MARKETING RESEARCH

STEP1
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Defining the problem

DR NAVREET
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*DEFINING/FORMULATING THE
WHAT IS A PROBLEM ? RESEARCH QUESTION PROBLEM DEFINITION Involves stating the general problem ( a broad statement) and identifying the specific components of the marketing research problem

PROBLEM

Inadequate problem definition is a leading cause of failure of marketing research projects

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The truly serious mistakes are made not as a result of wrong answers but because of asking the wrong questions (Peter Drucker)
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*The tasks involved

1. 2. 3. 4.

Discussions with management including key decision makers Interviews with industry experts Analysis of secondary data Qualitative research

The above lead to understanding of the environmental context of the problem

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*Environmental context of

the problem

Consists of factors that have an impact on the definition of the marketing research problem. These include:
i. ii. iii. iv. v. vi. vii.

Past information and forecasts Resources and constraints of the firm Objectives of the decision maker Buyer behavior Legal environment Economic environment 11/30/12 Marketing and technological skills of the firm

*Management decision problem

and marketing research problem

Can be defined after gaining an adequate understanding of the environmental context. Both are distinct yet closely linked MANAGEMENT DECISION PROBLEM: Confronts the decision maker. Asks what he needs to do. E.g. How should the loss of a market share be addressed? Should the market be segmented differently? Should a new product be introduced? Should the promotional budget 11/30/12 be increased?

MARKETING RESEARCH PROBLEM: Entails determining what information is needed and how it can be obtained efficiently and effectively. The distinction aids in understanding how the MR problem should be defined.

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Management decision problem Asks what the decision maker needs to do Action oriented Focuses on symptoms

Marketing research problem Asks what information is needed and how it should be obtained Information oriented Focuses on underlying causes
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Management decision problem

1.

Marketing research problem

1.

Should a new product be introduced?

To determine consumer preferences and purchase intentions for the proposed product

2. Should the advertising campaign be changed?

2. To determine the effectiveness of the current advertising campaign

3. Should the price of the brand 3. To determine the price be increased? elasticity of demand and the impact of various levels of price changes on sales and profits
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*Conceptual map
Three components: 1. Management wants to (take an action) -This line states the rationale behind the research question n the project ( Management Decision Problem)
2.

Therefore, we should study (topic)Declares what broad topic is being investigated

So that we can explain (question)Implies the question being investigated- i.e. the who/how/why that needs to be explained 2. and 3. define the broad marketing problem
3.

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A good way to link the broad statement of the marketing research problem with the management decision problem is through the use of the conceptual map
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EXAMPLE : AT & T (American Telephony & TelegraphyAmerican multinational corporation headquartered in Texas)
1.

Management wants to (develop retention programs that will retain 90% of heavy users of wireless services and lead to 10% higher sales over the next two years) Therefore , we should study (heavy-user loyalty) So that we can explain (what will be the most important variable in retaining these customers over the next two years)
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1.

1.

Problem focuses on: A segment of customers---Heavy users A customer behaviour---Staying with the company over the next 2 years Measurable results---90% retention of heavy users Company goal---10% increase in sales over the next 2 years
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in problem definition
ERROR I Research problem defined too broadly. Does not provide clear guidelines for the subsequent steps in the research project Examples of overly broad problem definitions: Develop a marketing strategy for the brand Improve the competitive position of the firm Improve the companys image Not specific enough to suggest an approach to the problem or a research design 11/30/12

*Two common errors

ERROR II Research problem defined too narrowly. A narrow focus: i. Decreases the possibility of considering alternative courses of action which may be innovative ii. Prevents the researcher from addressing important components of the management decision problem
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EXAMPLE OF A PROJECT CONDUCTED BY A CONSUMER PRODUCTS FIRM Management problem- How to respond to a price cut initiated by a competitor? The alternative courses of action initially identified by the firms research staff: 1. Decrease the price of the firms brand to match the competitors price cut 2. Maintain price but increase advertising heavily 3. Decrease the price somewhat, without matching the competitor's price, and moderately increase advertising These were not promising 11/30/12

Outside marketing experts redefined the problem as: How to improve the market share and profitability of the product line? Qualitative research indicated that:

In blind tests consumers could not differentiate products offered under different brand names They relied on price as an indicator of quality

Findings led to a creative alternative: Increase the price of the existing brand and introduce two new brandsone priced to match the competitor and the other priced to undercut it The strategy was implemented resulting in the solution 11/30/12

*Broad statement of the

problem and its specific components
Two things to be kept in mind while defining the problem The definition should:

Allow the researcher to obtain all the information needed to address the management decision problem Guide the researcher in proceeding with the 11/30/12 project

The broad statement provides an appropriate perspective on the problem (safeguards against committing Error II) The specific components focus on the key aspects of the problem and provide clear guidelines on how to proceed further (prevent Error I)
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TO SUM UP following are the factors to be considered while analyzing the environmental context of the problem: P ast information and forecasts R esources and constraints O bjectives of the decision maker B uyer behaviour L egal environment E conomic environment M arketing and technological skills

THANK YOU.
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