Chapter Two

Defining the Marketing

Research Problem and
Developing an Approach

Copyright © 2010 Pearson Education, Inc. 2-1

 Chapter Outline

1) The Process of Defining the Problem

and Developing an Approach
2) Tasks involved in Problem Definition
i. Discussions with Decision Makers
ii. Interviews with Industry Experts
iii. Secondary Data Analysis
iv. Qualitative Research

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 Chapter Outline

3) Environmental Context of the Problem

4) Problem Definition

5) Components of an Approach
i. Objective / Theoretical Foundations
ii. Analytical Model
iii. Research Questions
iv. Hypothesis
v. Specification of Information Needed

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 1) Dr. Malhotra’s Case

Dr. Malhotra:
“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. 2-4
 1) Dr. Malhotra’s Case

“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:

What is the problem being addressed?”

Copyright © 2010 Pearson Education, Inc. 2-5
 1) Dr. Malhotra’s Case

“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. 2-6
 1) Dr. Malhotra’s Case

“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. 2-7
 1) The Problem Definition Process

Pre-step 1: Tasks Involved

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

Pre-step 2: Environmental Context of the Problem

Step I: Problem Definition

Management Decision Problem

Marketing Research Problem

Step II: Approach to the Problem

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

Step III: Research Design

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 2) Pre-step 1: Tasks Involved (Discussion w/
DM)

The problem audit is a comprehensive examination of a

marketing problem with the purpose of understanding its
origin and nature. A discussion with the decision-maker (DM)
includes:
1. History of the problem - The events that led to the
decision that action is needed.
2. Alternatives - The alternative courses of action available
to the DM.
3. Criteria - The criteria that will be used to evaluate the
alternative courses of action.
4. Potential Actions - The potential actions that are likely
to be suggested based on the research findings.
5. Information Needed - The information that is needed
to answer the DM's questions.
6. Uses of Information - The manner in which the DM will
use each item of information in making the decision.
7. Cultural Influence - The corporate culture as it relates
to decision making.
Copyright © 2010 Pearson Education, Inc. 2-9
 2) Pre-step 1: Tasks Involved, continued

• Conduct Interviews with Industry Experts

• Survey experiences professionals; useful for new
products.
• Conduct Secondary Data Analysis
• Secondary data: data collected for some other purpose
other than the problem at hand; this data already exists.
• Primary data: any data that originated by the
researcher specifically to address the research problem
(save this for later).
• Conduct Qualitative Research
• Qualitative research: an unstructured, exploratory
research methodology based on small samples intended
to provide insight and understanding of the problem
setting.
• Examples: focus groups, depth interviews.
Copyright © 2010 Pearson Education, Inc. 2-10
 3) Pre-step 2: Consider the
Environmental Context of the Problem
Considering the following:
PAST INFORMATION AND FORECASTS

FIRM RESOURCES AND

CONSTRAINTS

RESEARCH OBJECTIVES

BUYER BEHAVIOR

LEGAL ENVIRONMENT

ECONOMIC ENVIRONMENT
MARKETING AND TECHNOLOGICAL
SKILLS OF THE FIRM
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 The Problem Definition Process (again)

Pre-step 1: Tasks Involved

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

Pre-step 2: Environmental Context of the Problem

Step I: Problem Definition

Management Decision Problem

Marketing Research Problem

Step II: Approach to the Problem

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

Step III: Research Design

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 4) Step I: Problem Definition

Management Decision Problem Marketing Research Problem

Asks what the DM needs to do  Asks what information is needed
and how it should obtained

EXAMPLE
Should a new product be  What are the consumer preferences
introduced? and purchase intentions for the
proposed new product?

Should the advertising  How effective is the current

campaign be changed? advertising campaign?

Should the price of the  How elastic is the demand?

brand be increased? How will a price change impact
sales and profits?

Copyright © 2010 Pearson Education, Inc. 2-13

 4) Definition of the Research Problem
Fig. 2.3

Marketing Research Problem

Broad Statement

Specific Components

For example….

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 4) Department Store Project Example

Broad Statement
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. What is the demographic and psychological profile of the
customers of Sears and competitors?

Specific Components

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 The Problem Definition Process (again)

Pre-step 1: Tasks Involved

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

Pre-step 2: Environmental Context of the Problem

Step I: Problem Definition

Management Decision Problem

Marketing Research Problem

Step II: Approach to the Problem

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

Step III: Research Design

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 5) Step II: Approach to the Problem

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

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 5) Objective/Theoretical Foundations

A theory is a conceptual scheme based on foundational

statements that are assumed to be true.
• Theory should be developed using objective,
secondary evidence.
• Theory should be relied upon when…
• developing variables and hypotheses
• operationalizing variables
• choosing research procedures (e.g. survey,
experiment, etc.)
• selecting a sample
• analyzing and interpreting data

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 5) Development of Research
Questions and Hypotheses

Components of the
Marketing Research Problem
Objective/
Theoretical
Framework
Research Questions

Hypotheses

Analytical Model

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 5) Research Questions and Hypotheses

• Research questions (RQs) are refined

statements of the specific components of
the problem.
• Does preference for Sears lead to patronage?
• What leads to preference for Sears?
• 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.
• H1: Positive evaluation of Sears leads to
preference for Sears.
• H2: Preference for Sears leads to patronage of
Sears.
Copyright © 2010 Pearson Education, Inc. 2-20
 5) Analytical 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.

The most common forms of analytical

models are
• verbal,
• graphical, and
• mathematical models.

Copyright © 2010 Pearson Education, Inc. 2-21

 5) Analytical Models, continued

In verbal models, the variables and their

relationships are stated in prose form.

Example:
A consumer first becomes aware of a department
store. That person then gains an understanding
of the store by evaluating the store in terms of the
factors comprising the choice criteria. Based on the
evaluation and understanding, the consumer forms
a degree of preference for the store. If preference
is strong, the consumer will patronize the store.

Copyright © 2010 Pearson Education, Inc. 2-22

 5) Analytical Models, continued

Graphical models state the relationships in

visual form.

Awareness

Understanding Evaluation

Preference

Patronage
Copyright © 2010 Pearson Education, Inc. 2-23
 5) Analytical Models, continued

Mathematical models explicitly specify the

relationships among variables, usually in
equation form.

Y = Β0 + Β1X
where Β0 is a constant (i.e. starting point), Β1 is the
regression coefficient, X is the value of the independent
variable, and Y is the value of the dependent variable. In
this case:

• Patronage = Constant + Preference*X

• Preference = Constant + Understanding*X1 + Evaluation*X2
• Understanding = Constant + Awareness*X
• Evaluation = Constant + Awareness*X
Copyright © 2010 Pearson Education, Inc. 2-24
 5) Specification of Information Needed

• What information should be obtained in the

marketing research project? Focus on:
• each component of the problem,
• the analytical framework/models,
• the research questions, and
• the hypotheses.

• This exercise is carried out for the department store

example on the next few slides…

Copyright © 2010 Pearson Education, Inc. 2-25

 Specification of Information Needed:
Department Store Project Example

Component 1: What criteria do households use

when selecting department stores?

• 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…

Copyright © 2010 Pearson Education, Inc. 2-26

 Department Store Project Example, cont’d.

• Research Question: Is price the most

important criteria when selecting a
department store?
• Hypothesis 1: Price is the most important
criteria when selecting a department
store.

Information needed:
• Survey a few hundred department store
customers.
• The respondents should be asked to rate
the importance of each factor as it
influences their store selection.
Copyright © 2010 Pearson Education, Inc. 2-27
 Survey Example

Please rate the following stores on the below criteria (1 =

worst, 10 =best).
Sears JC Penney Kohl’s Bon-Ton
Quality of
merchandise
Variety and
assortment of
merchandise
Returns and
adjustment
policy
Service of
store
personnel
Prices
Convenience
of location

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 Questions??

Thank You!

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