Chapter Two

Defining the Marketing Research

Problem and Developing an
Approach
 2-2

Chapter Outline
1) Overview
2) Importance of Defining a Problem
3) The Process of Defining the Problem and
Developing an Approach
4) Tasks involved in Problem Definition
i. Discussions with Decision Makers
ii. Interviews with Industry Experts
iii. Secondary Data Analysis
iv. Qualitative Research
 2-3

Chapter Outline
5) Environmental Context of the Problem
i. Past Information and Forecasts
ii. Resources and Constraints
iii. Objectives
iv. Buyer Behavior
v. Legal Environment
vi. Economic Environment
vii. Marketing and Technological Skills
6) Management Decision Problem and
Marketing Research Problem
 2-4

Chapter Outline
7) Defining the Marketing Research Problem
8) Components of an Approach
i. Objective / Theoretical Foundations
ii. Analytical Model
iii. Research Questions
iv. Hypothesis
v. Specification of Information Needed
 2-5

The Marketing Research Process

(8)
Follow-up
(2)
(7) Determine the
Preparing and Research Design
Presenting the
Report (1)
Identifying the
Research
(6) Problem/Opportunit (3)
Analyzing the y Determine Data
Data Collection Method

(5)
Design Sample (4)
and Collect Data Design Data
Collection Forms
 2-6

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.
 2-7

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,
 2-8

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.
 2-9

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.
 2-10

The Problem Definition Process

Tasks Involved
Fig. 2.1
Discussion Interviews Secondary Qualitative
with with Data Research
Decision Maker(s) Experts Analysis

Environmental Context of the Problem

Step I: Problem Definition

Management Decision Problem

Marketing Research Problem

Step II: Approach to the Problem

Analytical Specification
Objective/ Model: Verbal, Research of
Theoretical Hypotheses
Graphical, Questions Information
Foundations
Mathematical Needed

Step III: Research Design

 2-11

Tasks Involved in Problem Definition

 Discussions with Decision Makers

 Interviews with Industry Experts
 Secondary Data Analysis
 Qualitative Research
 2-12

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. E.g. Mc Donald’s
losing market share in 2003 and 2004.
2. The alternative courses of action available to the DM.
E.g. alternatives available to DM of Mc Donald’s include
introducing new sandwiches, reducing prices, increasing
advt. and opening more restaurants.
3. The criteria that will be used to evaluate the alternative
courses of action. E.g. New product offering might be
evaluated on the basis of sales, market share, profitability,
return on investment.
4. The potential actions that are likely to be suggested
based on the research findings. E.g. Strategic marketing
response by Mc Donald’s.
 2-13

The Problem Audit

5. The information that is needed to answer the DM's
questions. E.g. Comparison of McDonald’s and its
competitors on elements of marketing mix (four p’s) in
order to determine relative strengths and weaknesses.
6. The manner in which the DM will use each item of
information in making the decision. E.g. Strategy for Mc
Donald’s based on the research findings and their
judgment.
7. The corporate culture as it relates to decision making. Eg.
Mc Donald’s calls for a committee approach in which
critical decisions are made by key decision makers.
 2-14

The Seven Cs of Interaction

The interaction between the DM and
the researcher should be characterized
by the seven Cs:
1. Communication
2. Cooperation
3. Confidence
4. Candor
5. Closeness
6. Continuity
7. Creativity
Factors to be Considered in the
2-15

Environmental Context of the Problem

Fig. 2.2

PAST INFORMATION AND FORECASTS

RESOURCES AND CONSTRAINTS

OBJECTIVES

BUYER BEHAVIOR

LEGAL ENVIROMENT

ECONOMIC ENVIROMENT

MARKETING AND TECHNOLOGICAL

SKILLS
 2-16
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 levels of
price changes.
 2-17

Proper Definition of the Research Problem

Fig. 2.3

Marketing Research Problem

Broad Statement

Specific Components
 2-18

Department Store Project

Problem Definition
  In the department store project, the marketing research
problem is to determine the relative strengths and weaknesses
of Sears, vis-à-vis other major competitors, with respect to
factors that influence store patronage. Specifically, research
should provide information on the following questions.

1. What criteria do households use when selecting department

stores?
2. How do households evaluate Sears and competing stores
in terms of the choice criteria identified in question 1?
3. Which stores are patronized when shopping for specific
product categories?
4. What is the market share of Sears and its competitors for
specific product categories?
5. What is the demographic and psychological profile of the
customers of Sears? Does it differ from the profile of
customers of competing stores?
6. Can store patronage and preference be explained in terms
of store evaluations and customer characteristics?
 2-19

Components of an Approach

 Objective/Theoretical Foundations
 Analytical Model
 Research Questions
 Hypotheses
 Specification of the Information
Needed
 2-20
The Role of Theory in Applied
Marketing Research

Research Task Role of Theory

1. Conceptualizing Provides a conceptual foundation and understanding of the basic processes
and identifying underlying the problem situation. These processes will suggest key dependent
key variables and independent variables.
2. Operationalizing Theoretical constructs (variables) can suggest independent and dependent
key variables variables naturally occurring in the real world.
3. Selecting a Causal or associative relationships suggested by the theory may indicate whether
research design a causal or descriptive design should be adopted.
4. Selecting a The theoretical framework may be useful in defining the population and
sample suggesting variables for qualifying respondents, imposing quotas, or stratifying
the population (see Chap. 11).
5. Analyzing and The theoretical framework (and the models, research questions and hypotheses
interpreting data based on it) guide the selection of a data analysis strategy and the interpretation
of results (see Chap. 14).
6. Integrating The findings obtained in the research project can be interpreted in the light of
findings previous research and integrated with the existing body of knowledge.
 2-21

Models
An analytical model is a set of
variables and their interrelationships
designed to represent, in whole or in
part, some real system or process.

In verbal models, the variables and

their relationships are stated in prose
form. Such models may be mere
restatements of the main tenets of a
theory.
 2-22

Graphical Models
Graphical models are visual. They are used to
isolate variables and to suggest directions of
relationships but are not designed to provide
numerical results.
Awareness

Understanding: Evaluation

Preference

Patronage
 2-23

Mathematical Models
Mathematical models explicitly specify the
relationships among variables, usually in
equation form.
n
y  a 0   a i xi
i 1

Where
y = degree of preference

a ,a
0
= model parameters to be estimated
i
statistically
 Development of Research
2-24

Questions and Hypotheses

Fig. 2.4

Components of the
Marketing Research Problem
Objective/
Theoretical
Framework Research Questions
Analytical
Model
Hypotheses
 2-25

Research Questions and Hypotheses

 Research questions (RQs) are refined
statements of the specific components
of the problem.
 A hypothesis (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.
 2-26

Department Store Project

 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.
 2-27

Department Store Project

Specification of Information Needed

Component 1
 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
 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. 
 2-28

Department Store Project

Component 3
 Sixteen 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 ten stores for each of the 16 product
categories.

Component 4
 No additional information needs to be obtained from

the respondents.
 
 2-29

Department Store Project

Component 5
 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.
 
Component 6
 No additional information needs to be obtained from

the respondents.
 At United, Food is Uniting the Airline
2-30

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 was to identify the factors
that influence loyalty of airline travelers.
 At United, Food is Uniting the Airline
2-31

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.
 At United, Food is Uniting the Airline
2-32

with Travelers

The airline's Marketrak 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.