to focus on symptoms rather than on causes. Inability to meet sales forecasts, loss of market share, and decline in profits are all symptoms. The researcher should treat the underlying causes, not merely address the symptoms. e.g. loss of market share may be caused by a superior promotion by the competition, inadequate distribution of the company's products, or any number of other factors. Only when the underlying causes are identified can the problem be successfully tackled

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Your Task.

Obtain as much information as possible about a troubled brand by visiting its website. Write a brief report. As the brand manager for that brand you are concerned about improving the performance of the brand. Identify possible symptoms that indicate to you that the performance is below expectations. You are conducting marketing research to help improve the performance of the brand. Identify possible underlying causes that might be contributing 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 both parties (DM & researcher) must cooperate. Confidence The interaction between the DM and the researcher should be of mutual trust. Candor. There should not be any hidden agendas, and an attitude of 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 researcher should be creative rather than formality

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Interviews with Industry Experts

These experts may be found both inside and outside the firm. Information is obtained by unstructured personal interviews, without administering formal questionnaire. It is helpful to prepare a list of topics to be covered The order in which these topics are covered and the questions to ask should not be predetermined This allows greater flexibility in capturing the insights of the experts. The purpose of interviewing experts is to help define the marketing research problem rather than to develop a conclusive solution.

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REAL RESEARCH Cherry Picking: The Repositioning of Diet Cherry Coke

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Secondary Data Analysis

Secondary data are data collected for some purpose other than the problem at hand Primary data, on the other hand, are originated by the researcher for the specific purpose of addressing the research problem. Secondary data include information available by business and government sources, commercial marketing research and computerized databases. Analysis of available secondary data is an essential step 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 respondents to indicate their first responses to stimulus words), and depth interviews (one-an-one interviews that probe the respondents' thoughts in detail), exploratory research techniques, such as pilot surveys and case studies, may all be undertaken to gain insights into the phenomenon of interest. Pilot surveys tend to be less structured than largescale surveys in that they generally contain open-ended questions and sample size is smaller. Case studies involve an intensive examination of a few selected cases of the phenomenon of interest

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Role of qualitative research in defining the marketing 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 with industry experts, and secondary data analysis help the researcher to understand the environmental context of the problem. Other Factors to be considered for understanding the environment of the firm: past information and forecasts pertaining to the industry and 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

Factors to be Considered in the Environmental Context of the Problem

PAST INFORMATION AND FORECASTS RESOURCES AND CONSTRAINTS OBJECTIVES BUYER BEHAVIOR LEGAL ENVIROMENT ECONOMIC ENVIROMENT

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MARKETING AND TECHNOLOGICAL SKILLS

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Past Information and Forecasts

Past information and forecasts of trends with respect to sales, market share, profitability, demographics, and lifestyle can help understand the underlying marketing research problem. e.g. if a firm's sales have decreased but industry sales have increased, the problems will be very different than if the industry sales have also decreased. In the former case, the problems are likely 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 clear understanding of two types of objectives: (I) the organizational objectives and (2) the personal objectives of the decision maker (DM).

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Buyer Behavior

Buyer behavior is a central component of the environmental context. In most marketing decisions, the problem can ultimately be traced to predicting the response of buyers to specific actions by the marketer. The buyer behavior factors that should be considered include:

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Buyer Behavior

The number and geographical location of the 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 RESEARCH How "Got Milk?" Got Sales

Legal Environment & Economic Environment

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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 general economic conditions After gaining an understanding of the environmental context of the problem, researcher can define the management decision problem and the marketing research problem.

MANAGEMENT DECISION PROBLEM AND MARKETING RESEARCH PROBLEM

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The management decision problem : Should Harley Davidson invest to produce more motorcycles? The marketing research problem: Determine if the customers would be loyal buyers of Harley Davidson in the long term. The management decision problem asks what the DM needs to do, whereas, marketing research problem asks what information is needed and how it can be obtained

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MANAGEMENT DECISION PROBLEM AND MARKETING RESEARCH PROBLEM

Research can provide the necessary information to make a decision. The management decision problem is action oriented. It is concerned with the possible actions the DM can take. The marketing research problem is information oriented. It involves determining what information is needed, how that information can be obtained effectively and efficiently. Management decision problem focuses on symptoms, the marketing research problem focuses on underlying causes.

Example: Defining the Problem

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After discussion, analysis of secondary data, and qualitative research, the problem was identified as follows: Management Decision Problem: What should be done to improve the patronage of Sears( A Retail store)? Marketing Research Problem: Determine the relative strengths & weaknesses of Sears viz-a viz other major competitors with respect to factors that influence store patronage

MANAGEMENT DECISION PROBLEM AND MARKETING RESEARCH PROBLEM

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MANAGEMENT DECISION PROBLEM Asks what the decision maker needs to do Action oriented Focuses on symptoms

MARKETING RESEARCH PROBLEM Asks what information is needed and how it should be obtained Information oriented Focuses on the underlying causes

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DEFINING THE MARKETING RESEARCH PROBLEM

T he general rule to be followed in defining the marketing research problem is that the definition should (l) allow the researcher to obtain all the information needed to address the management decision problem, and (2) guide the researcher in proceeding with the project.

DEFINING THE MARKETING RESEARCH PROBLEM

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Researchers make two common errors in problem definition. The first arises when the research problem is defined too broadly. A broad definition does not provide clear guidelines for the subsequent steps. Some examples of overly broad marketing research problem definitions are: (1) improve the competitive position of the firm, or (2) improve the company's image. These are not specific enough to suggest a research design.

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DEFINING THE MARKETING RESEARCH PROBLEM

The second type of error is the opposite: The marketing research problem is defined too narrowly. A narrow focus may preclude consideration of some courses of action or prevent the researcher from addressing important components of the management decision problem. For example, in a project conducted for a major consumer products firm, the management problem was how to respond to a price cut initiated by a competitor.

DEFINING THE MARKETING RESEARCH PROBLEM

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The alternative courses of action initially identified by the firm's research staff were: (1) decrease the price of the firm's brand to match the competitor's price cut; (2) maintain price but increase advertising heavily; (3) decrease the price somewhat, without matching the competitor's price, and moderately increase advertising. None of these alternatives seemed promising. When outside marketing research experts were brought in, the problem was redefined as improving the market share and profitability of the product line.

Management Decision Problem Vs. Marketing Research Problem

Management Decision Problem Should a new product be introduced? Marketing Research Problem

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To determine consumer preferences and purchase intentions for the proposed new product. To determine the effectiveness of the current advertising campaign.

Should the advertising campaign be changed?

Should the price of the brand be increased?

To determine the price elasticity of demand and the impact on sales and profits of various levels of 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.100 yrs to New Coke & subsequently returned to the old favorite, Coca Cola Classic. Working in a group, read as much material as you can on this marketing bungle Identify the decision problem the Coke management faced As a team of researcher define the marketing research problem & its specific components

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Your Task.

Marketing Research Begins at Home (or Near the Campus)

Visit a local business located near your campus. Interview the business owner or manager/decision maker and identify some of the marketing challenges facing this business. Also, interview an expert in this industry. Search and analyze 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 management decision problems. Should a new product be introduced? Should an advertising campaign run for three years be changed? Should the in-store promotion for the existing product line be increased? What pricing strategy should be adopted for a new product? Should the compensation package be changed to motivate the sales force better?