Session 2

Defining the Marketing Research Problem and Developing an Approach
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.

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,

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.

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.
Problem Formulation
A problem well defined is a problem half solved!
Failure to properly identify where you are headed and why will inevitably lead you to wonder where you are and how you got there!
Tips for Accurately Defining Research Problems

Find out why the information is being sought. Determine whether the information already exists. Determine whether the question really can/should be answered. Use exploratory research to define background of the problem
Situation analysis The iceberg principle
Determine relevant variables
Beware the Iceberg!

The Iceberg Principle
The dangerous part of many marketing problems is neither visible to nor understood by many marketing managers. Submerged parts of the problem must be understood and including in the research design for the research to be useful.
Symptoms vs. Problems

Microbrewery Symptom
Consumers prefer the taste of competitor s brand
PD based on the Symptom

What type of reformulated taste is needed?
True Problem
Old-fashioned package influenced taste perception
Symptoms vs. Problems

Manufacturer of palm-size computers with Internet access Symptom
Distributors complain prices are too high
PD based on the Symptom

Investigate business users to learn how much prices need to be reduced
True Problem
Distributors do not have adequate product knowledge to communicate product s value
Definition of Research Objectives

Marketing Research Objectives: the specific bits of knowledge that need to be gathered to close the information gaps highlighted in the research problem. Stated in action terms Serve as a standard to evaluate the quality and value of the research Objectives should be specific and unambiguous Examples: To assess viewer recall of our ad campaign To describe the segments of the marketplace
Putting It All Together

Management Problem Placement office has noticed, while major companies make annual recruiting visits to campus for engineers, not many national or local companies are formally recruiting business majors through the placement office Marketing Research Problems Why are companies not taking advantage of the resources that the placement service offers? Are companies going around the service? What kind of things might generate more recruiting activity? Marketing Research Objectives To determine to what extent companies are aware of the placement service To determine whether a quarterly newsletter highlighting business programs and students might generate more recruiting activity.
Another Example
Management Problem What price should we charge for our new product? Research Problem What are our costs of production and marketing (COGS)? What price does similar types of products sell for? What is the perceived value of our product in the marketplace? Research Objectives To assess the costs involved in producing and selling our product To examine current prices for direct and indirect competition To determine potential customer reaction to various prices and their perception of the benefits of owning the product
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
Tasks Involved in Problem Definition

Discussions with Decision Makers Interviews with Industry Experts Secondary Data Analysis Qualitative Research
Factors to be Considered in the Environmental Context of the Problem

PAST INFORMATION AND FORECASTS
RESOURCES AND CONSTRAINTS OBJECTIVES BUYER BEHAVIOR LEGAL ENVIRONMENT ECONOMIC ENVIRONMENT MARKETING AND TECHNOLOGICAL SKILLS
Management Decision Problem Vs. Marketing Research Problem

Management Decision Problem Should a new product be introduced? Marketing Research Problem To determine consumer preferences and purchase intentions for the proposed new product.
Should the advertising campaign be 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.
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 was to identify the factors that influence loyalty of airline 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.

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.

Secondary data, like the J. D Power & Associates' survey on "current and future trends in airline food industry," indicated that "food service is a major contributor to customers loyalty." This survey also emphasized the importance of food brands.

The airline's survey told United Airlines that "customers wanted more varied and up-to-date food. The following research questions and hypotheses may be posed: RQ1 H1: H2: H3: H4: How important is food for airline customers? Food is an important factor for airline travelers. Travelers value branded food. Travelers prefer larger food portions, but with consistent quality. Travelers prefer exotic food.
Practice, Practice
For the following management problems, identify the underlying research problems and a couple of research objectives. Should our retail chain offer online shopping? What advertising media should we use to reach our market? How do we get more people to attend our outdoor festival/event? Should we build a new warehouse to store our excess inventory?
Practice, Practice
For the following management problems, identify the underlying research problems and a couple of research objectives. How can we increase customer retention? Should the amount of in-store promotion for an existing product line be increased? Should the compensation package be changed to better motivate the sales force?

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Defining the Marketing Research Problem and Developing an Approach

Chain Restaurant Study

Chain Restaurant Study

Chain Restaurant Study

Chain Restaurant Study

Tips for Accurately Defining Research Problems

Determine relevant variables

Beware the Iceberg!

Symptoms vs. Problems

PD based on the Symptom

Symptoms vs. Problems

PD based on the Symptom

Definition of Research Objectives

Putting It All Together

The Problem Definition Process

Environmental Context of the Problem

Step I: Problem Definition

Marketing Research Problem

Step II: Approach to the Problem

Objective/ Theoretical Foundations

Step III: Research Design

Tasks Involved in Problem Definition

Factors to be Considered in the Environmental Context of the Problem

Management Decision Problem Vs. Marketing Research Problem

Should the advertising campaign be changed?

To determine the effectiveness of the current advertising campaign.

Should the price of the brand be increased?

At United, Food is Uniting the Airline with Travelers

At United, Food is Uniting the Airline with Travelers

At United, Food is Uniting the Airline with Travelers

At United, Food is Uniting the Airline with Travelers

At United, Food is Uniting the Airline with Travelers

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