Marketing Management [kotler]

Chapter 2: Defining the Marketing Research problem and developing an approach 

Harley Davidson:

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Management decision problems was: Should Harley Davidson invest to produce more motorcycles?

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Marketing Research problems was : Determine if customers would be loyal buyers of Harley Davidson in the long term.

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The research had to address the following components: Who are the customers? What are their demographic and psychographic characteristics? Can different type of customers be distinguished? Is it possible to segment the market in a meaningful way? How do customers feel regarding their Harleys? Are all customers motivated by the same appeal? Are the customers loyal to Harley Davidson? What is the extent of brand loyalty?

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One of the research question (RQs) examined and the associated hypothesis (Hs) were:

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RQ: Can the motorcycle buyers be segmented based on psychographic characteristics?

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H1: There are distinct segments of motorcycle buyers.

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H2: Each segment is motivated to own a Harley for a different reason.

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H3: Brand loyalty is high among Harley Davidson customers in all segments.

Importance and the process of defining the problem & Developing an approach 

Only when the marketing research problem has been clearly defined can research be designed and conducted properly.

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All effort, time and money spent will be wasted if the problem is misunderstood.

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

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Better communication and more involvement in problem definition are the most frequently mentioned ways of improving the usefulness of research.

Importance and the process of defining the problem & Developing an approach 

Step 1: Problem Definition

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Researcher should take into account the purpose of the study, the relevant background information, the information needed, and how it will be used in decision making.

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Involves discussion with decision makers, interviews with industry experts, analysis of secondary data, and perhaps, some qualitative research.

Tasks Involved 

Discussions with Decision Makers:

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Problem Audit: A comprehensive examination of a marketing problem to understand its origin and nature.

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Problem Audit involves discussions with the DM on the following issues.

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The events that led to the decision that action is needed: Competitors (of MacDonald's) such as burger king was grabbing market share as they launched new products and aggressive promotional campaigns.

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The Alternative course of action available to the DM. Introducing new sandwiches, menu items, reducing prices, opening more restaurants, launching special promotions, and increasing advertising. The criteria that will be used to evaluate the alternative course of action: new products offerings might be evaluated on the basis of sales, market share, profitability, ROI etc. The potential actions that are likely to be suggested based on research findings: Strategic marketing response. Information needed to answer DM’s questions: comparison will competitors products on all the elements of product mix. Manner in which DM will use each item of information in making the decision: Based on research findings and judgements. The corporate culture as it related to decision making: In some firms the decision making process is dominant, in others the personality of DM is more important.

Interviews with Industry experts 

These can be both inside and out side the firm.

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Unstructured personal interview.

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Two potential problems may arise while seeking experts advice. Some individuals who claim to be knowledgeable are eager to participate may not possess expertise. It may be difficult to locate and obtain the help from experts who are outside the client organisation.

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Secondary Data Analysis and Qualitative Research 

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Secondary data: Data collected for some purpose other than the problem at hand. Primary data: Data originated by the researcher specifically to address the research problem. Qualitative research: An unstructured, exploratory research methodology based on small samples intended to provide insight and understanding of the problem setting.

Environmental Context of the Problem 1. 2. 3. 4. 5. 6. 7.

Past information and forecasts Resources and Constraints Objectives Buyer behaviour Legal environment Economic Environment Marketing and Technological Skills

Management decision problem and marketing research problem 

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Management decision problem: The problem confronting the decision maker. It asks what the decision maker needs to do. Marketing research problem: A problem that entails determining what information is needed and how it can be obtained in the most feasible way.

Management decision problem

Marketing research problem

Asks what the decision maker needs to do

Asks what information is needed and how it should be obtained

Action oriented

Information oriented

Focuses on symptoms

Focuses on the underlying causes

Management decision problem

Marketing research problem

Should a new product be introduced?

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 level of price changes.

Defining the marketing research problem  2.

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Definition should: Allow a researcher to obtain all the information needed to address the management decision problem Guide the researcher in proceeding with the project. Researcher makes two errors. First when the research problem is defined too broadly. Secondly when it is defined too narrowly. Broad statement: The initial statement of the marketing research problem that provides an appropriate perspective on the problem. Specific components: The second part of the marketing research problem definition. The specific components focus on the key aspects of the problem and provide clear guidelines on how to proceed further.

Components of an approach Objective / Theoretical Framework 

In general research should be based on objective evidence and supported by theory.

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Theory: A conceptual scheme based on foundational statements, or axioms, that are assumed to be true.

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Objective evidence: Unbiased evidence that is supported by empirical findings. It is gathered by compiling relevant findings from secondary sources.

Analytical model 

Analytical model: An explicit specification of a set of variables and their interrelationships designed to represent some real system or process in whole or in part.

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Verbal models: Analytical models that provide a written representation of the relationships between variables.

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Graphical models: Analytical models that provide a visual picture of the relationships between variables. Mathematical models: analytical models that explicitly describe the relationships between variables, usually in equation form.

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Research Questions 

Research questions are refined statements of the specific components of the problem.

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Each component may have to be broken down into subcomponents or research questions.

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Information required with respect to the problem component.

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Theoretical framework and the analytical model play a significant role in the operationalization and measurement of variables specified by the research question.

Hypothesis 

An unproven statement or proposition about a factor or phenomenon that is of interest to the researcher.

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Often, a hypothesis is a possible answer to the research question.

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They go beyond research questions because they are statements or relationships or propositions rather than merely questions to which answers are sought.

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Important role is to suggest variables to be included in the research design.

International marketing research 

Precise definition of the marketing research is more difficult in international marketing research rather than in domestic market research.

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Unfamiliarity with the environmental factors of the country where the research is being conducted

Ethics in marketing research 

Ethical issues arise if the process of defining the problem and developing an approach is compromised by the personal agendas of clients.

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Researcher is ethically bound to define the problem so as to further the best interest of the client, rather than the interest of the research firm.

Internet and computer application 

Discussions with decision makers: email… secure chat rooms.

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Interviews with industry experts: search engines to locate industry experts. Secondary data analysis and qualitative research: again search engines.. Also chat rooms in providing exploratory data .

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Environmental context of the problem: past information and forecasts of trends can be found using search engines. Company home page for specific information. www.freeedgar.com to download all the reports that a public company has every created like annual reports etc.