Chapter Two

Defining the Marketing

Research Problem and
Developing an Approach

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-1

 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.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-2
 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,

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-3

 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.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-4
 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.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-5
 Rationale behind the problem definition
process
• Clearly defined problem serves as a guideline
to the researcher in designing and
conducting research properly.
• What is to be done? In absence of a well-
defined problem, the data collected may be
worthless to the decision maker.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-6

 What is the nature of the first step in
conducting a marketing research project

• The first step is to define the marketing

research problem.
• This definition may not be derived from simply
asking decision-makers what information support
they need.
• As such, problem definition may require strong
diagnostic skills.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-7

 Tasks Involved in Problem Definition

• Discussions with Decision

Makers (DM)

• Interviews with Industry Experts

• Secondary Data Analysis

• Qualitative Research

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-8

 Tasks Involved in Problem Definition

The implication of this is that no matter how

technically proficient a researcher may be in
terms of designing and crafting data
qualitative and/or quantitative data
collection, sampling, data analysis and
interpretation,

• Without a sound diagnosis of research problems

the whole research process may be totally
ineffective and a poor investment

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-9

 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 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
questions
6. The corporate culture as it relates to decision making

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-10

 The Seven Cs of Interaction

The interaction between the Decision Maker

(DM) and the researcher should be
characterized by the seven Cs:
1. Communication
2. Cooperation
3. Confidence
4. Candor/Honesty
5. Closeness
6. Continuity
7. Creativity

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-11

 Factors to be Considered in the
Environmental Context of the Problem
Fig. 2.2
PAST INFORMATION AND
FORECASTS

RESOURCES AND CONSTRAINTS

OBJECTIVES

BUYER BEHAVIOR

LEGAL ENVIRONMENT

ECONOMIC ENVIRONMENT
MARKETING AND TECHNOLOGICAL
SKILLS
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-12
 Factors to be Considered in the
Environmental Context of the Problem

•Past information and forecasts: Past information and

forecasts provide industry data that put the current problem
into context.
•Resources and constraints: Resources and constraints force
the problem to be defined in an appropriate scope.
•Objectives: An understanding of the objectives of the
organization and decision maker allows the researcher
to pinpoint the exact desires for the study.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-13

 Factors to be Considered in the
Environmental Context of the Problem
• Buyer behavior: An understanding of the ultimate
consumer’s behavior is critical to understanding their
response to specific marketing actions.
• Legal behavior: The legal environment may regulate
certain aspects of the marketing mix and the research effort,
thus affecting the problem definition.
• Economic environment: The economic environment can
affect the decisions of consumers and impact the
marketing mix.
• Marketing and technological skills: The abilities of the
organization to develop and market products may affect the
scope of the research to be done.
• In addition, technological advances offer new methods
of conducting marketing research.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-14

 Management Decision Problem Vs. Marketing
Research Problem

• The management decision problem asks what the

DM needs to do, whereas the marketing
research problem entails determining what
information is needed and how it can be
obtained in the most feasible way.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-15

 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

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-16

 Proper Definition of the Research Problem
Fig. 2.3

Marketing Research
Problem

Broad Statement

Specific Components

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-17

 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?

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-18

 Components of an Approach

 Objective/Theoretical Foundations
 Analytical Model
 Research Questions
 Hypotheses
 Specification of the Information
Needed

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-19

 Objective/Theoretical Foundations

• Emphasize that the foundation of research

should be objective and based on a theoretic
foundation.
• A theory is based on principles, which have
either been proven or accepted as true.
• A theory serves as a framework that can be used
by the researcher in interpretation of the data
collected.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-20

 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.
• Thus, note that the analytical model is
developed from the theoretic base of
the research.
• Once formed, the model describes the
relationship among the variables of
interest in the present situation.
• By manipulating these variables, a
researcher can isolate the relevant
variables.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-21

 Models

In verbal models, the variables and their

relationships are stated in style form.
Is a word equation that represents areal
situation.
No Numbers are used in the verbal model.
Such models may be mere restatements of
the main views of a theory.
Total costs of groceries = (number of
box of cereal) * (Cost per Box) + Cost
of Milk

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-23
 Mathematical Models

Mathematical models explicitly specify

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

Where
y = degree of preference

a ,a
0 = model parameters to be
i

estimated
statistically
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-24
 Development of Research
Questions and Hypotheses

Fig. 2.4

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

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 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.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-26

 Research Questions and Hypotheses

• Research Question Hypothesis

1. What is the mean income of heavy-drinkers of beer? The lower income people consume more beer.

2. What age group of purchasers of product ‘X’ buys ‘X’ the The age group 35–44 is the heaviest user.
most?

What will be the result on sales of a 20% increase in

3. A 20% increase in price will not lead to a decrease in
price?
dollar sales.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-27

 • No one approach to a problem will be perfect.
There is no one best approach.
• Rather, each approach will have its own
strengths and weaknesses.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-28

 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.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-29
 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.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-30

 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.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-31

 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.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-32
 At United, Food Is Uniting the Airline
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.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-33
 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.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-34

 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.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-35

International Marketing Research Examining the
Impact of the Self-Reference Criterion (SRC)

1. Define the marketing research problem in

terms of domestic environmental and cultural
factors.
2. Define the marketing research problem in terms of
foreign environmental and cultural factors. Make
no judgments.
3. Isolate the self-reference criterion (SRC) influence
on the problem and examine it carefully to see how
it complicates the problem.
4. Redefine the problem without the SRC influence
and address it for the foreign market situation.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-36

 •Set up an appointment and visit the campus
bookstore, a restaurant, or any business located on
or near the university campus. Hold discussions
with the decision maker. Can you identify a
marketing research problem which could be
fruitfully addressed?

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-37

 • The purpose of this field trip is to have you the
interaction with a businessperson and gain first-
hand experience in deciphering the marketing
research problem from the management decision
problem.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-38

 All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America.

Copyright © 2010 Pearson Education, Inc.

publishing as Prentice Hall
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2-39