Session 2

Understan
ding the D
ecision Pr
Research
oblem
for Market
ing Decisio
ns

The Decision Problem

0 The starting point of the research
0 Typically includes some management decision

problem / issue
0 Are the consumers satisfied? If not why? What needs

to be done to satisfy them?

0 Who are the consumers? What are their purchase
behaviour?

0 Sometimes it could be a research problem too

0 Demand forecasting / sales forecasting
0 What is the ideal price point? What is the attrition
rate of the consumers with the increase of price?

The Decision Problem

0 Sometimes, it could be rather vague too
0 Would the consumer culture support health clubs / organic
produce in XYZ city?
0 I want to make my business green. Tell me how.
0 Hence, the researcher / consultant needs to develop

clarity of thought, judgmental evaluation of symptoms

and evidence and considerable amount of checking and
cross checking of alternative ideas for arriving at most
worthy questions / issues for investigation
0 In other words, one needs to develop a logical thought
process for being a successful marketing researcher

How to progress?
0 Prerequisite
0 General contextual familiarity / methodological
familiarity with the problem
0 Requirements
0 Break down the problem into many clear
components and integrating them into a coherent
set
0 Developing and examining some starting
hypotheses (from the broken down components)
about the problem about the why / how of the
problem

How to progress?
0 Intelligent dialogue with the decision maker/s

to decipher what the real problem is

compared to the reported one
0 Carry out preliminary analyses to check and
re-check the starting hypotheses and
generate new hypotheses (If needed)
0 Determining the information requirements
with utmost clarity

How to progress?
0 Checking for the availability / sources of the

information
0 Evaluating the cost and value of the
information (seriousness of the consequences
envisaged)
0 Writing the project proposal and asking for
the approval of the client

Illustration
0 Decision Problem
0 Sale of NIKE shoes has been declining in the
last couple of years
0 General contextual familiarity
0 Industry as a whole is reporting declining sales
and what the company has noticed is nothing
but a reflection of industry trend
0 Increased competition from low priced brands
is responsible for decline in NIKEs sales

Illustration
0 To ascertain the general contextual issues as

the key reasons, one needs to determine

some facts that bear upon the decision
0 What is the size and trend of industry volume?
0 What is NIKEs share in the industry volume?
0 What is the trend in NIKEs market share?
0 How is the industry volume divided into high

priced, med priced and low priced brands?

0 What are the industry volume trends in each of
these categories?

Illustration
0 Breaking down the decision problem
0 The construct declining sales could depend
upon multiple factors; one needs to look up the
theory and practice to identify those factors
0 Product mix
0 Pricing
0 Distribution channels and their coverage
0 Displays, Promotions, advertising
0 Consumer buying habits

0 Each of the above can be converted to starting

hypotheses

Illustration
Product
Decisions
Advertising
& sales
strategy

In store
Promotions

Pricing
Decisions

Sales
Declin
e

Distributi
on
Channel
Types
Distribution
channel coverage

H1: High pricing is the reason for declining sales

H2: Lack of in store promotions is the reason for declining sales

Illustration
0 At this stage, it is significant to go back to the

client and discuss the hypotheses with him for

further development
0 You may need to interact with executives / shop
floor workers at various levels and different
interest levels
0 One also needs to gauge the real reason for the
project and its consequences
0 Subsequently, you may pick up some of the
hypotheses for further development or may
create new hypotheses for further development

Illustration
0 Carrying out initial analysis
0 You need to collate all the information you have
gathered till now and validate the starting
hypotheses for further development
0 You may carry out fresh interviews, scan variety
of documents and gather numerous internal
and external data

Lack of
Promotio
n

Sales
Decline
High
Price

S1

Consumer
Survey

S2

Internal
Reports

S3

Secondary
report

S4

Retailer
Survey