Transcript Chapter One

Chapter Two
Defining the
Marketing Research
Problem and
Developing an
Approach
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Chapter Outline
1) Marketing Research process
2) Step 1: Defining the Problem
3) Step 2: Developing an Approach
4) An Example of steps 1 and 2: a case of
United Airlines
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Marketing Research Process
Step 1: Defining the Problem
Step 2: Developing an Approach to the Problem
Step 3: Formulating a Research Design
Step 4: Doing Field Work or Collecting Data
Step 5: Preparing and Analyzing Data
Step 6: Preparing and Presenting the Report
Chapter 2 covers the first two steps of the
marketing research process.
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Step 1: Defining the Problem
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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.
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The Problem Definition
The Problem Definition is the
most important step, because
only when a problem has been
clearly and accurately identified,
a research project can be
conducted properly.
Defining the marketing research
problem sets the course of the
entire project.
All effort, time and money spent
on the research 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 1: Problem Definition
Management Decision Problem
Marketing Research Problem
Step 2: Approach to the Problem
Objective/
Theoretical
Foundations
Analytical
Model: Verbal,
Graphical,
Mathematical
Research
Questions
Hypotheses
Specification
of
Information
Needed
Step 3: Research Design
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The Problem Definition Process

Tasks involved:
To define the problem the researcher should do some important task:
1-Discussion with key decision makers in the company. those meetings
help the researcher determines the management decision problem. In
discussions, the researcher makes what is called “problem Audit” which is
a comprehensive examination of the marketing problem to understand its
origin and nature.
2-Interviews with industry experts either inside or outside the
company. The purpose is to help the researcher define the marketing
research problem rather than to develop a conclusive solution.
3-secondary data analysis is very important in defining the problem.
Those data include: information made by business and government
sources, commercial marketing research firms, and computerized
databases.
4-qualitative research is an unstructured, exploratory research
methodology based on small samples. The intended purpose of it is to
provide insights and understandings of the problem and its underlying
factors (e.g. focus groups and depth interviews).
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The Problem Definition Process

Environmental context of the problem:
Environmental context analysis is done so that the researcher could
understand the internal or external factors that impact on the definition of the
marketing research problem. Those factors include:
• Past information pertaining to the firm and industry (e.g. sales, market shares,
profitability, population, and demographics).
• Resources and constraints of the firm (e.g. money and time – the scope of the
research is affected by such factors).
• Objectives of the decision makers of the organization should be considered; simply
because the research is done to help decision makers’ decisions in attaining their
objectives.
• Buyer behavior study to understand and predict consumers’ actions and the
factors (e.g. buying habit, preferences, and demographics) that affect these
actions.
• Legal environment that influence the performance of firms (e.g. taxes tariffs,
trade regulations).
• Economic environment influences the performance of the company, for example,
the state of rapid growth is different than the state of recession.
• Marketing and technological skills in the firm affects its performance and may
be causes of some marketing problems.
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The Problem Definition Process
 Problem Definition:
After gaining an adequate understanding of the environmental context of the
problem, the researcher can define both the management research problem
and the marketing research problem.
Management Decision Problem
Action oriented
(asks what the decision makers need to do)
Focus on symptoms
Examples:
Marketing Research Problem
Information oriented
(asks what information is needed and how it
should be obtained)
Focus on the underlying causes
Examples:
Should a new product be introduced?
To determine consumer preferences and
purchase intentions for the proposed new
product.
Should the advertising campaign changed?
To determine the effectiveness of the current
advertising campaign.
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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The Problem Definition Process
 Iceberg principle: Symptoms and Causes
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The Link between Management Decision Problem and
Marketing Research Problem
While distinct, the marketing research problem has to be closely linked to
the management decision problem. A good way to link is the use of
Conceptual Map of three components: action, topic, and question.
Conceptual Map Steps
Management
Decision Problem
1. Management wants to
take (action)
2. Therefore, we should
study (topic)
Marketing Research
problem
3. So that, we can explain
(question)
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Example
Management wants to
Develop retention program
that will retain 90% of the
product’s heavy users over
the next 2 years
Therefore, we should
study (heavy-users
loyalty)
What will be the most
important variables in
retaining these customers
over the next 2 years?
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Proper Definition of the Research Problem
Marketing Research
Problem
Broad Statement
Specific Components
Component 1
Component 2
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Component 3
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Example: Department Store Project
Problem Definition
In the department store project, the marketing research problem (broad
statement) is to determine the relative strengths and weaknesses of Sears,
vis-à-vis other major competitors, with respect to factors that influence the
customer store patronage. Specifically, research should provide information
on the following questions (specific components):
1.
Component 1: criteria for selecting the store.
2.
Component 2: customer actual evaluation of different stores.
3.
Component 3: customer patronage to stores.
4.
Component 4: the market share of the store’s product categories.
5.
Component 5: demographic and psychographic characteristics of consumers in
different stores.
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Step 2: Developing an Approach
to the Problem
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Components of an Approach

Objective/Theoretical Foundations (Framework):
Research should be based on objective evidence and
supported by theoretical and empirical findings (literature
review)

Analytical Model: a set of variables and their
interrelationship. It could be verbal, graphical, or
mathematical.

Research Questions: refined statements of specific
components of the problem.

Hypotheses: A hypothesis is an unproven statement or
proposition about the studied phenomenon.

Specification of the Information Needed: information
that should be obtained to test the hypotheses of the
research.
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Steps of Research approach
Components of the
Marketing Research Problem
Objective/
Theoretical
Framework
Research Questions
Analytical
Model
Hypotheses
Specification of the Information Needed
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Components of an Approach

Objective/Theoretical Foundations (Framework):
Research should be based on objective evidence and
supported by theoretical and empirical findings
(literature review) to:
• Determine which variables should be investigated
and how to measure them.
• Know how the research could be design and how a
sample is selected.
• Guide in selecting data analysis methods.
• Help in organizing and interpreting the research
findings in light of the previous research findings.
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Components of an Approach
 Analytical Model:
a set of variables and their interrelationship. It
could be verbal, graphical, or mathematical.
Analytical model
•
Verbal model
the variables and their relationships are stated in prose
(written) form.
•
Example: consumer’s store patronage
A consumer first becomes aware of a department store. That person
then gains and understanding of the store by evaluating the store
in terms of factors comprising the choice criteria. Based on the
evaluation, the consumer forms a degree of preference for the
store. If the preference is strong enough, the consumer will
patronize the store.
Graphical models
Awareness
Evaluation
they are visual and used to isolate variables and to
suggest directions of relationships, but are not
designed to provide numerical results.
Preference
Patronage
•
Mathematical models
explicitly specify the relationships among variables,
usually in equation form.
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y =
a
0
+
n
a x
=
i
i
i 1
Y = degree of preference, a = model parameters to be estimated statistically,
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x= store patronage factors (choice criteria)
Components of an Approach
 Research Questions: (RQs) are refined statements of the
specific components of the problem.
 Hypotheses: (H) is an unproven statement or proposition
about a factor or phenomenon that is of interest to the
researcher. Often, a hypothesis is a possible answer to the
research question.
Example:
• RQ: Do the customers of Sears exhibit store
loyalty?
• H1: Customers who are store-loyal are less
knowledgeable about the shopping environment.
• H2: Store-loyal customers are more risk-averse
than are non-loyal customers.
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Components of an Approach
Department Store Project
 Specification of the Information Needed: information
that should be obtained to test the hypotheses of the research.
Specification of the information needed could be determined
focusing on each component of the problem, analytical framework
and models, research questions, and hypotheses.
Component 1 (choice criteria)
The researcher identified the following factors as part of the choice
criteria: quality of merchandise, variety and assortment of
merchandise, returns and adjustment policy, service of store
personnel, prices, convenience of location, layout of store, credit and
billing policies. The respondents should be asked to rate the
importance of each factor as it influences their store selection.
Component 2 (consumer evaluation of the stores)
The researcher identified nine department stores as competitors to
Sears based on discussions with management. The respondents
should be asked to evaluate Sears and its nine competitors on the
eight choice criteria factors.
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Components of an Approach
Department Store Project
Component 3 (consumer patronage of stores)
16 different product categories were selected, including
women's dresses, women's sportswear, lingerie and body
fashion, junior merchandise, men's apparel, cosmetics, jewelry,
shoes, sheets and towels, furniture and bedding, and draperies.
The respondents should be asked whether they shop at each of
the 10 stores for each of the 16 product categories.
Component 4 (market shares of the stores)
No additional information needs to be obtained from the
respondents.
Component 5 (consumer characteristics)
Information should be obtained on the standard demographic
characteristics and the psychographic characteristics of store
loyalty, credit use, appearance consciousness, and combining
shopping with eating.
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Example: Defining the problem and
Developing an Approach
to the Problem
The case of United Airline
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At United, Food Is Uniting the Airline with Travelers
United Airlines, as other major airlines, had to deal with
passenger loyalty
management decision problem: how to attract more
and more loyal passengers.
The broad marketing research problem: to identify the
factors that influence loyalty of airline travelers.
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At United, Food Is Uniting the Airline with Travelers
The basic answer is to improve service. Exploratory
research, theoretical framework, and empirical evidence
revealed that the consumers’ choice of an airline is
influenced by: safety, price of the ticket, frequent-flyer
program, convenience of scheduling, and brand name.
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At United, Food Is Uniting the Airline with Travelers
A graphical model stipulated that
consumers evaluate competing airlines
based on factors of the choice criteria to
select a preferred airline. The problem
was that major airlines were quite
similar on these factors. Indeed,
"airlines offer the same schedules, the
same service, and the same fares.”
Consequently, United Airlines had to find
a way to differentiate itself. Food turned
out to be the solution.
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At United, Food Is Uniting the Airline with Travelers
Secondary data, like the J. D Power & Associates'
survey on "current and future trends in the airline
food industry," indicated that "food service is a major
contributor to customers’ loyalty." This survey also
emphasized the importance of food brands.
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At United, Food Is Uniting the Airline with Travelers
The airline's Marketing survey told United Airlines that
"customers wanted more varied and up-to-date food.”
The following research questions and hypotheses may be
posed.
RQ1
How important is food for airline customers?
H1:
Food is an important factor for airline travelers.
H2:
Travelers value branded food.
H3:
Travelers prefer larger food portions, but with
consistent quality.
H4:
Travelers prefer exotic food (unusual food).
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At United, Food Is Uniting the Airline with Travelers
Characteristics that influence the research design
included the identification of competing airlines (Delta,
American, etc.), factors of the choice criteria (already
identified), measurement of airline travel, and loyalty.
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At United, Food Is Uniting the Airline with Travelers
This kind of research helped United Airlines define their marketing
research problem and develop the approach. Focus groups and
surveys were conducted to check customers' perceptions of food in
United Airlines' aircraft.
The results provided support for all the hypotheses (H1 to H4).
United Airlines then made a few changes: new "culinary menus,"
larger portions of food, new coffee, and branded products (e.g.,
Godiva chocolates). This resulted in better service, increasing
customer satisfaction and fostering loyalty.
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Questions for Revision
1. Why is it important, as a first step in undertaking marketing
research, to define the marketing research problem
appropriately? (slide 9)
2. Mention , with an example, 2 differences between
management decision problem and marketing research
problem. (slide 13)
3. Explain, with an example, the relationship between
management decision problem and marketing research
problem. (slide 14)
4. What are the most common forms of the analytical models
that are used when conducting research. (slide 21)
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