CHAPTER THREE:

Quality decision – making drives business success. Marketing researchers

contribute to decision making in several key ways. These would be:

1) Helping to better define the organisation’s current situation

2) Identifying useful decision statements and related research questions
3) Defining the firm’s meaning – how consumers, competitors, and employees
view the firm.
4) Providing ideas for product improvements or ppossiblee new product
development
5) Testing ideas that that will assist in implementing marketing strategy including
innovations.
6) Examining how well a marketing theory describes marketing reality

Decision making and research

Decision making is the process of developing and deciding among alternative ways
of resolving a problem or choosing from among alternative opportunities. Every
decision-making situation can be classified based on whether it represents a
situation characterised by complete certainty or absolute ambiguity.

A market opportunity is a situation that makes some potential competitive advantage

possible. A market problem is a business situation that makes some significant
negative consequence more likely. This situation is because of some force acting in
or on the firm’s market. Problems are usually not as obvious as they may seem. In
fact, they usually are not easily observable.

Certainty

Complete certainty means that the decision maker has all the information needed to
make an optimal decision. This includes the exact nature of the marketing
opportunity or problem.

Uncertainty means that the manager grasps the general nature of desired objectives,
but the information about alternatives is incomplete. Under conditions of uncertainty,
effective managers recognise that spending additional time to gather data that clarify
the nature of a decision is needed.
 Ambiguity

This means that the nature of the problem is unclear. Objectives are vague and
decision alternatives are difficult to define. This situation is common. The more
important, ambiguous or uncertain a situation, the more likely it is that additional time
must be spent on marketing research.

Classifying Decision Situations

Under problem-focused decision making and conditions of high ambiguity, symptoms

may not clearly point to some problem. They may, however, be small deviations from
normal conditions.

Types of Marketing Research

Sometimes researchers know exactly what their problems are and can design
careful studies to test specific hypothesis. There are three types of marketing
research:

1) Exploratory research
2) Descriptive research
3) Causal research

Matching the particular decision situation with the right type of research is important
in obtaining useful research results.

EXPLORATORY RESEARCH DESIGN (ER)

This type of research aims to clarify ambiguous situations or discover ideas that may
amount to true business opportunities. Exploratory research does not provide
conclusive evidence from which to determine a particular course of action.

ER is useful in new product development – it may reveal insight into radical products.
It may be helpful in better defining a market problem or identifying a market
opportunity. ER may be implemented to identify symptoms and potential problems
that may arise.

DESCRIPTIVE RESEARCH (DR)

Descriptive research describes characteristics of objects, people, groups,
organisations or environments. DR addresses who, what, when, where, why and
how questions – usually helpful in describing the target market and market
segments.

Accuracy is NB because misestimating may lead to misleading results. Researchers

are able to conduct studies with a considerable understanding of the marketing
situation. Survey research typifies a descriptive study.

“why are store A’s sales lower than store B’s sales?”. This is a diagnosis analysis.
Diagnosis analysis seeks to detect reasons for market outcomes and focuses
specifically on the beliefs, feelings and reactions consumers have about and toward
competing products.

CAUSAL RESEARCH

If a decision maker knows what causes important outcomes like sales and employee
satisfaction he/ she can shape firm decisions in a positive way. Cause interferences
are powerful because they lead to greater control. Causal research allows decision-
makers to make causal interference.

ER and DR usually precede causal research. As a result, researchers can make

informed predictions concerning cause and effect relationships. This research,
however, may demand a large amount of money and time.

Causality

Causal research attempt to establish that when we do one thing, another thing will
follow. A causal interference is just a conclusion. A researcher needs some type of
evidence in order to draw a causal interference.

Three critical pieces of causal evidence are:

1) Temporal Sequence
2) Concomitant Variance
3) Nonspurious Association
 Temporal Sequence

Temporal sequence deals with time order of events. In other words, having an
appropriate causal order, or temporal sequence, is a necessary criterion for
causality. The cause must happen before the effect. (e.g if advertising causes sales,
the advertising must appear before the change in sales).

Concomitant Variance

Concomitant variance occurs when two events “covary” (when they vary
systematically). This means that when a change in cause occurs, a change in
outcome is also observed. Causality can’t exist if there is no systematic variation
between variables.

Nonspurious Association

Nonspurious association means any covariation between a cause and an effect is

indeed because of a cause and not just owing to some other variable. A spurios
association is one that is not true. Often a causal inference can not be made even
though the other two conditions are because both the cause and effect have some
common cause; that is, both may be influenced by a third variable.

Establishing evidence of nonspurious can be difficult. If a researcher finds a third

variable that covries with both the cause and effect causing a significant drop in the
correlation between the cause and effect , then a causal inference becomes difficult
to support. The research must, therefore, find a “third” variable that would relate to
both the cause and effect.

IN SUMMARY, CAUSAL RESEARCH MUST:

1) Establish the appropriate causal order or sequence of events

2) Measure the concomitant variation between the presumed cause and
consumed effect
3) Examine the possibility of spuriousness by considering the presence of
alternative planned causal factors

Stages in the Research Process

The stages of the research process follow a series of stages:

 1. Defining research objectives
2. Planning a research design
3. Planning a sample
4. Collecting data
5. Analysing data
6. Formulating conclusions and prepring a report

Management is in the center of this process. The researcher can’t properly define
research objectives without managerial input.

Alternatives in the Research Process

The researcher must choose among a number of alternatives during each stage of
the research process. When dthere are severe time constraints , these constraints
override validity, resulting in choosing the fastest alternative.

Defining research objectives

Research objectives are the goals that researchers intend to achieve through this
particular effort. In consulting, researchers use the term delivarables to describe the
objectives to a research client.

The researcher, for the sake of applied research, list objectives until there is an
understanding of the decision statement. The lead researcher and the
chiefresearcher must share this understanding for effective research. This
understanding is known as the problem statement. Research objectives cannot take
place until managers and researchers have agreed on the “problem” that will be
addressed by the research. They set out to “discover” the problem through a series
of interviews and through a document called a research proposal.

Defining the managerial decision situation.

Careful attention to problem definition allows the researcher to set proper objectives.
If the purpose of research is clear the chances of relevant and necessary informaion
being collected.
The summary of the managerial decision situation, the research objectives and/or
deliverables and a basic description of the research process represent key elements
of a research proposal.

**exhibit 3.6