PROBLEM DEFINITION: THE FOUNDATION OF BUSINESS RESEARCH

Previously we have talked about the problem definition. Here in this chapter we will
continue to talk about it. Problem Definition is considered as the foundation of the
research. This chapter looks at this important step in the research process more closely.
When the client(either the firm’s management team or an outside sponsor) fails to
understand their situation or insists on studying an irrelevant problem, the research is very
likely to fail, even if it is done perfectly.
Translating a business situation into something that can be researched is somewhat like
translating one language into another. It begins by coming to a consensus on a decision
statement or question.
A decision statement is a written expression of the key question(s) that a research user
wishes to answer. It is the reason that research is being considered. It must be well stated
and relevant. The researcher translates this into research terms by rephrasing the decision
statement into one or more research objectives. These are expressed as deliverables in
the research proposal. The researcher then further expresses these in precise and
scientific research terminology by creating research hypotheses from the research
objectives.
 Problem Definition
The process of defining and developing a decision statement and the steps
involved in translating it into more precise research terminology, including a set
of research objectives.
If this process breaks down at any point, the research will almost certainly be
useless or even harmful. It will be useless if it presents results that simply are
deemed irrelevant and do not assist in decision making. It can be harmful both
because of the wasted resources and because it may misdirect the company in a
poor direction.
Even the best research procedures will not overcome poor problem definition.
 The Problem-Definition Process
Problems Mean Gaps
A Problem occurs when there is a difference between the current conditions and
a more preferable set of conditions. In other words, a gap exists between the way
things are now and a way that things could be better. The gap can come about in a
number of ways:
1. Business performance is worse than expected business performance. For
instance, sales, profits, and margins could be below targets set by management.
This is a very typical type of problem analysis. Think of all the new products that
fail to meet their targeted goals. Trend analysis would also be included in this type
of problem. Management is constantly monitoring key performance variables.
Previous performance usually provides a benchmark forming expectations. Sales,
for example, are generally expected to increase a certain percentage each year.
When sales fall below this expectation, or particularly when they fall below the
previous year’s sales, management usually recognizes that they have a potential
problem on their hands.
2. Actual business performan ce is less than possible business performance.
Realization of this gap first requires that management have some idea of what is
possible. Opportunity-seeking often falls into this type of problem-definition
process. China’s Civil Aviation Administration has relaxed requirements opening
the Chinese air travel market to private airlines.2 Suddenly, the possible market
size for air travel has increased significantly, creating opportunities for growth.
3.Expected business performance is greater than possible business
performance.
Sometimes, management has unrealistic views of possible performance levels—
either too high or too low. One key problem with new product introductions
involves identifying realistic possibilities for sales. Did the company know the
possible size of the market? In this case, the problem is not with the product but
with the plan. Some product “failures” may actually have been successful if
management had a more accurate idea of the total market potential.
Management can close this gap through decision making. Researchers help
managers make decisions by providing relevant input.
 The Problem-Definition Process Steps
The problem-definition process involves several interrelated steps, as shown in
Exhibit 6.2 Page# 112. Sometimes, the boundaries between each step aren’t
exactly clear. But generally, completing one step leads to the other and by the
time the problem is defined, each of these steps has been addressed in some way.
The steps are:
1. Understand the business situation—identify key symptoms
2. Identify key problem(s) from symptoms
3. Write managerial decision statement and corresponding research objectives
4. Determine the unit of analysis
5. Determine the relevant variables
6. Write research questions and/or research hypotheses.
 Understand the Business Decision
A situation analysis involves the gathering of background information to familiarize
researchers and managers with the decision-making environment. The situation
analysis can be written up as a way of documenting the problem-definition process.
Gaining an awareness of marketplace conditions and an appreciation of the situation
often requires exploratory research. Researchers sometimes apply qualitative
research with the objective of better problem definition. The situation analysis begins
with an interview between the researcher and management.
IDENTIFYING SYMPTOMS
Interviews with key decision makers also can be one of the best ways to identify key
problem symptoms. All problems have symptoms just as human disease is diagnosed
through symptoms. Once symptoms are identified, then the researcher must probe to
identify possible causes of these changes.
Probing is an interview technique that tries to draw deeper and more elaborate
explanations from the discussion. This discussion may involve potential problem
causes. This probing process will likely be very helpful in identifying key variables that
are prime candidates for study.
One of the most important questions the researcher can ask during these
interviews is, “what has changed?” Then, the researcher should probe to identify
potential causes of the change. At the risk of seeming repetitive, it is important
that the researcher repeat this process to make sure that some important change
has not been left out. In addition, the researcher should look for changes in
company documents, including financial statements and operating reports.
Changes may also be identified by tracking down news about competitors and
customers.
Researchers should make sure that they have uncovered all possible relevant
symptoms and considered their potential causes. Perhaps more interview time
with key decision makers asking why people choose Coke would have helped
identify some of the less tangible aspects of the Coke-Pepsi-New Coke battle.
Identifying the Relevant Issues from the Symptoms : Anticipating the many influences
and dimensions of a problem is impossible for any researcher or executive. The interview is
extremely useful in translating the decision situation into a working problem definition by
focusing on symptoms. The probing process begins this process. However, the researcher needs
to be doubly certain that the research attacks real problems and not superficial symptoms.
For instance, when a firm has a problem with advertising effectiveness, the possible
causes of this problem may be low brand awareness, the wrong brand image, use of
the wrong media, or perhaps too small a budget.
Writing Managerial Decision Statements and Corresponding Research Objectives
The situation analysis ends once researchers have a clear idea of the managerial
objectives from the research effort. Decision statements capture these objectives in a
way that invites multiple solutions. Research may provide evidence showing results of
several ways a problem can be attacked.
Decision statements must be translated into research objectives. At this point, the
researcher is starting to visualize what will need to be measured and what type of
study will be needed.
The researcher should reach a consensus agreement with the decision maker regarding the overall
decision statement(s) and research objectives. If the decision maker agrees that the statement
captures the situation well and understands how the research objectives, if accomplished, will help
address the situation, then the researcher can proceed. The researcher should make every effort to
ensure that the decision maker understands what a research project can deliver. If there is no
agreement on the decision statement or research objectives, more dialogue between decision
makers and researchers is needed.
 Determine the Unit of Analysis
The unit of analysis for a study indicates what or who should provide the data
and at what level of aggregation. Researchers specify whether an investigation
will collect data about individuals (such as customers, employees, and owners),
households (families, extended families, and so forth), organizations (businesses
and business units), departments (sales, finance, and so forth), geographical
areas, or objects (products, advertisements, and so forth). In studies of home
buying, for example, the husband/wife dyad typically is the unit of analysis rather
than the individual because many purchase decisions are made jointly by
husband and wife.
Determining the unit of analysis should not be overlooked during the problem-
definition stage of the research.
 Determine Relevant Variables
WHAT IS A VARIABLE? What things should be studied to address a decision
statement? Researchers answer this question by identifying key variables.
A variable is anything that varies or changes from one instance to another. Variables
can exhibit differences in value, usually in magnitude or strength, or in direction. In
research, a variable is either observed or manipulated, in which case it is an
experimental variable.
Constant is something that does not change. Constants are not useful in addressing
research questions. Since constants don’t change, management isn’t very interested
in hearing the key to the problem is something that won’t or can’t be changed.
TYPES OF VARIABLES
A continuous variable is one that can take on a range of values that correspond to
some quantitative amount. Sales volume, profits are continuous variables.
A categorical variable is one that indicates membership in some group. The term classificatory
variable is sometimes also used and is generally interchangeable with categorical variable.
Categorical variables more often simply identify membership.
For example, people can be categorized as either male or female. A variable representing
biological sex describes this important difference. The variable values can be an “M” for
membership in the male category and an “F” for membership in the female category.
Alternatively, the researcher could assign a “0” for men and a “1” for women. In either case, the
same information is represented.
A common categorical variable in consumer research is adoption, meaning the consumer either
did or did not purchase a new product. Thus, the two groups, purchase or not purchase,
comprise the variable. Similarly, turnover, or whether an employee has quit or not, is a common
organizational variable.
In descriptive and causal research, the terms dependent variable and independent variable
describe different variable types. This distinction becomes very important in understanding how
business processes can be modeled by a researcher. The distinction must be clear before one
can correctly apply certain statistical procedures like multiple regression analysis.
A dependent variable is a process outcome or a variable that is predicted and/or explained by other
variables. An independent variable is a variable that is expected to influence the dependent variable in
some way. Such variables are independent in the sense that they are determined outside of the
process being studied. That is another way of saying that dependent variables do not change
independent variables
For example, average customer loyalty may be a dependent variable that is
influenced or predicted by an independent variable such as perceptions of
restaurant food quality, service quality, and customer satisfaction. Thus, a
process is described by which several variables together help create and explain
how much customer loyalty exists. In other words, if we know how a customer
rates the food quality, service quality, and satisfaction with a restaurant, then we
can predict that customer’s loyalty toward that restaurant. Note that this does
not mean that we can predict food quality or service quality with customer
loyalty.
Dependent variables are conventionally represented by the letter Y. Independent
variables are conventionally represented by the letter X. If research involves two
dependent variables and two or more independent variables, subscripts may
also be used to indicate Y1 , Y2 and X1 , X2 , and so on.