| Introduction to Marketing Research Overview Real Research Marketing research comprises one of the most important and fascinating facets of market- ing. In this chapter, we give a formal definition of marketing research and classy marketing research into two areas: problem identification and problem-solving research. We provide several real-life examples to ilustrate the basic concepts of marketing research. We describe the marketing research process and the six steps that are involved in conducting research and discuss the nature of marketing research, emphasizing its role of providing information for marketing decision making, Next, we provide an overview of marketing research suppl crs who collectively constitute the marketing research industry, along with guidelines for selecting a supplier. The demand for well-executed marketing research leads to many excit ing career opportunities, which we describe. We show that marketing research is also an integral part of marketing inforation systems or decision support systems. For the purpose of illustration, we examine a department store patronage project, which was an actual marketing research project conducted by the author, and use it as a running example throughout the book. The scope of this project has been expanded in the sixth edition to include questions, and we also make available the relevant data for analysis. These "Project Research” sections appear in each chapter. The topic of international marketing research is introduced and discussed systematically in the subsequent chapters. The ethical aspects of marketing research and the responsibilities each of the marketing research stakeholders have to themselves, one another, and the research project are presented and developed in more detai! throughout the text. This chapter includes several Internet and hands-on applications of marketing research in the form of "Active Research,” "Experiential Research," and “Decision Research” illustrations with exercises, other emphases that pervade the entire book. For instructors wishing to implement a real-life marketing research project, we include a section titled “Live Research: Conducting @ Marketing Research Project.” Perhaps there is no better way to present an overview than to give a few examples that provide a flavor of the varied nature of marketing research Boeing: Taking Flight ‘The Boeing Company (www boeing com) has been the premier manufacturer of commercial jetliners for more than 40 years and provides products and services to customers in 145 countries. Headquartered in Chicago, Boeing had about 12,000 commercial jtliners in sevice worldwide as of 2009, which is roughly 75 percent of the world fleet. Bocing Commercial Airplanes (BCA) isthe division of Boeing that develops and sells airplanes inthe commercial segment. Although the airplane manufacturing industry isan oligopoly with only afew players, the competition is intense and the stakes are high. The division understands that itis ‘important to continuously monitor the dynamic marketplace and understand the needs and priorities af BCA customers (airlines) and their customers (people who fly). To achieve this purpose, BCA employs marketing research on a regular basis, ‘Boeing revently entrusted Harris Interactive (www-harrisinteractive.com) with a study of this type. Haris Interactive, one of the largest market research firms inthe world, is based in Rochester, New York. tis best known for The Harris Poll and for pioneering Internet-based research methods. Boeing ‘commissioned a study to determine the aircraft preferences of fliers. “We presented respondents with ‘eal-tfe air travel scenarios to better understand the attitudes and feelings that led to their choices,” said Dr. David Bakken, senior vice president of marketing sciences, Harris Interactive. “What we found was that travelers taking very long flights generally prefer the more convenient and flexible experience pro- vided by smaller planes.” 3536 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH Based on extensive marketing research, Boeing launched the newest members ofits 737 family, thereby bringing more ‘economical solutions to ans, a beter ight experience to passengers, and improved environmental performance tothe word Real Research ‘The study was a survey based on 913 interviews conducted inthe United Kingdom, Tokyo, and Hong Kong with international revelers (age 18 and over) who had taken atleast one recent eight-hour ot longer fight. Interviews were conducted hetweer November 2003 and February 2004 using a two-stage methodol- ogy. Respondents were first sreened and qufed by telephone or via in-person iaterviews, and then they completed an online survey at home of Work or ata central interviewing loaton, To each region, Haris polled equal numbers of Premium Class Business, Economy Business, and Economy Leisure travelers Some key fimiigs: ‘+ More than 60 percent preferred a singl-deck, 250-passenger aigplane t a double-deck, 550-passenger airplane for nonstop flights ‘© Seven out of 10 travelers preferred a nonstop trip on a single-deck, 250-passenger airplane to a trip involving a connecting flight on a double-deck, 550-passenger airplane with an on-board Tounge. ‘© Travelers inal the classes of service from all dhree regions believed smaller airplanes would provide better experience with check-in, boarding, disembarking, baggage claim, and customs/immigration than the $50-seat aircraft From Boein’s point of view, these were important insights. The company isFesponding with enhanced products. Based on these findings and subsequent product research that involved in-depth interviews and surveys of airlines, BCA developed a new version ofthe Bocing 737, which caters tothe 100-10 215.seat market. The new concep is focused on bringing more economical solutions to atines, a better light expe- rience to passengers, and improved eavironmentl performance tothe world. The newest members of the Bocing 737 family—the 737-€04/-T007-9001:900 mosdels—continue the 737s preeminence asthe works most popular and reliable commercial jet transpoa. Meeting the market demands, the 737 family has won ‘orders for more then 5,200 airplanes, an amazing fat even for Boeing! Satmetrix Puts Customer Metrics in Real Time Many of the nation’s largest corporations are realizing that the information they can get from clients and customers through marketing research can best be used i tis provided each day. How about each minute? This isthe basis upon which a company called Satmetrx (www satmetrix.com), customer feedback solu- tion company, operates—real tite. The Satmetrx Customer Relationship program is designed to maximize the impact of customer interactions by continuously gathering and transforming customer dialogues into Potential actions that can be taken to increase sales and customer satisfaction. This program ig focused on feeding the voice ofthe customers ck into the organization, Not only can customers go online and submit ‘complaints and suggestions tothe company, bat Satmetrix also hosts live chat sessions for users of certain products, All of tis is done with the aim of capturing the true words and emotions of consumers, and in tur using this information to improve or develop products and services. Satmetrix capitalizes on the need for “live” marketing research,Real Research CHAPTER 1 + INTRODUCTION TO MARKETING RESEARCH 37 As of 2009, the Internet continues to revolutionize the marketing research process. With the use of ‘online services, there is no need for ext data input that traditional research methods require. Satmetix, itseff 1s not the traditional full-service supplier of marketing research, As a standardized limited-service provider, the company does not get involved with every aspect ofthe research process. The approach, design, and data preparation are the Same foreach customer, and these are the parts ofthe esearch process with which the company is involved. ‘Their service, however, ais clients in identifying any problems with products through customer feed- bback and with problem solving, especially if customers give suggestions. For example, network stati NBC (www.nbe,com) takes advantage of Satmetrix services to obtain feedhack from viewers. ft helps the network 0 lear what viewers are looking for, their fies, and their dislikes. Mdeally, the Feedback is used andtefevision shows ae altered to more closely suit viewers’ tastes and desires thus leading to an increased ‘numberof people tuning in to watch the shows. NBC found, for example, that viewers wanted sitcom that was lighthearted, clever, and humorous; therefore, Kath and Kim, a emake of the popular Australian com- cedy by the same name, was launched on Octaber 9, 2008. Viewer feedback provided by Satmetrix has been instrumental in composing and modifying scripts and storylines. As a resul, in 2008, Will and Grace was a top-rated comedy show on NBC? Scion: The Illustrious Offspring of Toyota “Toyota has had tremendous sce wth oth the Toyota and Lexus brands of crs. The Leos brand was created sel cts me lnurios than hose previously feed by Toyota and to eter tothe older, more affvnt crowd However he company noticed an opprtnity inthe younger, “Generation Y” crowd hose Born between 1977 an 1995), here Toyota ha elaely smaller mare ae. More than 65 milion American fall ino ths demographic ategoy. Cars hougt by this group ae less expensive and mre Youth-reted. Chi vals within this competitive landscape include Honds, Volkswagen, BMW, Maz Ford and Chevrolet Focus groups and surveys by Toyota aged at the ten though thinies age group suggested that Toyota ha the image of being “ny parents ca” Needless to say sls tots diverse and elusive age group were smal Toyoa then bepan a sexe project, code-named “Genesis” to research the undet-30 market Fin ot what features they wanted inter cars ant deteine ter buying tis, The member ofthe sty looked at existing Toyota models such asthe Echo, the Calica, andthe M2 Spyder and found that, the Generation ¥ crowd perceived tes ars as having no cohesive theme aod caning Toyoas older image. Several cas were brought tothe United States that were being used in Japan to See what Kind of reaction they woul lic. The cars that raed the most baz imately were model for American pe erences and rested in ahi ine of eas for Toyota, aply named “Scion” (www sioncom). Te Scion name means“fTsping ofa lustrous family" and iste th fact that hy are spina fom Toyo 'Now that Toyota had the cars andthe stag they had to build their brand and market the ne cas to this new anience. Toot hired marketing frm ATTIK (woatikcom) to hep wth hs task. They con- dicted qualitative markt research tough traditional focus groups and clink aswell as quantitative research trough Interne surveys ant youth panels. They also implemented cas ties by asking people to stat their younger ren preferencs and reporter indings, The et of hs markt research revealed thal the Generation ¥ crowd vales individuality and expression dives and style, Because they are more prone to disdain commercialism and can be swajed mare effectively by word-of-mouth commu nications, Scion chose not to adverse through trations channels such as network television or imagines, Rate, they decided to markt the Scion tough guerilla tactics such lve concerts and ‘rents with a musi oF ars focus catered ovat hs younger crowd Scion (ok the ests of hei mkt research and applied them to hi business stategy In 208, he first Scions were availabe fr sl. Thee diferent models were designed to atacta Wie specu of sounger buyer, such sth Scion xB, which is a boxy, compet sports uit vehicle, Al Seions ame loaded th option that were desirable to the target buyer, sch as 160-wat stereos, cellphone holes, plush sats, and plenty of coxtonization options. They implemented a no-haggling eas to-undesand Pricing siractre to make th buying process more enjoyable fer many ofthese fist ime buyers, Meth 90 percent of Scion owners ave never owned Toya cr efor, nd te mean ge of Scion cvmners is 34, nc lower than he average ages of Toyota and Lens owners (9 and 5, respec. Since 26, Scion as een paretng wih Nien Online's BuzzMetics sec rwaeen-onlne com) 0 se infomation for consumer geerated mei (CGM) in fommulating thir market strategies. CGM is important to Scion because that's whe thi custmes are and where they ae mst likely to see and engage inthe ‘brand. There are many blogs, Web sites, and social networking sites for discussions for customers to get more information and see haw ter customers ike he proc. llth three mols (C, xB, and xD) continued 0 do wel rough 2008, unl the eession bt3B PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH Real Research Marketing research has helped fast-food chains like McDonald's identify and respond to consumers’ este for healthier fod. ‘Although Toyota appears to have figured out throug market research the sectetto attracting younger buyers, they cannot simply be content. The ticky younger generation i fickle. Therefore, Scion and Toyota ‘must continually rely on market research fo meet the ever-changing demands of younger buyers.) Fast... . Fruit? Average consumers have become more concemed with health and nutrition. Obesity lawsuits ave been fled guns food giants that have offered only fat, greasy burgers andes, As result, many fast-food chains ae now offering healthier altematives, such s salads and fresh rt, s wel as decreasing serving sizes scems that this shift toward healthier fare is paying off for fas-food chains. Acconling othe Quick- Track® research study conducted by market research frm Sandelman & Associates (www sunelman com) a 2009, Americans were satisfied with fastfood. The Quick-Track isa syndicated market research project conducted quarterly to track key consumer behavioral and atin measures for al major Fxt-food and pizza chains in inividoal markets. nts study, each quarter 400 respondents are surveyed in each market via @ combination of telephone and Intemet interviews in more than 100 markers representing a wide range of demo- sraphics. Telephone respondents ae selected via a compuler generated random sample of sted and unlisted ‘elephone numbers, al online respondent ar sec fom a panel of more than 5 ili Inet user. ‘Respondents were asked their opinioas of past visits to each fastfood restaurant chain within the last three months. They were ashe to rate ther opinions on the overall restaurant experience as well as on 12 specific atte suchas fod, service, cleanliness and vale. The responses were scored ona scale with 1 = Poor and 5 = Excellent. To ensure reliability and representation ofthe population, only chains with ‘minimum of 150 responses were considered. ‘The three most important attributes fo respondents were cleanlines (77 percent rated it as extremely important, food taste and flavor (74 percent), and order accuracy (66 petcen). The availability of healthy and nuttous food is inereasng in importance among respondents, with 40 percent rating it as extemely Jmportant (up from 34 percent in 2003). The overall increas in stsfcton wit fast-food chains can be attributed to the chains” responsiveness to customer demands for food quality, taste, health, and nutrition. One example of how fast-food chains respond tothe consumer's desire for healthier, aly foo aler- ings isto provide fresh fut as a menu option. Wendy's, for example, is now offering fesh fat bowls as an enue or 35 a dessert, McDonald's is offering a fruit and walnut salad, and THOP is seling frit pate entrees. These are not soated examples in the food industry. According 4 marketing research firm NPD Group (www.npd.com), fruit consumption in restaurants has increased by more than 10 percent from 2006 to 2009. Keri Anderson, president of Wendy's, commented that now's the time for fut, because people are looking for different and new tases an for healthier alteratives.* W ‘These examples illustrate the crucial role played by marketing research in designing and imple- menting successful marketing programs.® Note that marketing research is being used by all kinds of organizations, such as Boeing, NBC, Toyota, and fast-food restaurants (McDonald’s, Wendy's, IHOP). Furthermore, marketing research has become global (Harris Interactive), real time (Satmetsix), responsive (Toyota), and much more integrated with marketing and product development (McDonald's, Wendy's, IHOP). These examples illustrate only a few of the meth- ‘ods used to conduct marketing research: telephone, personal, and online surveys; focus groups; in-depth interviews; and the use of the Internet as a source of information, This book will fj peer, McDonald’smarketing research The systematic and objective identification callection, analysis, dissemination, and use of information forthe purpose of assisting management in decision making related to the identification and solution of problems (and ‘opportunities in marketing, Problem-identification esearch Research that is undertaken to help identify problems that are not necessarily apparent onthe surface and yet exist or ae kel 12 ats in the future CHAPTER 1 + INTRODUCTION TO MARKETING RESEARCH 39 introduce you to the full complement of marketing research techniques and iustrae their appl cations in formulating effective marketing strategies. Perhaps the role of marketing research can be betier understood in ight of its definition. Definition of Marketing Research ‘The American Marketing Association formally defines marketing research as the following: Marketing research és the function that links the consumer, customer, and public to the marketer through information—information used to identify and define marketing opportu- nities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing asa process. ‘Marketing research specifies the information required to adeiess these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the resulis, and communicates the findings and their implications.° ‘As of 2009, the American Marketing Association's Web site, MarketingPower (www, izpower.com), supp marke es marketing professionals with information on marketing careers, “Best Practices” articles, and industry trends. For the purpose of this book, whictr emphasizes the ‘need for information for decision making, marketing research is defined as follows: Marketing research is the systematic and objective identification, collection, analysi dissemination, and ase of information for the purpose of improving decision making related (0 the identification and solution of problems and opportunities in marketing, Several aspects of this definition are noteworthy. First, marketing research is systematic. Thus, systemiatic planning is required at all stages of the marketing research process. The procedures followed at each stage are methodologically sound, wel! documented, and, as much as possible, planned in advance, Marketing research uses the scientific method in that data are collected and analyzed to test prior notions or hypotheses. Marketing research atlempts to provide accurate information that reflects a true state of affairs. It is objective and should be conducted impartially. Although research is always influ- ‘enced by the researcher's philosophy, it should be free from the personal or politica biases of the researcher of the management. Research that is motivated by personal or political gain involves a breach of professional standards, Such research is deliberately biased so as to result in predetermined findings. The motto of every researcher should be, “Find it and tell it ike itis.” Marketing research involves the identification, collection, analysis, dissemination, and use of information, Each phase of this process is important. We identify or define the marketing, research problem or opportunity and then determine what information is needed to investigate it. Because every marketing opportunity translates into a research problem to be investigated, the terms “problem” and “opportunity” are used interchangeabiy here. Next, the relevant informa- tion sources are identified and a range of data collection methods varying in sophistication and complexity are evaluated for their usefulness. The data are collected using the most appropriate method: they are analyzed and interpreted, and inferences are drawn. Finally, the findings, impli- cations, and recommendations are provided in a format that allows the information to be used for marketing decision making and to be acted upon directly. The next section elaborates on this definition by classifying different types of marketing research,” A Classification of Marketing Research ur definition states that organizations engage in marketing research for two reasons: (1) to identify and (2) to solve marketing problems. This distinction serves as a basis for classifying marketing research into problem-identification research and problem-solving research, as shown in Figure 1.1. Problem-identification research is undertaken to help idenify problems that are, perhaps, not apparent on the surface and yet exist or are likely to arise in the future. Examples of problem- identification research include market potential, market share, brand or company image, market characteristics, sales analysis, short-range forecasting, long-range forecasting, and business trends research. A survey of companies conducting marketing research indicated that 97 percent of those who responded were conucting market potential, market share, and market characteristics40 PART! + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH FIGURE 1.1 A Classification of Marketing Research \erteaon Fb Saving Research { { ‘+ Market Potential Research ‘+ Segmentation Research ‘+ Market Share Research’ * Product Research + image Research, "Pricing Research + Market Characteristics Research Promotion Research '* Sales Analysis Research, + Distribution Research Travan feeach ++ Business Trends Research research. About 90 percent also reported that they were using other types of problem-identification research, Research of this type provides information about the marketing environment and helps diagnose a problem. For example, a declining market potential indicates that the firma is likely to have a problem achieving its growth targets. Similarly, a problem exists if the market potential is increasing but the firm is losing market share, The recognition of economic, social, or cultural trends, such as changes in consumer behavior, may point to underlying problems or opportunities ® problem-solving ‘Once a problem or opportunity has been identified, problem-solving research is undertaken research to arrive at a solution. The findings of problem-solving research are used in making decisions Research undertaken that will solve specific marketing problems. Most companies conduct problem-soiving to help solve specitic research,? Table 1.1 shows the different types of issues that are addressed by problem-solving marketing problems research, including segmentation, product, pricing, promotion, and distribution research, Classifying marketing researc into two main types is useful from a conceptual as well as a practical viewpoint. However, problem-identification research and problem-solving research go Problem-Sol ‘Segmentation Research, determine basis of segmentation establish market potential and responsiveness for various segments selec target markets and create lifestyle profiles, demography, media, and product image characteristics Product Research Promotional Research test concept ptimal promotional budget optical product design sales promotion relationship Package tests ‘optimal promotional mix product modification copy decisions brand positioning and media decisions repositioning creative advertising esting test marketing faim substantiation control store tests evaluation of advertising effectiveness Pricing Research Distribution Research importance of price in brand selection ‘ype of distribation pricing policies altitudes of channel membars product line pricing inteasity of wholesale and retail coverage price elasticity of demand channel margins response to price changes location of retail and wholesale outletsReal Research marketing research, process Aset of sisteps that defines the tasks to be accomplished in conducting a makeing research study, ‘These include problem efnition, development of ar approach to the problem, research design formulation, fieldwork, data preparation and analysis, and report preparation and presentation CHAPTER 1 » INTRODUCTION TO MARKETING RESEARCH 41 hhand in hand, and a given marketing research project may combine both types of research. This, ‘was illustrated in the opening Boeing example, The consumer surveys identified potential ‘demand for smaller planes (problem identification), Subsequent product research fed to the introduction of the new versions of the Boeing 737, which cater to the 100- to 215-seat market (problem solving). Kellogg's provides another example, Crunchy Nut Red Adds Color to Kellogg's Sales Kellogp’s (www.kelloggs.com), marketing its products in more than 180 countries as of 2008, experienced slump inthe market and faced the challenge of reviving iow cereal sales. Through problem-identfication research, Kellogg's was able to identify the problem and, through problem-solving research, develop several solutions to increase cereal sales. Kellogg's performed several tasks to identify the problem. The researchers spoke to decision makers Within the company, interviewed industry experts, conducted analysis of available data, performed some qualitative research, and surveyed consumers about their perceptions and preferences for cereals. Several important issues or problems were identified by this research, Current products were being targeted to kids, bagels and muffins were winning for favored breakfast foods, and high prices were turing consumers to ‘generic brands, Some other information also came to light during te research. Adults wanted quick foods that required very litle or no preparation, These issues helped Kellogg’s identify the problem. It was not being creative in introducing new products to meet the needs ofthe adult market. ‘After defining he problem, Kellogg's went to work on solutions. It developed and tested several new flavors of cereals using mal intercept interviews with adult consumers, Based on the resuls, Kellogg's into- duced new flavors that were more suited to th adult palate but were not the tasteless varieties of the past, For example, in 2008 it introduced Kellogg’ Nutri-Grain Cereal Bar Blackberry. This new cereal bars filled with blackberries, The new cereal bar was supported by an ad campaign and mgjr in-store promotions. ‘Through creative problenientifcaton esearch followed by problem-solving research, Kellog’s has not ‘only seen an increase in sles, but also increased consumption of cereal at times oter than just breakfast” ACTIVE RESEARCH ‘The Football League is Tickled Pink I Visit wow-fotball-leagne.co.uk. Use a search engine as welt as your ibrarys online databases to obtain information on women’s attitudes toward the Football League. ‘As the marketing dector ofthe Foothall League, what marketing strategies would you formulate to target female fans? The Football League would like to appeal to more female fans. What kind of market- ing research would you recommend? Problem-identification and problem-solving researck not only go hand in hand, as shown by the Kellogg's example, but they also follow a common marketing research process, The Marketing Research Process We conceptualize the marketing research process as consisting of six steps. Each ofthese steps. is discussed in great detail inthe subsequent chapters; thus, the discussion here is brief ‘The frst step in any marketing research project is to define the problem. In defining the problem, the researcher should take into account the purpose of the study, the relevant background informa- tion, the information needed, and how it will be used in decision making. Problem definition involves discussion with the decision makers, interviews with industry expects, analysis of secondary dala, and, perhaps, some qualitative research, sich as focus groups. Once the problem hhas been precisely defined, the research can be designed and conducted properly. (See Chapter 2.) ‘Step 2: Development of an Approach to the Problem Development of an approach to the problem includes formulating an objective or theoretical framework, analytical models, research questions, and hypotheses and identifying the informationa PART + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH needed. This process is guided by discussions with management and industry experts, analysis of secondary data, qualitative research, and pragmatic considerations, (See Chapter 2.) Step 3: Research Design Formulation A research design isa framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the required information, aad its purpose is to design a study that will test the hypotheses of interest, determine possible answers tothe research questions, and provide the information needed for decision making. Conducting exploratory research, precisely defining the variabfes, and designing appropriate scales to measure them are also a part of the research design. The issue of how the data should be obtained from the respon- dents (for example, by conducting a survey or an experiment) must be addressed. It is also necessary to design a questionnaire and a sampling plan to select respondents forthe study. More formally, formulating the research design involves the following steps 1, Definition of the information needed 2. Secondary data analysis, 3. Qualitative research 4, Methods of collecting quantitative date (survey, observation, and experimentation) 5, Measurement and scaling procedures 6. Questionnaize design 7. Sampling process and sample size 8. Plan of data analysis “These steps are discussed in detail in Chapters 3 through 12, Step 4: Fieldwork or Data Collection Data collection involves a field force or staff that operates either in the field, asin the case of per- sonal interviewing (in-home, mall intercept, or computer-assisted personal interviewing), from ‘an office by teleptione (telephone or computer-assisted telephone interviewing), through mail (traditional mail and mail panel surveys with prerecrtited households), or electronically (e-mail or Internet). Proper selection, training, supervision, and evaluation of the field force help minimize data-collection errors. (See Chapter 13.) Step 5: Data Preparation and Analysis Data preparation includes the editing, coding, transcription, and verification of data. Each ques- tionnaire or observation form is inspected or edited and, if necessary, comected, Number or letter codes are assigned to represent each response to each question in the questionnaire. The data from the questionnaires are transcribed or keypunched onto magnetic tape or disks, or input directly into the computer. The data are analyzed to derive information related to the components of the marketing research problem and, thus, to provide input into the management decision problem. (See Chapters 14 through 21.) Step 6: Report Preparation and Presentation ‘The entire project should be documented in a written report that addresses the specific research ‘questions identified; describes the approach, the research design, data collection, and data analysis procedures adopted, and presents the results and the major findings. The findings Should be presented in a comprehensible format so that management can readily use them in the decision-making process. In addition, an oral presentation should be made to management using tables, figures, and graphs to enhance clarity and impact. (See Chapter 23.) The Internet is also being used to disseminate marketing research results and reports, which can be pasted on the Web and made available to managers on a worldwide basis, Although we have described the research process as 2 sequence of steps, it should be noted that these steps are interdependent and iterative. Thus, at each step, the researcher should not only look back at the previous steps bat also look ahead to the following steps. AS indicated by the Marriott example, our description of the marketing research process is fairly typical of the research being done by major corporations.| i | Real Research FIGURE 1.2 The Role of Marketing Research CHAPTER 1 + INTRODUCTION TO MARKETING RESEARCH 43 Marketing Research at Marriott Corporation Marriot International, Inc. (ww¥.marsott com) isa leading worldwide hospitality company. Is heritage ‘ean be traced to a root beer stand opened in Washington, D.C, in 1927 by J. Willard and Alice . Mario ‘As of 2009, Marriot International has nearly 3.00 lodging properties located in the United States and 69 ‘other counties and territories. Is brands inclode Marriot, Renaissance, Courtyard, Residence In, Fairfield Inn, Towneplace Suites, Springhill Suites, and Ramada Intemational “Marketing research at Marriot is done atthe corporate level through the Corporate Marketing Services (CMS). ts goals include providing Marriott managers withthe information that they need to bester under- stand the market and the customer. (CMS does many diferent types of research. I uses quantitative and qualitative research approaches such as telephone and mail surveys, focus groups, and customer intercepts to gain mote information on ‘market segmentation, product testing, price sensitivity of consumers, consumer satisfaction, and the like ‘The process of research at Marriot is a simple stepwise progression. The first steps ae to better define the problem tobe addressed and the objectives ofthe client unit and to develop an approach tothe problem. ‘The next step is to desig the study by formulating a formal research design. CMS must decide whether to dovts own research orto buy it from an outside organization, and in that case, decide whether to use moli- ple firms. Once a decision is made, the data are collected anu anafyzed. Then CMS presents the study Findings tothe client unit in a formal report. The final step inthe research process is o conduct a constant dialogue between the client and CMS. During this tage, CMS may help explain the implications of the research finding, assist in decision making, or make suggestions fo future research." The Role of Marketing Research in Marketing Decision Making te nature and role of marketing esearch can be better understood in light of the basic market- ing paradigm depicted in Figure 1.2 *Consuiners + Employees. + Shareholders + Suppliers er MARKETING es ee | RESEARCH i : ] | | Assessing pe Marketing Information PVE Decision ods ormation Making + Market Sepmentation + Target Market Selection ‘Marketing Programs * Performance and Control44 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH Real Research ‘The emphasis in marketing ison the identification and satisfaction of customer needs. In order to determine customer needs and to implement marketing strategies and programs aimed at satisfy- ing those needs, marketing managers need information. They need information about customers, competitors, and other forces in the marketplace. In recent years, many factors have increased the need for more and better information. As firms have become national and intemational in scope, the need for information on larger and more distant markets has increased. As consumers have become more affluent and sophisticated, marketing managers need better information on how they ‘will respond to products and other marketing offerings. As competition has become more intense, managers need information on the effectiveness of their marketing tools. As the environment changes more rapidly, marketing managers need more timely information"? ‘The task of marketing research is to assess the information needs and provide management with relevant, accurate, reliable, valid, current, and actionable information, Today's competitive marketing environment and the ever-increasing costs attributed to poor decision making require marketing research o provide sound information, Sound decisions are not based on gut feeling, intuition, or even pure judgment. Inthe absence of sound information, an incorrect management decision may be made, as illustrated by che case of Johnson & Johnson baby aspirin J & J's Gentleness Could Not Handle Pain “Iohnson 8 Johnson (wen com) is considered tobe the world's most broadly based manufacture of heath ‘ate products with more than 250 operating companies in 57 counties as of 2009. Despite its success in the industry, Johnson & Johnson’ attempt o use its company name on baby asprin proved to be unsuccessful Johnson & Johnson baby product are perceived as gentle, ut gentleness isnot what people want ina baby _spirn. Although baby asprin shouldbe safe, gentleness pr es not a desirable feature. Rather, some people perceived that agente aspirin might not be cffectve enough. Ths isan example of what intuitively seemed 10 be a natural move but without proper marketing research tured out tobe an incorrect decision"? A indicated by the Johnson & Johnson example, marketing managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. As shown in Figure 1.2, they make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions among the controllable marketing variables of product, pricing, promotion, and distribution, Further complications are added by uncontrollable environmen- tal factors such as general economic conditions, technology, public policies and laws, the political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of the various customer groups: consumers, employees, shareholders, suppliers. Marketing research helps the marketing manager link the marketing variables with the environment ‘and the customer groups. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers’ response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and uncontrollable factors and Consumers; this information enhances the effectiveness of decisions made by marketing managers.!* ‘Traditionally, marketing researchers were responsible for assessing information needs and pro- viding the relevant information, whereas marketing decisions were made by the managers. However, these roles are changing. Marketing researchers are becoming more involved in decision making, ‘whereas marketing managers are becoming more involved with research. This trend can be atrib- uted to better training of marketing managers, the Intemet and other advances in technology, and a shift inthe marketing research paradigm in which more and more marketing research is being under- taken on an ongoing basi rather than in response to specific marketing problems or opportunities. In essence, marketing research must add value to marketing decision making, indeed to the entire organization. It should be emphasized that marketing managers do not work in isolation from other functions in the organization. Rather, the marketing orientation embodies a cross- functional perspective to meet consumer needs and attain long-term profitability. Therefore, marketing research should interface with the other functions in the organization such as manufacturing, research and development, finance, accounting, and other functional areas as may be relevant in a given projec.FIGURE 1.3 Power Decisions’ Methodology Source: wave powerdeisons, com, Used with permission of Power Decisions Group, competitive intelligence The process of enhancing marketplace competitveness though a restr Understanding of fir’ ‘compattors and the competitive envionment CHAPTER 1 « INTRODUCTION TO MARKETING RESEARCH 45 opportunity sean option generation ciety ee) feeds How We ciaity esearch | Evaluate Mutet Plan | A2¥5" i Interpret, |Recommend| ‘Assist Help Persons |] Anabysis | Facilitate Research | eon As illustrated by the examples inthe chapter overview and by the Power Decisions example, marketing and marketing research are becoming more and more integrated.'S Power Decisions (www powerdecisions.com) is a market research company focused on marketing strategy. Using. ‘market research and decision clarification tools, they help clients benefit from the tight market- ing research information for uncovering marketing strategy solutions that work. Power Decisions researches, evaluates, and facilitates its clients’ market entry and market share growth. Figure 1.3, is a pictorial representation of Power Decisions’ methodology. ‘A food-processing company approached Power Decisions for opportunity scanning and brand development. The client was a well-respected private-label food processor that held a sirong position in Western markets. Top grocery chains stocked much of its canned vegetables Jine—it was known for packing quality produet at competitive prices. The private-label business, however, grew more price competitive and profits began to erode. A proprietary brand strategy ‘was required to deliver higher profits through restored margins. Power Decisions’ role was to guide an 18-month multistage effort to discover the most appropriate product categories to pursue. They undertook a major consumer research product concept testing study, which consisted of the following steps: ‘© Scanned and evaluated more than 40 product groups, recommending a shortlist of product category candidates. ‘* Conducted a conswner research study to find a set of canned food products with low con- sumer satisfaction and high interest in a new brand. © ‘Made a trade-off analysis to calculate the price-quality blends that had the best chance of success. ‘© Worked closely with the client product development team as they formulated test runs of the final food product chosen to ensure thatthe test formulations fe true to the product ateibutes formula derived from consumer research. ‘The final stage was to manage the brand name development, package design, intial ad cam- paign, and test market plan. As a result, the new brand containing the blend of ingredients desired most by consutners was successfully introduced at a premium price level, The brand fast gained both trade ard consumer acceptance and was later expanded to other products and institutional markets.'° ‘As shown by the experience of Power Decisions, marketing research can greatly enhance the information avaiable to management, Marketing research also plays a special role in obtaining competitive intelligence. Marketing Research and Competifive Intelligence ‘Competitive intelligence (C1) may be defined a the process of enhancing marketplace competitive nes through a greater understanding of a firm's competitors and the competitive environment. This 68 unequivocally ethical. involves the legal collection and analysis of information regard ing the capabilies, vulnerabilities, and intentions of business competitors, conducted by using information databases and other “open sources” and through ethical marketing research inquiry. CC enables senior managers in companies of all sizes to make informed decisions about everything from marketing, research and development (R&D), and investing tactics to long-term business strategies. Effective Cis a continuous process involving the legal and ethical collection46 PARTI» INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH internal supplier ‘Marketing research departments located within afm, of information, analysis that doesn’t avoid unwelcome conclusions, and controlled dissemination of actionable intelligence to decision makers. Competitive intelligence is a crucial part of the ‘emerging knowledge economy. By analyzing rivals’ moves, CI allows companies to anticipate market developments rather than merely react to them. ‘Although marketing research plays @ central role in the collection, analysis, and dissemination of Cl information, CT has evolved into a discipline of its own. The Society of Competitive Intelligence Professionals (SCIP) consists of members conducting Cl for large and small companies, providing management with early warning of changes in the competitive landscape. For more information on competitive intelligence, go to SCIP’s Web page at www.scip.org, The Decision to Conduct Marketing Research ‘Marketing research can be beneficial ina variety of situations, but the decision to conduct research is ‘not automatic, Rather, this decision should be guided by a number of considerations, including the costs versus the benefits, the resources available to conduct the research, the resources available to implement the research findings, and management's attitude toward research, Marketing research should be undertaken when the expected value of information it generates exceeds the costs of conducting the marketing esearch project. In general, the more important the decision confronting ‘management and the greater the uncertainty or risk facing them, the greater the value of information obtained, Formal procedures are available for quantifying the expected value as wel asthe costs of a marketing research project. Although in mos instances the value of information exceeds the cost, there are instances when the reverse may be tue. A pie manufacturer, for example, wanted to under- stand consumers’ purchase of pies in convenience stores, | advised against a major marketing research project when we discovered that less than I percent of the sales were coming.from con- venience stores and that tis situation was unlikely to change in the next five yeas Resources, especially time and money, are always limited. However, if either time or money is not available in adequate amounts to conduct a quality project, that project probably should not be undertaken, It is better not to do a formal project than undertake one in which the integrity of the research is compromised because of lack of resources. Likewise, a firm may lack the resources to implement tbe ‘ecommendations arising from the findings of marketing research. In that case, spending the resources to conduct the research may not be warranted. And if manage- ‘ment does not have a positive attitude toward research, then it is likely that the project report will gather dust after the project is conducted. However, there may be exceptions to this guideline, Teonducted a project for a retail chain with management that was hostile toward the project, but the research was commissioned and funded by the parent organization. Although the store man- ‘agement was opposed to the findings, which reflected negatively on the store chain, the parent company did implement my recommendations. ‘There are other instances that may argue against conducting a marketing research project. If the required information is already available within the organization, or the decision for which the research is to be conducted has already been made, or the research is going to be used for ‘zaining political ends, then the value of information generated is greatly reduced ane he project is generally not warranted. However, if the decision is made to conduct marketing research, then ‘management may also rely on marketing research suppliers and services to obtain the specific information needed.!7 The Marketing Research Industry ‘The marketing research industry consists of suppliers who provide marketing research services. Marketing research suppliers and services provide most of the information needed for making marketing decisions. Most of the big Suppliers have severat subsidiaries and divisions that encompass various areas of marketing research. Nevertheless, it is useful to classify marketing research suppliers and services, Broadly, research suppliers can be classified as internal or exter- nal (see Figure .4). An internal supplier is a marketing research department within the firm. ‘Many firms, particularly the big ones, ranging from automobile companies (GM, Ford, Chrysler) {o consumer products firms (Procter & Gamble, Colgate Palmolive, Coca-Cola) to hanks (GPMorgan Chase, Bank of America), maintain in-house marketing research departments. The marketing research depariment’s place in the organizational stracture may vary considerably.| | | \ FIGURE 1.4 Marketing Research Suppliers and Services external suppliers ‘Outside marketing research ‘ommpanies hired to supply marketing research data or semis, marketing research industry The marketing research industy const of excernal suppliers who provide mmatketing esearch services. full-service suppliers Companies that offer the full range of marketing research activites syndicated services Companies that colect and sell common pools of data cesigned to serve information needs shared by a number of cients customized services Companies that tailor the research procedures to best meet the needs ofeach client Internet services Companies that have specaied in conducting marketing research onthe Internet. (CHAPTER 1 » INTRODUCTION TO MARKETING RESEARCH 47 or ¥ ¥ Internal External Full Service Limited-Service . . . + Focus Groups Technic and? gy. and Qualitative Analytical. OM Services Servioes Syndicated Customized Internet Field Services. Services Services Services At one extreme, the research function may be centralized and located at the corporate head- quacters. AC the other extreme is a decentralized structure in which the marketing research function is organized along divisional lines. In a decentralized scheme, the company may be ‘organized into divisions by products, customers, or geographical regions, with marketing research personnel assigned to the various divisions. These personnel generally report toa di sion manager rather than to a corporate-level executive. In addition, between these two extremes, there are different types of organizations. The best organization fora firm depends on its market- ing research needs and the structure of marketing and other functions, although in recent years there has been a trend toward centralization and a trimming of the marketing research staff. Internal suppliers often rely on extemal suppliers to perform specific marketing research tasks. External suppliers are outside firms hired to supply marketing research data. These external suppliers, which collectively comprise the marketing research industry, range from small (one ora {ew persons) operations to very large global corporations."® Table 1.2 lists the top 50 U.S. research suppliers.'9 External suppliers can be classified as full-service or limited-service suppliers. Full- service suppliers offer the entire range of marketing research services, from problem defivtion, approach development, questionnaire design, sampling, data collection, data analysis, and interpre tation, to report preparation and presentation. The services provided by these suppliers can be further broken down into syndicated services, customized services, and Internet services (see Figure 1.4). Syndicated services collect information of knows commercial value that they provide to multiple clients on a subscription basis. Surveys, panels, scanners, and audits are the main means by which these data are collected. For example, the Nielsen Television Index by Nielsen Media Research (www.nielsenmedia.com) provides information on audience size and demographic characteristics of households watching specific television programs. The Nielsen Company (www.nielsen.com) provides scanner volume tracking data, such as those generated by electronic scanning at checkout counters in supermarkets. The NPD Group (www.npd.com) maintains one of the largest consumer panels in the United States. Quick-Track, conducted by Sandeman & Associates in the “Fast... Fruit” opening example, is another illustration of syndicated service. Syndicated services are discussed in more detail in Chapter 4.” Customized services offer a wide variety of marketing research services customized to suit a clients specific needs. Each marketing research project is treated uniquely. Some market- ing research firms that offer these services include Burke, Inc. (www.burke.com), Synovate (www.synovate.com), and TNS (www.tns-global.com). The survey conducted by Harris Interactive for Boeing in the opering example constituted customized research, Internet services are offered by several marketing research firms, including some that have specialized in conducting marketing research on the Internet. For example, Greenfield Online Research Center Inc. in Westport, Connecticut (www.greenfieldonline.com), a subsidiary of The Greenfield Consulting firm (www-greenfieldgroup.com), offers a broad range of customized Qualitative and quantitative online marketing research for consumer, business-to-business, and Professional markets. Using large, proprietary databases, studies are conducted within the company's secure Web site. Jupiter Research (www.jupiterrescarch.com) offers research and consulting services that focus on consumer online behavior and interactive technologies.Defining the Marketing Research Problem and Developing an Approach Overview Real Research This chapter covers the first two of the six steps of the marketing research process described in Chapter 1: defining the marketing research problem and developing an approach to the problem. Defining the problem is the most important step, because only when a problem has been clearly and accurately identified can a research project be conducted properly. Defining the marketing research problem sets the course of the entire project. In this chapter, we allow the reader to appreciate the complexities involved in defining a problem by identifying the factors to be considered and the tasks involved. Additionally, we provide guidelines for appropriately defining the marketing research problem and avoiding common types of errors. We also discuss in detail the components of an approach to the problem: objective/theoretical framework, analytical models, research questions, hypothe- ses, and specification of the information needed. The special considerations involved in defining the problem and developing an approach in international marketing research are discussed, Several ethical issues that arise at this stage of the marketing research process are considered, We introduce our discussion with an example from Harley-Davidson, which needed specific information about is customers. Harley Goes Whole Hog The motorcycle manufacturer Harley-Davidson (www.harleydavidson.com) made such an important come- tack in the early 2000s tha there was along waiting list o get a bike. In 2007, Harley-Davidson’s revenues exceeded $6 billion with a market share of about 50 percent inthe heavyweight category. Although distrib ‘lors urged Harley-Davidson to build more motoreycle, the company was skeptical about investing in new production facilities. ‘The years of declining sales taught top management to be more risk averse than risk prone. Harley- Davidson was now performing well again, and investing in new facilities meant taking risks. Would the ddemand follow in the long run or would customers stop wanting Harleys when the next fad came along? ‘The decrease in motorcycles’ quality linked to Harley’ fast growth had cost the company all its bad years. ‘Top management was afraid thatthe decision to invest was too early. On the other hand, investing would help Harley-Davidson expand and possibly become the clear market leader in the heavyweight segment Discussions with industry experts indicated that brand loyalty was a major factor influencing tke safes and repeat sales of motorcycles. Secondary data revealed thatthe vast majority of motorcycle owners also ‘owned automobiles suchas cars, SUVS, and trucks, Focus groups with motorcycle owners further indicated that motorcycles were not used primarily as @ means of basi transportation but as @ means of recreation. ‘The focus groups also highlighted the role of brand loyalty in motoreycle purchase and ownership, Forecasts called for an increase in consumer spending on recreation and entertainment well into the ‘year 2015. Empowered by the Internet, consumers inthe twenty-first century had become increasingly Sophisticated and value conscious. Yet brand image and brand loyalty played significant role in buyer behavior with well-known brands continuing to command a premium. Cleat, Harley-Davidson had the necessary resources and marketing and technological skills to achieve its objective of being the dominant motorcycle brand ona global bass, ‘This process and the findings that emerged helped define the management decision problem and the marketing research problem, The management decision problem was: Should Harley-Davidson invest to produce more motoreycles? The marketing research problem was to determine if customers would be or68 PART! + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH A correct definition ofthe ‘marketing research problem and an appropriate approach helped Harley- Davidsoa make te right decision to invest ints [production facilites. ‘Abroad statement of the general problem and ‘dentiiation ofthe specific components of the marketing esearch problem, loyal buyers of Harley-Davidson in the long term, Specifically the research had to address the following questions 1. Who are the customers? What are their demographic and psychographic characteristics? 2. Can different types of customers be distinguished? Is i possible to segment the market in a meaning: ful way? 3. How do customers feel regarding their Hatleys? Are all customers motivated by the same appeal? ‘4. Are the customers loyal to Harley-Davidson? What isthe extent of brand loyalty? (One of the research questions (RQs) examined and its associated hypotheses (Hs) were: RQ: Can the motoreyele buyers be seumented based on psychographic characteristics? Hi: ‘There are distinct segments of motorcycle buyers. HQ: Each segment is motivated ie own a Harley fora different reason. 3: Brand loyalty is high among Harley-Davidson customers in all segments. ‘This research was guided by the theory that brand loyalty is the result of positive belies, attitude, affect, and experience with the brand. Both qualitative research ul quantitative research were conducted. First, focus groups of current owners, would-be owners, and owners of other brands were conducted to understand thee feelings about Harley-Davidson, Then 16,000 surveys were mailed to get the psychologi- cal, sociological, and demographic profiles of customers and also ther subjective appraisal of Harley Some of the major findings were as follows: Seven calegories of customers could be distinguished: (1) the adventure-loving traditionalist, (2) the sensitive pragmatist, (3) the stylish status seeker, (4 the Inid-back camper, (5) the classy capitalist, (6) the cool-headed loner, and (7) the cocky misfit. Thus, H was supported. ‘© Allcustomers, however, had the same desire to own a Harley: It was a symbol of independence, free docs, and poser. This uniformity across segments was surprising, contradicting H2. ‘© All customers were long-term loyal customers of Harley-Davidson, supporting H3. Based on these findings, the decision was taken to invest and in this way t0 increase the number of Horleys built in the future! This example shows the importance of correctly defining the marketing research problem and developing an appropriate approach, Importance of Defining the Problem Although each step in a marketing research project is important, problem definition is the most important step. As mentioned in Chapter 1, forthe purpose of marketing research, problems and ‘opportunities are treated interchangeably. Problem definition involves stating the general prob- Jem and identifying the specific components of the marketing research problem. Only when the ‘marketing research problem has been clearly defined can research be designed and conducted properly. Of all the tasks in a marketing research project, none is more vital to the ultimate | ' | t |Real Research CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 69 fulfillment of a client's needs than a proper definition of the research problem. All the effort, time, and money spent from this point on will be wasted if the problem is misunderstood or il defined? As stated by Peter Drucker, the truly serious mistakes are made not asa result of wrong answers but because of asking the wrong questions. This point is worth remembering, because inadequate problem definition is a leading cause of failure of marketing research projects. Further, better communication and more involvement in problem definition are the most frequently mentioned ways of improving the usefulness of research. These results lead to the conclusion that the importance of clearly identifying and defining the marketing research prob- lem cannot be overstated. I cite an episode from personal experience to illustrate this point. Chain Restaurant Study ‘One day, I received a telephone cal rom a research analyst who introduced himself a one of our alumni. Fe was working fora restaurant chain in town and wanted help in analyzing the data he had collected while conducting a marketing esearch study. When we met, he presented me with acopy ofthe questionnaire and asked how he should analyze the data. My first question to him was, “What js the problem being addressed?” When he looked perplexed, I explained that data analysis was not an independent exercise Rather, the goal of data analysis is to provide information related to the problem components. Iwas, surprised to learn that he did not have a clear understanding ofthe marketing research problem and that ‘ written definition of the problem did not exist So, before proceeding any further, I had to define the ‘marketing research problem. Once that was done, 1 found that much of the daa collected were not relevant to the problem. In this sense, the whole study was a waste of resources. Anew study had tobe designed and Jiplemente to adress the problem identified. Further insights on the difficulty invotved in appropriately defining the problem are provided by the problem definition process.* The Process of Defining the Problem and Developing an Approach ‘The problem definition and approach development process is shown in Figure 2.1. The tasks involved in problem definition consist of discussions with the decision makers, interviews with industry experts and other knowledgeable individuals, analysis of secondary data, and some- times qualitative esearch, These tasks help the researcher to understand the background of the problem by analyzing the environmental context. Certain essental environmental factors bearing on the problem should be evaluated. Understanding the environmental context facilitates the identification ofthe management decision problem. Then the management decision problem is translated into a marketing research problem. Based on the definition of the marketing research problem, an appropriate approach is developed. The components ofthe approach consist of an objctiveltheoretical framework, analytical models, research questions, hypotheses, and specii- cation of the information needed. Futher explanation ofthe problem definition process begins With a discussion ofthe tasks involved. Tasks Involved Discussions with Decision Makers Discussions with decision makers (DM) are extremely important. The DM needs to understand the capabilities and limitations of research.‘ Research provides information relevant to manage- ment decisions, but it cannot provide solutions because solutions require managerial judgment. Conversely, the researcher needs to understand the nature of the decision managers face and ‘What they hope to lear from the research, ‘To identify the management problem, the researcher must possess considerable skill in inter- acting with the DM. Several factors may complicate this interaction. Access to the DM may be difficult, and some organizations have complicated protocols for access to top executives. The ‘organizational status ofthe researcher or the research department may make it difficult to reac the key DM in the early stages ofthe project. Finally, there may Be more than one key DM and70 PART » INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH FIGURE 2.1 The Process of Defining the Problem and Developing an Approach problem audit ‘comprehensive ‘examination of 2 marketing problem to understand its ‘ign and nature. eon Environmental Context of the Problem Sen Peon meeting with them collectively or individually may be difficult, Despite these problems, itis necessary thatthe researcher interact directly with the key decision makers.S ‘The problem audit provides a useful framework for interacting with the DM and identify- ing che underlying causes of the problem. The problem audit, like any other type of audit, is a ‘comprehensive examination of a marketing problem with the purpose of understanding its origin and nature-6 The problem audit involves discussions with the DM on the following issues that are illustrated with a problem facing McDonald's: 1. The events that led to the decision that action is needed, or the history ofthe problem, ‘McDonald's, a long-time feader in the fast-food industry, was losing market share in 2003 and 2664 to competitors such as Burger King, Wendy's, and Subway in some ofthe key ‘markets. This problem came into sharper focus as these competitors launched new products, and aggressive promotional campaigns, whereas the recent campaigns of MeDonald’s were not as successful 2. The alternative courses of action availuble to the DM. The set of alternatives may be incomplete at this stage, and qualitative research may be needed to identify the more innovative courses of action. The alternatives available to the management of McDonald’s include introducing new sandwiches and menu items, reducing prices, opening more restaurants, launching special promotions, and increasing advertising. j | i | t fReal Research CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 74 43. The criteria that wll be used to evaluate the alternative courses of action. For example, ‘new product offerings might be evaluated on the basis of sales, market share, profitability, return on investment, and so forth. McDonald’s will evaluate the alternatives based on contributions to marketshare and profit 4, The potential actions that are likely to be suggested based on the research findings. The research findings will likely call for a strategic marketing response by McDonald's 5. The information that is needed to answer the DM’s questions. The information needed includes @ comparison of McDonald's and its major competitors on all the elements of the ‘marketing mix (product, pricing, promotion, and distribution) in order to determine relative strengths and weaknesses. 6. The manner in which the DM will use each item of information in making the decision. ‘The key decision makers will devise «strategy for McDonald's based on the research find- ings and their intuition and judgment. 7. The corporate culture as it relates to decision making.” in some firms, the decision-making process is dominant; in thers, the personality of the DM is more important, Awareness of corporate culture may be one of the most important factors that distinguishes researchers ‘who affect strategic marketing decisions from those who do not. ‘The corporate culture a ‘McDonald's calls for @ committee approach in which critical decisions are made by key decision makers. Its important to perform a problem audit because the DM, in most cases, has only a vague idea of what the problem is, For example, the DM may know that the fim is losing market share but may not know why, because DMs tend to focus on symptoms rather than on causes. Inability 10 meet sales forecasts, loss of market share, and dectine in profits are all symptoms. The researcher shoufd treat the underlying causes, not merely address the symptoms. For example, loss of market share may be caused by a superior promotion by the competition, inadequate distribution of the company’s products, or any number of other factors. Only when the underlying causes are identi- fied can the problem be successfully addressed, as exemplified by the effort of store brand jeans. Look Who's Picking Levi's Pocket For years, teenagers have considered store label jeans “uncool” Although the lower price tag of store brand jeans, such as JCPenney's Arizona brand jeans or the Gap’s in-house brand, has long appealed to value- conscious parents, teenagers have preferred big brand names such as Levi's, Lee, and Wrangler. The big-name brands have historically dominated the $12 billion industry as a result, Through marketing research problem audits, the private labels determined thatthe real cause for their low market share was lack of image. Therefore, the marketing research problem was defined as enhancing theic image in the eyes of the target market—the lucrative teenage segment. ‘Arizona jeans and Gap's in-house brands have led the charge among the “generies” in changing their image. These store brand jeans, along with other store label jeans, now target the teenage marke! With “cutting edge” advertising. Their advertisements feature cock bands such as Aerosmith along with high: ‘ech intagery to attract teenagers. The brands also promote ther trendy Web sites—areas where their target market should go and visit to be “cool.” Gap jeans have also scored big. The chain's strategy has been to distance their store brand jeans from the store itself. Teenagers think of the Gap as a place where older people or their parents shop, thus making “uncool” Gap’s marketing campaign now aims to separate ther store name and image from their jeans that are aimed at teens. This isthe opposite ofa more typical or travitona! brane! name feveraging strategy, The results, according tothe research services firm TRU (wwWteenresearch.com), are that “Teens are not putting it together that this isthe house brand.” ‘The results for the store brand jeans have been quite successful. According to the marketing research firm NPD Group, privat label jeans’ matket share ha risen in the 2000s. Levi's, the market leader, has seen their market share drop over the same time period. Levi's drop is also indicative for the big brand names nationwide. These impressive results are encouraging other stores to consider introducing their own fabel Jeans to capture» portion ofthe teenage market? AAs in the case of the private label jeans, a problem audit, which involves extensive interaction between the D's and the researcher, can greatly facilitate problem definition by determining the ‘underlying ca es. The interaction between the researcher and the DM is facilitated when one or72 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH experience survey Inteniews with people very ‘onedgable about the general top being investigated key-informant technique Another name for experience sures, Le, inteniews with people very knowledgable about the general topic being investigated lead-user survey Interdews with ead uses of the technology more people in the client organization serve as alison and form a team with the marketing researcher, In order to be fruitful, the interaction between the DM and the researcher should be characterized by the seven 1. Communication. Free exchange of ideas between the DM and researcher is essential 2. Cooperation. Marketing research is a team project in which bath parties (DM and researcher) must cooperate. 3. Confidence. The interaction between the DM and the researcher should be guided by mutual trust 4, Candor. There should not be any hidden agendas, and an attitude of openness should prevail ‘5. Closeness. Feelings of warmth and closeness should characterize the relationship between the DM and the researcher. 6. Continuity. The DM and the researcher must interact continually rather than sporadically 7. Creativity. The interaction between the DM and the researcher should be creative rather than formulaic. ‘ACTIVE RESEARCH Sprite: The Third Largest Soft Drink Brand Visit www.coca-cola.com and www.sprite.com and obtain as much information about the marketing | program of Sprite as you can. Write a bref report | As the brand manager for Sprite, the third largest soft drink brand, you are concerned about improv- ing the performance of the brand Identify possible symptoms that indicate to you thatthe performance of | Sprite is below expectations ‘You are conducting marketing research for Sprite to help improve the performance of the brand. denty possible underlying causes that might be contributing tothe lack of performance. Interviews with Industry Experts In addition to discussions with the DM, interviews with industry experts, individuals knowledge- able about the firm and the industry, may help formulate the marketing research problem.” These ‘experts may be found both inside and outside the firm. If the notion of experts is broadened to include people very knowledgeable about the general topic being investigated, then these interviews are also referred to as an experience survey or the key-informant technique. Another variation ofthis ina technological context is the lead-user survey that involves obtai ing information from the lead users of the technology. Typically, expert information is obtained by unstructured personal interviews, without administering a formal questionnaire. It is helpful, however, to prepare a list of topics to be covered during the interview. The order in which these topics are covered and the questions to ask should not be predetermined but decided as the interview progresses. This aflows greater flexibility in capturing the insights of the experts. The purpose of interviewing experts isto help define the marketing research problem rather than to develop a conclusive solution, Unfortunately, two potential difficulties may arise when seek- ing advice from experts: 1. Some individuals who claim to be knowledgeable and are eager to participate may not really possess expertise 2. Itmay be difficult to locate and obtain help from experts who are outside the client “organization, For these reasons, interviews with experts are more useful in conducting marketing research for industrial firms and for products ofa technical nature, where itis relatively easy to identify and approach the experts. This method is also helpful in situations where litte information is available from other sources, as in the case of radically new products. The Internet can be searched to find industry experts outside of the client's organization. By going to industry sites, and newsgroups (e.g. groups.google.com), you can find access to many knowledgeable industry ‘experts, You could also do searches on the topic at hand and follow up on any postings or FAQs. Experts can provide valuable insights in modifying or repositioning existing products, as illus- trated by the repositioning of Diet Cherry Coke. | | |Real Research secondary data Data colected for some purpose other than the ptoblem at hand. primary data ata originated by the researcher special to adress the research problem, qualitative research ‘An unstructured, exploratory research methodology based ‘on small samples intended to provide insight and understanding ofthe problem setting, CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 73 Cherry Picking: The Repositioning of Diet Cherry Coke ‘As of 2009, Coca-Cola (mww.coca-cola.com) is sil the world’s leading manufacturer, marketer, and distrib tutor of nonalcoholic beverages to more than 200 countries, with more than 2,800 beverage products. Sales of Diet Cherry Coke had been languishing, however, down from more than 8 million cases sold in the peak years, Coke system betters had begun to cut hick distribution of Diet Cherry Coke. Faced with this issue, Coca-Cola had to determine the cause of such a decline in sales. When industry experts were consulted, the real problem was identified: Diet Cherry Coke was not positioned correctly. These experts emphasized that brand image was a key factor influencing soft drink sales, and Diet Cherry Coke was perceived as, conventional and old-fashioned, an image inconsistent with that of Cherry Cake, Hence, the marketing research problem was identified as measuring the image and positioning of Diet Cherry Coke. The research undertaken confirmed the diagnosis of the industry experts and provided several useful insights. Based on the research results, the product was repositioned to align it more closely to the image of Cherry Coke. The sim was to target younger drinkers. The packaging was remade to also be more consis: ‘ent with the Cherty Coke packaging. Bolder, edgy graphics were used to appeal to the youth segment, Finally, Diet Cherry Coke was placed with Cherry Coke in a teen-targeted promotional giveaway. Positioning Diet Cherry Coke as a youthful soft dink and targeting the teenage segment led toa tumaround and increased sales Sales have shown an upward trajectory since thanks to the industry experts who helped identify the real problem." Wy ‘The Diet Cherry Coke example points to the key roe of industry experts. However, information obtained from the DM and the industry experts should be supplemented with the available secondary data, ‘ACTIVE RESEARCH Wal-Mart: The Largest Retailer! Visit www.walmart.com and search the Intemet using a search engine as well as your library's oaline databases to identify the challenges and opportunities facing Wal-Mart, the largest retailer inthe United States. Visit groups google.com and survey the postings in retailing newsgroups t identify an expert in| retailing. Interview this expert (via telephone or online) to identify the challenges and opportunities facing Wal-Mart AAs the CEO of Wal-Mart, what marketing strategies would you formulate to overcome these challenges and capitalize on the opportunites? Secondary Data Analysis Secondary data are data collected for some purpose other than the problem at hand. Primary data, on the other hand, are originated by the researcher forthe specific purpose of addressing the research probiem. Secondary data include information made available by business and governmeat sources, commercial marketing research firms, and computerized databases. Secondary data are an economical and quick source of background information. Analysis of available secondary data is an essential step in the problem definition process: Primary data should not be collected until the available secondary data have been fully analyzed. Given te tremendous importance of secondary data, this topic will be discussed in detail in Chapter 4, Which also further discusses the differences between secondary and primary deta Itis often helpful to supplement secondary data analysis with qualitative research Qualitative Research Information obtained from the DM, industry experts, and secondary data may not be sufficient to define the research problem. Sometimes qualitative research must be undertaken to gain an understanding of the problem and ils underlying factors. Qualitative research is unstructured, exploratory in nature, based on small samples, and may utilize popular qualitative techniques such as focus groups (group interviews), word association (asking respondents to indicate their first responses fo stimulus words), and depth interviews (one-on-one interviews that probe the respondents’ thoughts in detail). Other exploratory research techniques, such as pilot surveys and74 PART | » INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH pilot surveys Saves that tend tobe less structured than largest sameysin that they oeeraly contain more pe ended questions ad the sale Sie is much smal case studies ase studies involve an intensive examination of a few selected cases ofthe Dheriomenon of intrest, Cases could be customers, stores, o¢ other units, Real Research environmental context of the problem Consists ofthe factors that have an impact on the detntion ofthe marketing research problem, induding past information and fovecsts, resources and constants ofthe fm, objectives of the dion maker, buyer behavior, egal environment, econoenic environment, nd marketing and technological skis ofthe rm case studies, may also be undertaken to gain insights into the phenome» of interest. Pilot surveys tend to be less structured than large-scale surveys in that they y -tally contain more open-ended questions and the sample size is much smaller. Case studies .wvolve an intensive examination of a few selected cases of the phenomenon of interest. The cases could be con- sumers, stores, firms, or a variety of other units such as markets, Web sites, and so on, The data are obtained from the company, external secondary sources, and by cunducting lengthy unstructured interviews with people knowledgeable about the phenomenon «f interest. In the department store project, valuable insights into factors affecting store patronage were obtained in ‘a case study comparing the five best stores with the five worst stores. Exploratory research is discussed in more detail in Chapter 3, and qualitative research tech- niques are discussed in detail in Chapter 5. Although research undertaken at this stage may not be conducted in a formal way, it ean provide valuable insights into the problem, as illustrated by Harley-Davidson in the opening ‘example, industry experts indicated the importance of brand loyalty, which also emerged as a ‘major factor in focus groups. Secondary data revealed that most motorcycle owners also owned automobiles such as cars, SUVs, and trucks, Focus groups further indicsted that motorcycles ‘were used primarily as 2 means of recreation, and all these factors were useful in defining the problem as determining if customers would be loyal buyers of Harley-Davidson in the long term, Procter & Gamble (PSG) provides another illustration of the role of qualitative research in defin- ing the marketing research problem. P&G's Peep into Privacy P&G, the maker of Tide laundry detergent, Pampers diapers, and Crest toothpaste, is sending video crews and cameras into about 80 households around the World hoping to capture, on tape life's daily routines and procedures in al ther boring glory, P&G thinks the exercise will yield a mountain of priceless insights into consumer behavior that more traditional methods—focus groups, interviews, home visits—may have ‘missed, People tend to have selective memories When talking to a market researcher. They might say, for ‘example, that they brush their teeth every moming or indulge in just a few potato chips when infact they ‘often forget to brush and eat the whole bag, Videotaping, P&G hopes, will help it get a the whofe «ruth. Iitaly, the study followed families in the United Kingdom, Italy, Germany, and China. After a subject family agrees to participate, one or two ethnographer filmmakers ative at the home when the alarm clock rings in the morning and stay until bedtime, usually fora four-day stretch, To be as unobsrusive as possible, the crew might at certain times Jeave the camera alone in a room with the subjects or let them film themselves. These ae ground rules. If friends come over, the subjects must inform them that they are Being filmed. The subjects and film- makers agree on boundaries ahead of time: Most bedroom and bathroom activities aren’t taped, A small, London research firm, Everyday Lives Ltd. (www.edlglobal.net), runs the program for P&G, Of course, P&G is acting on the information obtained by such research to come up with innovative products that cater tothe market needs, For example, some ofthe movies at customers" homes revealed tha ‘one ofthe biggest challenges faced by working mothers is their hectic mornings. fa between getting the kids off to school and juggling a host of other duties, they ft want to make sure they leave the house looking their best. So P&G defined the marketing research problem as determining the potential for multipurpose products zkat could help this segment of customers by making their makeup routine easier, Subsequent ‘esearch led tothe launch of multipurpose products such as a CoverGirl cosmetic that is a moisturizer, foun- dation, and sunscreen all rolled into One! ‘The insights gained from qualitative research, along with discussions with decision makers, interviews with industry experts, and secondary data analysis, help the researcher to understand the environmental context ofthe problem. Environmental Context of the Problem “To understand the background of a marketing research problem, the researcher must understand the client's firm and industry. In particular, the researcher should analyze the factors that have an impact on the definition of the marketing research problem. These factors, encompassing the ‘environmental context of the problem, include past information ancl forecasts pertaining (o the te nn nen agent neFIGURE 2.2 Factors to Be Considered in the Environmental Context of the Problem Real Research CCHAPTER 2 © DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 75 [——> Past Information and Forecasts [> Resources and Constraints L—> Objectives [> Buyer Bebavior [> Legal Environment [-—+ Keonomic Environment and Technological Skills industry and the firm, resources and constraints of the firm, objectives of the decision maker, buyer behavior, legal environment, economic environment, and marketing and technological ls of the fim, as shown in Figure 2.2. Each of these factors is discussed briefly? Past Information and Forecasts Past information and forecasts of trends with respect to sales, market share, profitability, technol- ogy, population, demographics, and lifestyle can help the researcher understand the underlying marketing research problem. Where appropriate, this kind of analysis should be carried ont at the industry and firm levels. For example, if a firm’s sales have decreased but industry sales have increased, the problems will be very different than if the industry sales have also decreased, In the former case, the problems are likely to be specific to the firm.!3 Past information and forecasts can be valuable in uncovering potential opportunities and problems. The following example shows how marketers can exploit potential opportunities by correctly assessing potential demand, Smarte Carte Becomes Smart with Marketing Research Smarte Cate, Inc (wwwsmartecatecom), wit its headquarter in St. Paul, Minnesota, is the leader in baggage car, focker and stller services at more than 1,00 airports, rain stations, bus terminals, shopping centers, and entertainment faites around the world. The company recently developed a ne locker using “smart” technology. They wanted to know which would be the ideal markets for this new product and sought the help of Fmerge Marketing (www mergemarketng.com). Expanding into new markets requires knowledge of each market's size and growth potential bariets to entry, and competitors. Using qualitative research (ike focus groups and depth interviews) and secondary research methods (lke Census Bureau information and Nielsen ratings), Emerge Marketing developed baseline information fora number of posible market segments. Based on the key requirements identified fo each market, it was found thatthe new locker technology would be a good fit for amusement parks, ski ares, and waterparks. The study had revealed that the features offered by the new product suited the needs of these markets segments the best. Moreover, the competitive picture was most favorable in these Segments. Thus, the problem definition was narrowed determining tbe demand potential fr the new tech nology in these thee segments (amusement parks, ski areas, and water parks). Further research was then ‘conducted to quantify the market in terms of potential sales in these segments so that Smarte Carte could ‘develop producs, manufacturing capabilites, and budgets accordingly. Based on the study, Smarte Cate76 PART | » INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH objectives Goals ofthe organization ‘and ofthe decision maker must be considered inorder to conduct successiul marketing esearch. fine-tuned the product for these three markets, For example, keyless electronic storage lockers were developed with the water parks in mind. Visitors could lock their valuables in this locker and then enjoy their rides without having to worry about the safety of their locker keys." ‘ACTIVE RESEARCH ‘The Lunch on the Go Crowd (Obtain from secondary sourees data onthe sales of restaurants for the past year and sales forecasts forthe next two to five years ‘How would you obtain this information using the Internet? ‘You are the marketing manager for Houston's restaurants. You come across information stating that ‘mee and more people are having lunch on the go end that this trend is expected to continue for the next five yeas. What kind of problems and opportunities does this information suggest? This example illustrates the usefulness of past information and forecasts, which can be espe- cially valuable if resources are limited and there ae other constraints onthe organization Resources and Constraints To formulate a marketing research problem of appropriate scope, itis necessary to take into account both the resources available, such as money and research skills, and the constraints on the organization, such as cost and time. Proposing a large-scale project that would cost $100,000 wien only $40,000 has been budgeted obviously will nt meet management approval. Jn many instances, the scope of the marketing research problem may have to be reduced to accommodate budget constrains, This might be done, as in the department store project, by confining the investigation to major geographical markets rather than conducting the project on 4 national basis. Itis often possible to extend the scope ofa project appreciably with only @ marginal increase in cosis. This can considerably enhance the usefulness of the project, thereby increasing the probability that management will approve it Time constraints can be important when decisions must be made quickly.'5 A project for Fisher-Price, a major toy manufacture, involving mall intercept interviews in six major cities (Chicago, Fresno, Kansas City, New York, Philadelphia, and San Diego) had tobe completed in six weeks. Why this rush? The results had tobe presented at an upcoming board meeting where a major (go/no go) decision was to be made about a new product introduetion.!6 Other constrains, such as those imposed by the client firm's personnel, organizational struc- ture and culture, or decision-making styles, should be identified (o determine the scope of the research project. However, constraints should not be allowed 1 diminish the value ofthe esearch to the decision maker or compromise the integrity ofthe research process. Ifa research project is worth doing, itis worth doing well In instances were the resources are too limited to allow ahigh- quality project, the firm should be advised not to undertake formal marketing research, For this rea son, it becomes necessary to identify resoutces and constraints a task that can be beter understood ‘when examined in the ight ofthe objectives ofthe organization and the decision maker. Objectives Decisions are made to accomplish objectives. The formulation of the management decision probiem must be based on a clear understanding of two types of objectives: (1) the organizational objectives (the goals of the organization), and (2) the personal objectives ofthe decision maker (DM). Forthe project to be successful, it must serve the objectives of the organization and of the DM. This, however, is nt an easy task. ‘The decision maker rarely formulates personal or organizational objectives accurately Rather, itis likely that these objectives will be stated in terms that have no operational signifi- cance, such as “to improve corporate image.” Direct questioning of the DM is unlikely to reveal all of the relevant objectives. The researcher needs skill to extract these objectives. An effective technique isto confront the decision makers with each ofthe possible solutions toa problem and ask whether they would follow that course of action, Ha “no” answer is received, use further probing to uncover objectives that are not served by the course of action.buyer behavior AAtbady of knowledge that tres to understand and predict consumers! reactions based on an individuals specific characteristics Real Research An understanding of the consumer tuhaviog under: lying milk consumption was critical to identifying the real causes that ed to the decline in milk consumption, Proceso romain Bo ‘CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 77 Buyer Behavior Buyer behavior is a central component of the envizcamental context. In most marketing decisions, the problem cz altimately be traced to predicting the response of buyers to specific actions by the marketer. An understanding of the underlying buyer behavior can provide valuable insights into the problem. The buyer behavior factors that should be considered include: 1. The number and geographical location of the buyers and nonbuyers 2, Demographic and psychological characteristics 3. Product consumption habits and the consumption of related product categories 4, Media consumption behavior and response to promotions 5. Price sensitivity 6. 7. 3. Retail outlets patronized . Buyer preferences The following example shows how an understanding of the relevant buyer behavior helps in ‘identifying the causes underlying a problem. How "Got Milk?" Got Sales Milk sales had declined in the 1980s and early 1990s, and the milk industry needed o find a way to increase sales. An advertising company was hired by the California Milk Processor Board, which in turn hited M/AVRIC Research (www.mareresearch.com) to conduct a telephone tracking survey of Californians ‘overage 11, To identify the cause of low milk sales the research company sought to understand the under: lying behavior of consumers toward milk. Through extensive focus groups, household observations, and telephone surveys, M/A/R/C was able fo understand consumer behavior underlying milk consumption. This research reveated how people used milk, what made them want it, with what foods they used it, and hhow they felt when they were deprived of it. They found that 88 percent of milk is consumed at home and ‘that milk was not the centraf drink of the average person, but it was used in combination with certain foods such as cereal, cakes, pastries, and so forth. However, milk was strongly missed when there was none around. The advertising agency, Goodby, Silverstein & Partners, developed an ad campaign around consumer behavior with respect to milk and launched the well-known “milk mustache” campaign with the “Got Milk?” tag line. This creative advertising was areal attention getter, showing celebrities from Joan Lunden to Rhea Periman and Danny DeVito sporting the famous white mustache. Through marketing research and the advertising campaign, milk sales increased and continued to be stable through 2009. But beyond sales, “Got Mik?" has become part of the American language. Some consumers have even said ‘that their kids walk into the kitchen with a cookie asking fora “glass of got meitk?™”78 PART |» INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH legal environment Regulatory policies and norms within which oxganzations must operate. economic environment. The economic environment consists of income, prices, savings, credit, and general economic conditions, The decline in milk consumption could be attributed to changes in the sociocultural environment, which include demographic trends and consumer tastes. In addition, the legal environment and the economic environment can have an iripact on the behavior of consumers and the definition of the marketing research problem. Legal Environment ‘The legal environment includes public policies, laws, government agencies, and pressure {groups that influence and regulate various organizations and individuals in society. Important areas of law include patents, trademarks, royalties, trade agreements, taxes, and tariffs. National Jaws have an impact on each element of che marketing mix. In addition, various countries have passed laws to regulate specific industries. The legal environment can have an important bearing, ‘on the definition of the marketing research problem, as can the economic environment, Economic Environment Along with the legal environment, another important component of the environmental context is the economic environment, which is comprised of purchasing power, gross income, dispos- able income, discretionary income, prices, savings, credit availability, and general economic conditions. The general state of the economy (rapid growth, slow growth, recession, or siagflation) influences the willingness of consumers and businesses to take on credit and spend on big-ticket items. Thus, the economic environment can have important implications for mar- keting research problems. Marketing and Technological Skills ‘A company’s expertise with each element of the fharketing mix, as well as its general level of marketing and technological skills, affects the nature and scope of the marketing research project. For example, the introduction of a new product that requires sophisticated technology ‘may not be a viable course if the firm lacks the skills to manufacture or market it. A firm's marketing and technological skills greatly influence the marketing programs and strategies that can be implemented. At a broader level, other elements of the technological environment should be considered. Technological advances, such asthe continuing development of computers, have had a dramatic impact on marketing research. To illustrate, computerized checkout lanes allow supermarkets to monitor daly consumer demand for products and make the scanner data available to the researcher. It is possible to obtain precise information on retail sales, nt only of the firm’s brands but also of competing brands. The speed and accuracy of dt collection enable the researcher to investigate intricate problems such as the daily change ‘market share during a promotion. Many of the factors to be considered in the environmental context of the problem can be researched via the Internet, Past information and forecasts of trends can be found by searching. for the appropriate information with search engines. For client-specific information, the user can go to the company home page and get the information from there. Investor Communication Solutions (www.broadridge.com) is an effective way to research a company and find jaformation on financial reports, company news, corporate profiles, or annual reports. Finally, you can go to sites such as Yahoo! Business or Finance or www.quicken.com to find analysts’ views of the company. Firms such as D&B (www.dnb.com) create company databases that can be accessed through a subscription or reports that can be purchased on a one-time basis. Environmental Context and Problem Definition After gaining an adequate understanding of the environmental context of the problem, the researcher can define the management decision problem and the marketing research problem. ‘This process was illustrated in the opening Harley-Davidson example. Forecasts called for an increase in consumer spending on recreation and entertainment wel! into the year 2015, Empowered by the Internet, consumers in the twenty-first century became increasingly sophisti- cated and value conscious. Yet brand image and brand loyalty played a significant role in buyermanagement decision problem The problem confronting the decison maker tasks wat the decision maker needs to do, marketing research problem ‘A problem that entails determining what informations needed and haw itcan be obtained in the mos feasible way. Project Research ‘CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 79) behavior with well-known brands continuing to command a premium. Clearly, Harley-Davidson had the necessary resources and marketing and technological skills to achieve its objective of being the dominant motorcycle brand on a global basis. The management decision problem was: Should Harley-Davidson invest to produce more motorcycles? The marketing research problem ‘was to determine if the customers would be loyal buyers of Harley-Davidson in the long term. ‘The following section provides further understanding of the management decision problem and the marketing research problem. Management Decision Problem and Marketing Research Problem “The management decision problem asks what che DM needs to do, whereas the marketing research problem asks what information is needed and how it can best be obtained (Table 21). Research can provide the necessary information to make a sound decision.'8 The management decision problem is action oriented. I is concerned with the possible actions the DM can take, How should the loss of marketshare be addressed? Should the market be segmented differently? Should a new product be introduced? Should the promotional budget be increased? In contrast, the marketing research probiem is information oriented. It involves determining what informa tion is needed and how that information can be obtained effectively and efficiently. Whereas the ‘management decisioa problem focuses on symptoms, the marketing esearch problem focuses on underlying causes Consider, for example, the loss of market share fora particular produet fine. The DM's d sion problem is how to recover this loss. Alternative courses of action include modifying existing products, introducing new products, changing other elements in the marketing mix, and seg- ‘eating the market, Suppose the DM and the researcher (R) believe thatthe problem is caused by inappropriate segmentation of the market and want research to provide information on this issue. The research problem would then become the identification and evaluation ofan alterna- tive bass for segmenting the market. Note that this process is interactive, The department store project example illustrates further the distinction between the management decision problem and the marketing research probfem as well as the interactive nature ofthe problem definition process. Defining the Problem DM: We have seen a dectine in the patronage of our stor. R: How do you know that? DM: Well itis reflected in our sales and market share. R: Why do you think your patronage has declined? DM: 1 wish I knew! R: What about competition? DME: | suspect we are better than competition on some factors and worse than them on others, R: How dothe customers view your store? DM: think most of them view it positively although we may have a weak area or two. After a series of dialogues with the DM and other key managers, research, the problem was idemifed as follows: alysis of secondary data, and qualitative Management Decision Problem What should be done to improve the patronage of Sears? Marketing Research Problem Determine the retatve strengths and weaknesses of Sears vis-a-vis other major competitors with respect to factors that influence store patronage.80 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH conceptual map ‘Away tink the broad statement ofthe marketing research problem to the ‘management decison problem Management Decision Problems Versus the Marketing Research Problem ‘Management Decision Problem _ Marketing Research Problem ‘Asks what the decision maker needs Asks what information is needed and how it should be todo obtained Action oriented Information oriented Focuses on symptoms Focuses on the underlying causes ‘The following examples further distinguish between the management decision problem and the marketing research problem: MANAGEMENT DECISION PROBLEM MARKETING RESEARCH PROBLEM Should a new product be ‘To determine consumer preferences and parchase introduced? intentions for the proposed new product Should the advertising campaign To determine the effectiveness of the current be changed? advertising campaign Should the price of the brand be ‘To determine the price elasticity of demand and increased? the impact on sales and profits of various levels of price changes While distinct, the marketing research problem has to be closely linked to the management deci- sion problem. A good way to link the broad statement of the marketing research problem with the management decision problem is through the use of a conceptual map. A conceptual map involves the following three components: ‘Management wants to (take an action). Therefore, we should study (topic). So that we can explain (question). ‘The first line states the rationale for the question and the project. This is the management decision problem. The second line of the conceptual map declares what broader topic is being investigated. The third line implies the question being investigated—the who/how/why that needs to be explained. ‘Thus, the second and third lines define the broad marketing research problem. An example of the conceptual map for AT&T follows: Management wants to (develop retention prograins that will retain 90 percent of heavy users ‘of wireless services and lead to 10 percent higher sales over the next 2 years) ‘Therefore, we should study (heavy-user loyalty). So that we can explain (what will be the most important variables in retaining these customers over the next 2 year). As can be seen, the preceding example provides valuable definitions of the management decision problem and the broad marketing research problems that are closely linked. The problem is now focused on a segment of customers (heavy users) and one behavior of these customers (stayimg with the company over the next 2 years). Measurable results, such as “90 percent retention of heavy users,” are included, as well as a company goal (10 percent increase in sales over the next 2 years). This distinction and linkage between the management decision problem and the marketing research problem helps us in understandiag how the marketing research problem should be defined. Defining the Marketing Research Problem The general rule to be followed in defining the marketing research problem is thatthe definition should (1) allow the researcher to obtain al! che information needed to address the management decision problem, and (2) guide the researcher in proceeding with the project. Researchers make two common errors in problem definition, The first arises when the research problem is definedCHAPTER 2 » DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 81 FIGURE 2.3 ern Proper Definition a of the Marketing a Research Problem Se Specitic Components Coniponent 1 IP Component 2 00 broadly. A broad definition does not provide clear guidelines for the subsequent steps involved in the project. Some examples of overly broad marketing research problem definitions are (1) develop a marketing strategy for the brand, (2) improve the competitive position of the firm, or (3) improve the company’s image. These are not specific enough to suggest an approach to the problem ora research design. The second type of error i just the opposite: The marketing research problem is defined too narrowly. A narrow focus may preclude consideration of some courses of action, particularly those that are innovative and may not be obvious. It may also prevent the researcher from address- ing important components of the management decision problem. For example, in a project conducted for a major consumer products firm, the management problem was how to respond to a price cut initiated by a competitor. The alternative courses of action initially identified by the firm’s research staff were (1) decrease the price ofthe firm’s 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. None of these alternatives seemed promising. When outside marketing research experts were brought in, the problem was redefined as improving the market share and profitability ofthe product line. Qualitative research indicated that in blind tests consumers could not differentiate products offered under different broad statement Te nal statement of the matketing research problem that provides an brand names. Furthermore, consumers relied on price a an indicator of product quality. These appropriate perspecve on findings led to a creative alternative: Increase the price of the existing brand and introduce two ‘the problem, new brands—one priced to match the competitor and the other priced to undercut it. This strategy ‘was implemented, leading to an increase in marketshare and profitability. ‘The likelihood of committing either type of error in problem definition can be reduced by stating the marketing research problem in broad, general terms and identifying its specific com- Uetniton Thespeciic. PObents (see Figure 2.3) The broad statement provides perspective on the problem and acts as ‘components focus on the Safeguard against committing the second type of error. The specific components focus on the key aspects of the problem Key aspects of the problem and provide clear guidelines on how to proceed further, thereby and provide dear guidlines reducing the likelihood of the first type of error. Examples of appropriate marketing research ‘on how to proceed further. problem definitions follow. specific components The second part of the imatketng research problem Project Research Marketing Research Problem Definition Inthe department store projet, the marketing esearch problem is to determine the relative strengths and ‘weaknesses of Sears, vis--vis other major competitors, wit respect to factors that influence store patron- age. Specifically, research should provide information onthe following questions. 1. What citer do households use when selecting department sores? 2. How do bouseholds evaluate Sears and competing stores in terms of the choice criteria deified in question I? 3, Which stores are patronized when shopping for specifi product categories? 4, What isthe marketshare of Sears and its competitors for specific product categories?82 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH AA proper definition af he ‘marketing research problem led to research that resulted in the correct use of non- price promotions for MLB games, 5, What isthe demographic and psychographic profile ofthe customers of Sears? Does it differ from the profile of customers of competing stores? 6, Can store patronage and preference he explained in terms of store evaluations and customer characteristics? US. Major League Baseball Majors in Research USS, Major League Baseball (MLB, www.milb.com) wanted to evaluate the effect of the size and frequency of its nonprice promotions for MLB games. The management decision problem was: Should MLB teams continue with nonprice promotions? The broad marketing research problem was defined as determining the impact of nonprice promotions on attendance at MLB games. Specifically, this research should answer the following questions, {1 What isthe overall effect of nonprice promotions on attendance? 2, What is the marginal impact on attendance of addtional promotional days? 3. Are nonprice promotions effective in building long-term loyalty? 44. What ate the demographic and psychographic characteristics of people who respond to nonprice promotions? ‘Analysis ofa dataset containing 1,500 observations revealed that nonpriee promotion increases single game attendance by about 14 percent. Additionally, increasing the number of promotions hus a negative elfecton the marginal impact of each promotion. The Joss from this “watering down’ effect, however, is ‘outweighed by the gain from having an extra promotion day. Promotion most influences ecasional ter ‘dees but does not engender long-term loyalty. Based on these findings, stratepic decisions were taken fo improve overall revenue by continuing the ronprice promotions, especially during the off-season and games for which sales projections were not impressive. The research results also led to the decision to spread out promotions 10 reduce che watering down effect. A correct definition ofthe sroblere Zed (o use findings that when implemented resulted in increased revenves.”” In the MLB example, the broad statement of the problem focused on gathering information about the effect of nonprice promotions, and the specific components identified the particular items of information that should be obtained. ‘This was also true in the opening Harley-Davidson exam- ple, where a broad statement of the marketing research problem was followed by four speci ‘components. Problem definition ie the department store project followed a similar patter. nce the marketing research problem has been broadly stated and its specific components identified, the researcher is ina position to develop a suitable approach.theory ‘A conceptual scherne based ‘on foundational statements, ‘or axioms, that ace assumed tobe tue, objective evidence Unbiased evidence thats supported by empirical findings. analytical motel ‘An expt specication of a set of variables and their intertelationships designed two represent some real system or process in whole orin par. verbal models Analytical models that provide a written representation ofthe relationships between variables. ‘graphical models ‘Analytical models that provide a visual picture of the relationships between variables. mathematical models Analytical mode's that explicitly describe the relationships between variables, usually in equation form. Project Research ‘CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 83. Components of the Approach In the process of developing an approach, we must not lose sight of the goal—the outputs ‘The outputs ofthe approach development process should include the following components: objective/theoretical framework, analytical models, research questions, hypotheses, and specification of information needed (see Figure 2.1). Each of these components is discussed in the following sections. Objective/Theoretical Framework C In general, research should be based on objective evidence and supported by theory. A theory is ‘a conceptual scheme based on foundational statements called axioms, which are assumed to be true. Objective evidence (evidence that is unbiased and supported by empirical findings) is gath- cred by compiling relevant findings from secondary sources. Likewise, an appropriate theory to ‘uide the research might be identified by reviewing academic literature contained in books, journals, and monographs. The researcher should rely on theory to determine which variables should be investigated. Furthermore, theoretical considerations provide information on how the variables should be operationalized and measured, as well as how the research design and sample should be selected. A theory also serves as a foundation on which the researcher can “organize and interpret te findings. “Nothing is so practical as a good theory? ‘Theory also plays a vital rolerin influencing the research procedures adopted in basic research. However, applying a theory to a marketing research problem requires creativity on the part of the researcher. A theory may not specify adequately how its abstract constructs (vari- ables) can be embodied in a real-world phenomenon, Moreover, theories are incomplete. They deal with only a subset of variables that exist in the real world. Hence, the researcher must also identify and examine other, nontheoretical, vaiables2! ‘The department store patronage project illustrates how theory can be used to develop an approach. Review of the retailing literature revealed that the modeling of store patronage terms of choice criteria had received considerable support. Furthermore, as many as 42 choice criteria had been identified in the literature, and guidelines on operationalizing these variables were provided. This provided an initial pool from which the fina) eight characteristics included in the questionnaire were selected. Theoretical considerations also suggested that store behavior could be examined via # survey of respondents familiar with department store shopping. The theoretical framework also serves as a foundation for developing an appropriate analytical model. Analytical Model ‘An analytical model is a set of variables and their interrelationships designed to represent, in ‘whole or in part, some real system or process. Models can have many different forms. The ‘most common are verbal, graphical, and mathematical structures. In verbal models, the vari- ables and their relationships are stated in prose form. Such models may be mere restatements, of the main tenets of a theory. Graphical models are visual. They are used to isolate variables, and to suggest directions of relationships but are not designed to provide numerical results, They are logical preliminary steps to developing mathematical models. Mathematical models, explicitly specify the relationships among variabies, usually in equation form, These models can be used as guides for formulating the research design and have the advantage of being anenabie to manipulation.” The different models are illustrated in the context of the depart- iment store project. Model Building Verbal Model ‘A consumer first ber mes aware ofa department store, That person then guns an understanding ofthe store by evaluating the «ore in terms ofthe factors comprising the choice criteria. Based on the evaluation, the consumer forms » degree of preference for the store. If preference is strong enough, the consumer will patronize the swe.84 PART| + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH research questions Research questions are refined statements ofthe Specic components ofthe probiem, Project Research Graphical Model Awareness ‘Understanding: Evaluation } Preference | Patronage Mathematical Model yrat San where “ 1 = degree of preference ‘ay. 4, = model parameters tobe estimated statistically “x, = slore patronage factors that constitute the choice criteria ml ‘As can be seen from this example, the verbal, graphical, and mathematical models depict the same phenomenon or theoretical framework in different ways, The phenomenon of store patron- age stated verbally is represented for clarity through a figure (graphical model) and is put in equation form (mathematical model) for ease of statistical estimation and testing. Graphical models are particularly helpful in conceptualizing an approach to the problem. In the opening Harley-Davidson example, the underlying theory was that brand loyalty isthe result of positive beliefs, attitude, affect, and experience with the brand. This theory may be represented by che following graphical model. Beliefs —> Attitudes > Purchase —» Experience! —> Repeat —> Loyalty 7 Evaluation Purchase Affect ‘The verbal, graphical, and mathematical models complement each other and help the researcher identify relevant research questions and hypotheses. Research Questions Research questions (RQs) are refined statements of the specific components of the problem. Although the components ofthe problem define the problem in specific terms, further detail may be needed to develop an approach, Each component of the problem may have to be broken down into subcomponents or research questions. Research questions ask what specific information is, required with respect to the problem components. Ifthe research questions are answered by the research, then the information obtained should aid the decision maker. The formulation of the research questions should be guided not only by the problem definition, but also by the theoreti- cal framework and the analytical model adopted. For a given problem component, there are likely to be several research questions, asin the case of the department store project. Research Questions The fith component ofthe research problem was the psychological profile of Seas’ customers. Inthe con- textof psychological characterises, several research questions were asked about the customers of Seas, © Do they exhibit store loyalty? © Are they heavy users of edit?hypothesis ‘An unproven statement or ‘proposition about a factor lr phenomenan thats of interest othe researcher Project Research FIGURE 2.4 Development of Research Questions and Hypotheses CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 85 ‘© Are they mote conscious of personal appearance as compared to customers of competing stores? ‘© Do they combine shopping with eating out? ‘The research questions were then further refined by precisely defining the variables and determining how they were to be operationalized. To ilusrate, how should the use of Sears credit be measured? It could be ‘measured in any ofthe following ways. 1. Whether the customer holds a Sears creditcard 2. Whether the customer uses the Sears credit cant 3. The mumber of times the Sears eredit card was used in agpecitie time period 4. The dollar amount charged tothe Sears credit card during a specified time period my ‘The theoretical framework and the analytical model play a significant role in the opera- tionalization and measarement of variables specified by the research questions. Whereas in the department store project, the literature reviewed did not provide any definitive measure of store credit, the sathematical model could incorporate any of the alternative measures, Thus, it was decided to include all four measures of store credit in the study. Research questions may be {farther refined into one or more hypotheses. Hypotheses ‘A hypothesis (H) is an unproven statement or proposition about a factor or phenomenon that is Of interest to the researcher. It may, for example, be a tentative statement about relationships between two or more variables as stipulated by the theoretical framework or the analytical ‘model. Often, a hypothesis isa possible answer to the research question. Hypotheses go beyond research questions because they are statements of relationships or propositions rather than merely questions to which answers are sought. Whereas research questions are interrogative, hypotheses are declarative and can be tested empirically (see Chapter 15). An important role of a hypothesis is to suggest variables to be included in the research design. The relationship among the marketing research problem, research questions, and hypotheses, along with the influence of the objective/theoretical framework and analytical models, is described in Figure 2.4 and illus- trated by the following example from the department store project.24 Hypotheses ‘The following hypotheses were formulated in elation to the research question on store loyalty? HI: Customers who are store loyal are less knowledgeable about the shopping environment HQ: Store-loyal customers are more tsk averse than a‘é nonloyal customers. ‘These hypotheses guided the esearch by ensuring that variables measuring knowledge of the shopping environment and propensity o take risks were included in the research design, Md Unfortunately, it may not be possible to formulate hypotheses in all situations. Sometimes suffi- cient information is not available to develop hypotheses. At other times, the most reasonable statement of a hypothesis may be a trivial restatement of the research question. For example: RQ: Do customers of Sears exhibit store loyalty? H: Customers of Sears are loyal ra een) Objective! Framework Research Questions Analytical Masel —| Hypotheses86 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH Real Research Experiential Research Hypotheses are an important part ofthe approach to the problem. When stated in operational terms, as H and H2 in the department store example, they provide guidelines on what, and how, data are to be collected and analyzed. When operational hypotheses are stated using symbolic nota- tion, they are commonly referred to as statistical hypotheses. A research question may have more than one hypothesis associated with it, as in the Harley-Davidson example and the one that follows, The Taste of Comfort In the midst of an insecure global environment in 2009, nothing was more comforting than trusted, familie fools and teats. Do cersin foods provide comfort under different situations in people’s lives? For instance, does chicken soup make people fee! bette ona rainy day or when they have a col, partially because they may hhave eaten chicken soup duting the same situations when they were growing up? Marketing research was, conducted to investigate comfort foods. The specific esearch questions and the associated hypotheses were: RQI: What foods are considered o be comfort foods? HI: Potato chips are considered comfort foo. H2: Ice cream is considered comfort food. RQ2: When do people eat comfort foods? 3: People eat comioit foods when they are in a good mood, H4: People eat comfort foods when they are in a bad mood. RQ3: How do people become atached to comfort foods? HS: People are attached to comfort foods that are consistent with their personality. HG: People ae atached to comfort foods because of past associations. In-depth telephone interviews were conducted with 411 people across the United States. The purpose was to find out what people's favorite comfort foods were and how these praiuts became comfort foods. tom the «qualitative answers, a 20-minute quantitative phone survey was develope for larger sample size of 1005 The results showed that America’s Favorite comfort fod is potato chips followed by ive cream, cookies, and candy. Thus, both HI and H2 were supported. Many respondents also considered natural, homemade, ot even “healthy” foods sch as meats, soups, td vegetables comfort foods. The psychological comfort ofthese foods may provide a powerful impact om people's food choices just asthe taste does for snack foods People are also more likely t0 eat comfort foods when they are in good moods than sad: jubilant (86 percent), celebrating (74 percent) got the blues (39 percent), the blahs (52 percent), and lonely (G9 percent) Thus, H3 had stronger support than H4, although both were supported, ‘The resus also showed that past associations with products and personality idemtificaton are the two ‘main seasons why foods become comfort foods, thus supporting HS and H6, Foods often remind people of specific events during ther lives, which is why they eat them for comfort. Some foods also help people form tei identities because the product are consistent with their personality. For instance, meat and pota- toes are staples forthe macho, all-American male, Which may explain why many males donot want to try healthier soy products. ‘The more marketers know about the psychology behind foods, at both the associative and personality levels, the better they will be at establishing new brands, as well as packaging and advertising existing brands that are already considered comfort foods and have their own brand personalities. For example, Fito-Lay's Baked Lays brand of low-fat potato chips has been very successful. Frito-Lay combined the fact that chips are fun to eat with the wave of health-conscious people inthe United States. ‘The slogan forthe new brand was “Taste the Fun, Not he Fa" which affects one’s concept of wanting a fun lifestye. The fun product continues to be comforting while reducing people's puilt by its low fat content. 25 Marketing Research Begins at Home (or Near the Campus) Visit local business located near your campus. Interview the business owner or manager and identify some of the marketing challenges facing this business. Also interview an expert in this industry. Search and analyze secondary data pertaining to this business and the industry and identify the environmental context ofthe problem, 1, Define the management decision problem. 2. Define the marketing esearch problem. 3. Develop «graphical model explaining the consumer choice process leading to the patronage of his basiness or its competitors 4. Develop an appropriate research question an hypothesis.Project Research CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 87 Specification of Information Needed By focusing on each component of the problem and the analytical framework and models, research questions, and hypotheses, the researcher can determine what information should be obiained in the marketing research project. Itis helpful to carry out this exercise for each compo- nent of the problem and make a list specifying all the inforination that should be collected. Let us consider the department store project and focus on the components of the probfem identified earlier in this chapter to determine the information that should be obtained from the respondents, selected for the survey. Specification of Information Needed Component 1 “This component involves the ritera households use to sce department tre. Based onthe proces ov lined earlier inthis chapter the researcher identified the following factor as part of the chai crite: quality of merchandise, variety and assortment of merchandise, etm and adjustnent policy, service of store personnel, prices, convenience of location, layout of tore, cei an bing policies. The respondents should be asked to rat the importance ofeach factor ai infuenees their tore selection ‘Component 2 ‘This component is concerned with competition. The researcher identified nine department stores as com- petitors of Seas tse on discusions with management. The respondents shouldbe asked to evaluate S and its.nge competitors on the eight choice criteria factors. Component 3 Specific product categories are the focus ofthis component. Sixteen diferent product categories were seleced, including, women’s dresses, women's sportswear, lingerie and body fashion, junior merchandise, men's apparel, cosmetics, jewelry, shoes, sheets and tovels, rite and bedding, and drapeies. The respondents should be asked whether they shop teach nf he 10 stores for each ofthe 16 product catepoies. Component 4 No additional information needs tobe obtained from the respondents. Component 5 Information onthe standard demographic characteristics should be obtained from the respondents. Based ‘on the process outlined earlier in this chapter, the researcher identified the following psychographic charac~ tetiates as relevant: store loyalty, credit use, appearance consciousness, and combining shopping With cating, Information on these variables should also be obtained fr the respondents. Component 6 ‘No ational information needs o be obtained from the respondents Project Activities Review the discussion of the Sears project given inthis chapter. 1. Do you think thatthe marketing research problem is appropriately defined, given the management decision problem facing Sears? Why or why not? 2. Develop an alternative graphical model of how consumers select a department store, 3. Develop two research questions and two hypotheses corresponding to components 1 to 4 and 6 ofthe ‘marketing research problem. Ml International Marketing Research The precise definition ofthe marketing research problem is more difficult in international ‘marketing research th: in domestic marketing research. Unfamiliarity with the environmental factors of the county where the esearch is being conducted can greatly increase the difficulty of understanding the problem's environmental context and uncovering its causes.88 PARTI + INTRODUCTION AND EARLY PHASES OF MARKETING RESEARCH Real Research self-reference criterion ‘The unconscious reference ‘to.0ne's own cultural values. Heinz Ketchup Could Not Catch Up in Brazil In 2009, Heinz (www heinz.com) was selling products in more than 200 countries and sales were topping $10 billion with approximately 60 percent of revenue coming from overseas. Despite good track records inland and overseas, H, J, Heinz Co. failed in Brazil a market that seemed to be South America’s biggest and most promising. Heinz entered fo a joint venture with Citrosuco Paulista, a giant orange jul ‘exporter, because of the future possibility of buying the profitable company, Yet the sales ofits products, including ketchup, did no take off. Where was the problem? A problem audit revealed thatthe company lacked a strong loaf distribution system. Heinz lost control of the distribution because it worked on con- signment, Distribution could not reach 25 percent penetration. The other related problem was that Heinz ‘concentrated on neighborhood shops because this strategy was successful in Mexico. However, the problem audit revealed that 75 percent of the grocery shopping in Sio Paulo is done in supermarkets and not the smaller shops. Although Mexico and Brazil may appear to have similar cultural and demographic character- istics, consumer behavior can vary greatly. A closer and intensive look at the Brazilian food distribution system and the behavior of consumers could have averted ths failure. Heinz, however, is looking more closely at Asia, especially China, where the company markets baby food and where 22 million babies are ‘bor every year? a [As the Heinz example illustrates, many international marketing efforts fail, not because research ‘was not conducted, but because the relevant environmental factors Were not taken into account, Generally, this leads toa definition ofthe problem that is too narrow. Consider, for example, the consumption of soft drinks. In many Asian countries such as India, water is consumed with meals, and soft drinks are generally served to guests and on special occasions. Therefore, the ‘management decision problem of inereasing the market share of a soft drink brand would trans- late to a different marketing research problem in India than inthe United States. Before defining the problem, the researcher must isolate and examine the impact of the self-reference criterion (SRC), or the unconscious reference to one’s own cultural values. The following steps help researchers account for environmental and cultural differences when defining the problem in an international marketing context." Step 1 Define the marketing research problem in terms of domestic environmental and cultural factors, Tas involves an identification of relevant American (domestic country) traits, ceonomics, values, needs, or habits, Step 2 Define the marketing research problem in terms of foreign environmental and cultural factors. Make no judgments. This involves an identification ofthe elated traits, economics, values, needs or habits in the proposed market culture. This task requires input fom researchers familiar withthe foreign environment ‘Step 3 Isolate the self-reference criterion (SRC) influence onthe problem and examine it carefully to see how it complicates the problem. Examine the differences hetween steps 1 and 2. The SRC can be seen to account for these differences. Step 4 Redefine the problem without the SRC influence and addres it for the foreign market situation. Ifthe difference in step 3 are significant, the impact ofthe SRC should be carefully considered Consider the broad problem of the Coca-Cola Company trying to increase its penetration of the soft drink market in India. In step 1, the problem of increasing the market penetration in the United States would be considered. In the United States, virtually all households consume soft rinks, and the problem would be to increase the soft drink consumption of existing consumers. Furthermore, soft drinks are regularly consumed with meais and as thirst quenchers. So the problem of increasing marketing penetration would involve getting the consumers to consume more soft drinks with meals and at other times. In India, on the other hand (step 2), & much smaller percentage of households consume soft drinks, and soft drinks are not consumed with ‘meals. Thus, in step 3, the SRC car be identified as the American notion that soft drinks are an all-purpose, all-meal beverage. In step 4, the problem in the Indian context can be defined as how to get a greater percentage of the Indian consumers to consume soft drinks (Coca-Cola products) and how to get them to consume soft drinks (Coca-Cola products) more often for personal ‘consumption, While developing theoretical frameworks, models, research questions, and hypotheses, remember that differences inthe environmental factors, especially the sociocultural environment,Reai Research Real Research ‘CHAPTER 2 + DEFINING THE MARKETING RESEARCH PROBLEM AND DEVELOPING AN APPROACH 89. may lead to differences in the formation of perceptions, attitudes, preferences, and choice behavior. For example, orientation toward time varies considerably across cultures. In Asia, Latin America, and the Middle East, people are not as time conscious as Westerners. This influ ences their perceptions of and preferences for convenience foods such as frozen foods and prepared dinners. In developing an approach to the problem, the researcher should consider the equivalence of consumption and purchase behavior and the underlying factors that influence them. This is critical to the identification of the correct research questions, hypotheses, and information needed, Surf Superconcentrate Faces a Super Washout in Japan ‘As of 2009, Unilever (worw.unilever.com) sold consumer products in 150 countries. AS much as 85 per- cent of their profits came from overseas, with 7 percent oftheir profits being attributed to Asia and the Pacific. Unilever attempted to freak into the Japanese detergent market with Surf Superconcentrate, It achieved 14.5 percent of the market share initially during test marketing, which fell down to a shocking 2.8 percent when the product was introduced nationally. Where did they go wrong? Surf was designed to have a distinctive premeasured packet asin tea-bag-like sachets, joined in pairs because convenience aus an important attribute to Japanese consumers, It also had a “fresh smell” appeal. However, Fapanese con. summers noticed thatthe detergents did not dissolve in the wash, partly because of weather conditions and also because of the popularity of low-agitation washing machines, Surf was not designed to work in the ‘new washing machines. Unilever also found shat the “fresh smell” positioning of new Surf had little relevance because most consumers hung their wash out in the fresh air. The research approach was certainly not without faw as Unilever failed to identify critical atributes that are relevant inthe Japanese detergent market, Furthermore, it identified factors such as “fresh smelt” that had no relevance in the Japanese context. Appropriate qualitative research such as focus groups and depth interviews across samples from the target market could have revealed the correct characteristics or factors leading to a suitable research design, Despite weak performance inthe Japanese market, Surf continued to perforin well in several markets including India through 2009, Surf, launched in 1952, is the third-biggest-selling product in the washing detergent market behind Unitever’s Persil and Procter & Gamble’s Ariel? Bihics in Marketing Research Ethical issues arise if the process of defining the problem and developing an approach is compro- mised by the personal agendas of the client (DM) or the researcher. This process is adversely affected when the DM has hidden objectives such as gaining 2 promotion or justifying a decision that has been already made. The DM has the abligation to be candid and disclose to the researcher all the relevant information that will enable a proper definition of the marketing research problem, Likewise, the researcher is ethically bound to define the problem so as to further the best interests of the client, rather than the interests of the research firm, AL times this ‘may mean making the interests ofthe research firm subservient to those of the client, leading to an ethical dilemma. Ethical or More Profitable? ‘A marketing research fir is hited by a major consume electronics company (¢, Philips) to conduct a large-scale segmentation study withthe objective of improving markt share. The researcher, afer folow- ing the process outlined inthis chapter, determines thatthe problem isnot market segmentation but distribution. The company appears to be lcking an effective dstbation sytem, hic is inting market share. However, the distribution problem requires a much simpler apprcah that wll greatly reduce the cos of the project and the research firm’s profits. What should the researcher do? Should the research firm conduct the research the lent want rather han the research the client needs Ethical guidelines indicate thatthe research firm hasan obigaton to disclose the actual problem othe client. fer he distribution problem has been discussed, the client still desires the segmentation research, the research firm should feel fice to conduct the sad The reason is thatthe researcher cannot know for certain the motivations underly- ing the client’s behavior.2°| Research Design Overview Real Research Chapter 2 discussed how to define 2 marketing research problem and develop a suitable approach. These first two steps are critical to the success of the entire marketing research project. Once they have been completed, attention should be devoted to designing the formal research project by formulating a detailed research design (ee Figure 2.1 in Chapter 2) This chapter defines and classifies research designs. We describe the two major types of research designs: exploratory and conclusive. We further classify conclusive research designs as descriptive or causal and discuss both types in detail. We then consider the differences between the two types of descriptive designs, cross-sectional and longitudinal, and identify sources of errors. We cover budgeting and scheduling of a research project and present guidelines for writing a marketing research proposal. The special considerations involved in formulating research designs in international marketing research are discussed Several ethical issues that arise at this stage of the marketing research process are considered. The reader can develop a better appreciation of the concepts presented in this chapter by first considering the following example, which illustrates exploratory and conclusive research designs More Than Just Causes Ina study of cause-reated marketing, exploratory esearch inthe form of secondary data analysis and focus ‘groups was conducted to identify the social causes that American businesses should be concerned about, ‘The following causes were identified as salient: child care, drug abuse, public education, hunger, crime, the environment, medical research, and poverty ‘Then conclusive research in te Form of a descriptive cross-sectional survey was undertaken to quantify hhow and why cause-rlated marketing inffuences consumers’ perceptions of companies and brands and to determine the relative salience of the causes identified in the exploratory research, A random sample of 2,000 Americans was surveyed by telephone. About 61 percent of respondents said that when price and ‘quality are eqeaf, they would switch brands or stores to companies that support good causes that help onthe Joca or national level. The survey also revealed that 68 percent of consumers would pay more fora product hat is Linked to a good cause. Company support of good causes proiuces a more positive image and greater trust of the company, according to 66 percent of those surveyed. The relative salience ofthe social causes that businesses should addres is presented in the following table. Social Issues Businesses Should Work the Hardest to Solve Percent Saying It is, _ Social issue a Major Concern Pte education B Coe 2 Ep.ironment 0 Poverty wu Medival esearch 2 Menger B Ch tare 2 D + abuse 8 101102 PART Il » RESEARCH DESIGN FORMULATION Exploratory research followed by conclusive research helped Starbucks realize that the environment ‘was an important cause influencing consumers? perceptions of companies and brands research design A framework or blueprint for conducting the marketing research proect It specifies the details ofthe procedures necessary for “obtaining the information needed to structure and/or salve marketing research problems, exploratory research One type of research esi, which has sits primary objective the ‘rovson of insights into and comprehension ofthe froblem station Confronting the researcher, In keeping with these findings, Starbucks (www starbucks com) decided to help the environment by provid ing a new “eco-ftiendly” coffee cup, composting coffee grounds, and recycling burlap bags. The company also ‘as initiatives to help smal coffe bean farmers, local community programs, and charitable giving, There are even ‘employee incentives and awards for volunteering for these causes. One ofthe newest socal programs isto match ermployee volunteer hours with dollar tothe same organization, Starbucks, in conjunction with intemational specialty coffee organizations such as the Colombian Coffee Federation and the Specialty Coffee Assocation of America, advised many environmental organizations abou growing earth-friendly coffee. An extensive set of juidelines was established, called the “Conservation Principles for Coffee Production.” Thus, Starbucks has leretited its brand and enhanced its image ina way that checkbook philanthropy never could." Ml AAs this example indicates, at a broad level, two main types of research designs are employed in marketing research: exploratory and conclusive. An understanding of the fundamentals of research

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