BUSINESS

RESEARCH Dr. Riyaz Ahmed Qureshi

METHODS
RESEARCH

In common language, Research refers to “Search for

Knowledge”. It is an art of scientific investigation.
It is also a systematic design, collection, analysis and
the reporting the findings and solutions for the marketing
problems of a company. Research is required because of
the following reasons:
 To identify and find solutions to the problems
 To help making decisions:
 To develop new concepts
 To find alternate strategies
BRM
1. To identify and find solutions to the problems
Understand the problem in depth. By identifying the problem precisely it is
easy to collect the relevant data to solve the problem.
Ex: Why Demand for a particular product is falling?
2. To help making decisions:
Research provides answers to certain decisions.
Ex: Is the same advertising budget maintained?
3. To develop new concepts:
Ex: Horizontal Marketing, MLM etc.
4. To find alternate strategies
Ex: Should we follow pull strategy or push strategy to promote the product?
BUSINESS RESEARCH
Introduction

Business research is a means of providing management with information.

The main purpose is to reduce uncertainty at the time when business
strategy is being planned, and to monitor performance after the strategy has
been implemented.
It has crucial role in aiding decision making, by ensuring continuous flow of
data or information.
The information collected from business research and its contribution to
decision making, depends largely on the nature of the problem.
If the problem is not correctly defined the information collected can go waste
or may be irrelevant.
Any approach to designing a research project therefore should start from
defining the problem carefully.
FEW QUESTIONS MUST BE
ASSURED
Few questions must be assured before one conducts research:

1. What information will aid decision making?

2. What are we going to do with this information?
3. How should we collect this information?
4. What are we going to measure?
5. How should we analyze results?
6. How much should we spend on the entire research
process?
COST AND VALUE OF
INFORMATION
It is important to consider the cost and value of information that may be
obtained before going in for research. The management also has to weigh
upon the outcome of not using research, against the likely results of using
it and therefore should address the following questions:

1. What decision are we faced with?

2. What are the implications of taking wrong decisions?
3. What is the risk of taking a wrong decision based on available
information?
4. How can we justify the decision without collecting data?
CONCEPT
 Business research is intended to find out things about business matters in a systematic
way.
 The purpose is to advance knowledge and increase understanding by providing
procedures that help managers to solve business problems.
 The most notable twenty-first century business environment characteristics are: a
fast-changing global market place and the need for cost-effective, accurate information
and timely decision-making.
Management has to take decisions in an uncertain environment that is influenced by
many factors.
 Business research aims to provide management with information that can serve as a
basis for sound decision-making.
 Research Methodology provides a tool for management to meet the information
requirements of key decision-makers.
 Business research methods can provide management with reliable information if data
are collected in a scientific manner.
 Through research, new knowledge is discovered that aids management in finding
solutions to specific business problems. This requires the development of an effective
research process.
MEANING
Business research refers to any type of researching done when starting or running
any kind of business.
For example, starting any type of business requires research into the target customer
and the competition to create a business plan.
Conducting business market research in existing businesses is helpful in keeping in
touch with consumer demand.
Small business research begins with researching an idea and a name and continues
with research based on customer demand and other businesses offering similar
products or services.
All business research is done to learn information that could make the company
more successful.
The task of business research is to generate accurate information for use in decision
making.
The emphasis of business research is on shifting decision makers from intuitive
information gathering to systematic and objective investigation.
DEFINITION

To McDaniel and Gates “Business research is the planning,

collection and analysis of data relevant to business decision-making
and the communication of the result in this analysis to management”.

In the words of John W Best, “Research is the systematic and

objective analysis and recording of controlled observations that may
lead to the development of generalizations, principles, or theories,
resulting in prediction and possibly ultimate control of events”.
NATURE OR CHARACTERISTICS
OF BUSINESS RESEARCH

Covering business region

Judging problem
Flexible
Deciding how to produce the product
Promoting Business
NATURE OR CHARACTERISTICS OF
BUSINESS RESEARCH

1. Promoting Business
The aim of any business research is how to better promote the business in an
economically sound manner and to increase the businesses net profit, exposure and
ensure its continuity.

2. Covering business region

It includes all the regions in which the business operates, locally and internationally.
Example: Setting-up a hotel means knowing local conditions such as attractions and
competing establishments but also problems such as crime or obtaining supplies.

3. Judging problem
One of the natures of business research is judging local problems of the environment
in which our establishment is going to operate.
4. Flexible
Another characteristic of business research objectives is flexibility. The
research may be programmed for one area and then something shows-up.
If that “something” is pertinent, it should be investigated and included in
the research. Research is discovering new things and factors, it should not
be easily sidetracked but it also should not be inflexible.

5. Deciding how to produce the product

Business research should include the use of the internet. If the business is
manufacturing a specific product, look at the market size and options on
how to produce the product.
This is part of knowing who is competitor , but slightly different as it helps
to best determine how to produce the product.
SCOPE OF BUSINESS RESEARCH

 Production and producing Methods

 Personal and Industrial Relations
 Purchasing and Inventory
 Financing, Investment and credit
 Market, the consumer and Marketing procedure
 Economic conditions and Tendencies
 Public and Government Relations
1. Production and producing Methods:
Business research is used in production cost analysis, time and motion studies, machine
depreciation and obsolescence; production stabilization.

2. Personal and Industrial Relations

It is used in Aptitude and attitude tests, fatigue studies, wage employment, and
retirement plans, employee organizations and activities, death and sickness disability
benefit plans, and group insurance.

3. Purchasing and Inventory

It is used for sources and prices of materials, purchasing methods and procedures,
inventory control and storage.
4. Financing, Investment and credit:
It is used for financial methods and operations, budget planning, investment of reserves
divided policies, credit sources and costs.
5. Market, the consumer and Marketing procedure
It is used for Market potentials, trading areas and sales quotas, distribution channels,
distribution cost, price policies and competition, credit and collection, advertising,
warehousing and transportation, consumer identity and attitudes.

6. Economic conditions and Tendencies

It is used for Measurement and forecast of economic and business conditions, general
price structure and price movements; trade and production changes; rates of return on
investments and of profits on sales, national income estimates, taxation.

7. Public and Government Relations

It is used for Relation of concern and its industry to public weal; public attitudes,
exchange of information with government agencies; regulations by statute and
administrative order.
NEED OF BUSINESS RESEARCH:

A manager faced with two or more possible courses of action faces

the initial decision of whether or not research should be conducted.
The determination of the need for research centers on:

Time Constraints
Availability of Data
Nature of the Decision
Benefit versus Costs
1. Time Constraints:
Systematic Research doing takes time. In many instances, management concludes
that because a decision must be made immediately, there will be no time for research.
As a result, decisions are sometimes made without adequate information or thorough
understanding of the situation.
Although such rapid decision-making is not ideal, sometimes the urgency of a
situation precludes the use of research.

 
2. Availability of Data:
Often Managers already possess enough information to make sound decisions with
no business research. When they lack adequate information, however, research must
be considered.
Managers must ask themselves if the research will provide the information needed to
answer the basic questions about a decision.
Furthermore if a potential source of data exists, managers will want to know, how
much it will cost to obtain the data. If the data cannot be obtained, research cannot be
conducted.
3. Nature of the Decision:
The value of business research will depend on the nature of the managerial
decision to be made. A routine tactical decision that does not require a
substantial investment may not seem to warrant a substantial expenditure for
research. For example, a computer company must update its operator’s
instruction manual when it makes minor product modifications.

The research cost of determining the proper wording to use in updating the
manual is likely to be too high for such a minor decision.

The nature of the decision is not totally independent of the next issue to be
considered, the benefits versus the costs of the research.

In general, however the more strategically or tactically important the business
decision, the more likely it is that research will be conducted.
BENEFIT VERSUS COSTS:

 Conducting research activities to obtain these benefits requires

expenditure, thus there are both costs and benefits in conducting
business research.
 In any decision-making situation, managers must identify alternative
courses of action, then weigh the value of each alternating against its
cost. It is useful to think of business research as an investment
alternative.
 When deciding whether to make a decision without research or to
postpone the decision in order to conduct research, managers should ask,
 Will the pay-off or rate of return be worth the investment?
 Will the information gained by business research improve the quality of the
decision to an extent sufficient to warrant the expenditure? And
 Is the proposed research expenditure the best use of available funds?
TYPES OF BUSINESS
RESEARCHES

Basically it is of four types. They are,

Marketing Research:
Market Research:
Product Research
Advertising Research:
1. Marketing Research:
Consumer Research or Marketing Research includes a form of applied sociological study,
which concentrates on understanding the behaviors, whims and preferences, mainly
current and future of consumers in a market based economy.
 
2. Market Research:
Market research has a broad scope and includes all aspects of the business environment.
It asks questions about competitors, market structure, government regulations, economic
trends, technological advances and numerous other factors that make up the business
environment.
Sometimes the term refers more particularly to the financial analysis of companies,
industries or sectors.
In this case, financial analysts usually carry out the research and provide the results to
investment advisors and potential investors.
3. Product Research:
This looks at what products can be produced with available
technology, and what new product innovations near-future
technology can develop.

4. Advertising Research
It attempts to assess the likely impact of an advertising campaign
in advance, and also measure the success of a recent campaign.
Significance or Importance of Business Research

The prime managerial value of business research is that it reduces

uncertainty by providing information that improves the decision-
making process. This process associated with the development
and implementation of a strategy involves four interrelated stages.

 Identifying problems or opportunities

 Diagnosing and Assessing Problems or Opportunities
 Selecting and Implementing a course of Action
 Evaluating the course of Action:
1. Identifying problems or opportunities:
 Business research can help managers to plan strategies by determining the nature of situations
or by identifying the existence of problems or opportunities present in the organization.
 It can be used as a scanning activity to provide information about what is occurring with an
organization or in its environment.
 The mere description of some social or economic activity may familiarize managers with
organizational and environmental occurrences and help them to understand a situation.

2. Diagnosing and Assessing Problems or Opportunities

 After an organization recognizes a problem or identifies a potential opportunity, an important
aspect of business research is the provision of diagnostic information that clarifies the
situation.
 Managers need to gain insight about the underlying factors causing the situation.
 If there is a problem, they need to specify what happened and why. If an opportunity exists they
may need to explore, clarify and refine the nature of the opportunity.
 If multiple opportunities exist research may be conducted to set priorities.
 Quantitative or qualitative investigations may help managers to better understand what
alternative courses of action are practical
3. Selecting and implementing a Course of Action
 After the alternative courses of action have been clearly identified business research is often
conducted to obtain specific information that will aid in evaluating the alternatives and in selecting
the best course of action.
 Opportunities may be evaluated through the use of various performance criteria. For example,
estimates of market potential allow managers to evaluate the revenue that will be generated by each of
the possible opportunities.
 A good forecast supplied by business researchers is among the most useful pieces of planning
information a manager can have.

4. Evaluating the course of Action

 After a course of action has been implemented, business research may serve as a tool to inform
managers whether planned activities were properly executed and whether they accomplished what
they were expected to accomplish.
 Evaluation research is formal, objective measurement and appraisal of the extent to which a given
activity, project or program has achieved its objectives.
 In addition to measuring the extent to which completed programs achieved their objectives or whether
continuing programs are presently performing as projected, evaluation research may provide
information about the major factors influencing the observed performance levels.
 Performance-Monitoring research is a specific type of evaluation research that regularly perhaps
routinely provides feedback for the evaluation and control of recurring business activity.
Types of Research
TYPES OF RESEARCH
On the basis of Intent
1. Pure
2. Applied research
3. Descriptive research
4. Exploratory research
5. Diagnostic Research
6. Conceptual research
7. Action research
8. Evaluation research
1. Pure Research
 Pure research is also called as fundamental research. This is conducted with view for the sake of the
knowledge having no intention of its application.
 This study is conducted for generalized which will help us to form certain theory.
 In pure research if study is conducted to assess human behavior, it may provide us generalization in
relation to normal human behavior.
 Pure research offer solutions to many practical problems. It helps us to find out various crucial
factors. It develops many alternative solutions.

2. Applied research
 Applied research is carried out when any real-life problem or social problem requires immediate
solution which can be helpful in policy formulation by the concerned agency. This is considered
problem oriented and action directed activity in which immediate and practical results are required.
 There is vast scope for applied research in the field of technology, management, commerce and
economics, as it contributes to the development of new facts or testing of new theory.
 Applied research can put theory to the test, it may add to conceptual clarification and integrate
previous existing theories.
3. Descriptive research:

 Descriptive research is termed as Ex-post-facto research.

This type of research is mainly concerned with description of facts only.
 It is an expiration of state of affairs as they exists. This includes surveys and facts findings
enquiries.
 The main important aspect of this type of the study is that researcher has no control on the
variables under investigation; he can only describe things as they exist and discover the
causes.

4. Exploratory Research or Formulative research:

 It helps us to investigate any problem with suitable hypothesis.
 This research on social science is particularly important for clarification of any concept
and throwing new light for further research on principles of developing hypothesis and its
testing with statistical tools.
5. Diagnostic Research
This is similar to descriptive study but with a different focus. It is directed towards
discovering what is happening, why is it happening/ and what can be done about. It
aims at identifying the causes of a problem and the possible solutions for it

Purpose: A diagnostic study may also be concerned with discovering and testing
whether certain variables are associated, e.g., are persons hailing from rural areas
more suitable for managing the rural branches of banks? Do more villagers than city-
voters vote for a particular party?

Requirements: Both descriptive and diagnostic studies share common requirements,

viz., prior knowledge of the problem, its thorough formulation, clear-cut definition of
the given population, adequate methods for collecting accurate information, precise
measurement of variables, statistical analysis and test of significance. As the aim is to
obtain complete and accurate information about a given situation/phenomenon, the
research design must make much more provision for protection against bias than is
required in an exploratory study. Moreover, the amount of work involved is
considerable and so concern with economy of research effort is extremely important.
6. Conceptual Research:
Conceptual research is conducted by the thinkers and philosophers for developing new
theories or for reinterpreting old one. In this type of research the researcher should collect
the data to prove or disapprove his hypothesis. The various ideologies are examples of
conceptual research.

7. Action Research:
When researcher is conducted for the survey in a single workplace, than action research is
commonly used in such cases. The focus in action research is given in improving working
practices. The action research has practical purpose and it is directed towards organizational
changes in managerial set-up. The action research theories are valid through practice, rather
than applied independently to practice. It is conducted through direct action. In action
research is conducted in various phases like, base line survey, systematic action and
periodical assessment.

8. Evaluation Research
This is an example of applied research. This research is conducted to find out how well a
planned programme is implemented. Therefore, evaluation research deals with evaluating the
performance or assessment of a project. Example: “Rural Employment Programme
Evaluation” or “Success of Midday Meal Programme”.
II. ON THE BASIS OF NATURE OF
DATA

Quantitative research and Qualitative research

It denotes to methods that generate data comprising of numbers. This research is
conducted for the measurement of quantity and it is applicable to the work which can be
expressed in terms of quantity only.
Qualitative research relates to quality involved in assessment. It generates the data that
is verbal. Assessment of human behavior is a qualitative research.
It is difficult to find out which research is quantitative and which one is qualitative.
There are four main methods for these types of research work namely – interview,
questionnaires, observations and documents analysis. On the basis of their explanation
none of this can be exclusively labeled as quantitative or qualitative. Accordingly the
labels of quantitative and qualitative should be applied to data rather than to methods.
Motivation research is important type of qualitative research, which is conducted to
assess the motive or desire of human behavior. Likewise Opinion research is also
qualitative research conducted to know how people feel about particular subject.
III. ON THE BASIS OF METHODS
OF STUDY

1. Analytical Research
It relates to critical evaluation of the existing facts and information which is used
in order to draw certain conclusions.

2. Empirical Research
Empirical research is based on observation or experience without due regards to
theories. In this type of research working hypothesis is provided and then data is
collected to prove or disprove this. Researcher here sets up the design for desired
results.

3. Formalized Research
When hypothesis is tested in the research study it is known as formalised research.
4. Survey Research
A survey is conducted with an object to understand specific aspect in defined population.
Usually the population in study is so large that the access to all the elements is impossible.
Therefore sample taken from the population will make it possible to draw the conclusions
regarding population. The purpose of the survey is to understand phenomena by identifying
influencing factors.
Survey are normally conducted through questionnaires but sometimes interview method is used
to collect necessary information. The method of conducting survey may also be applied to
analyzing large data files in an organization by using sample form. Survey method is widely
accepted for following reasons.
1. Greater amount of objectivity
2. Greater reality in findings and conclusions.
3. It is most scientific method for obtaining data and dependable result.
4. Direct observation of the population has possibility of getting accurate results.
5. Survey is extensively used in all the areas for its merit.
5. Case study
 It is very difficult to define, when the phenomena under investigation are not readily form its context in such
situation case study becomes appropriate. It is characterized by in-depth study of organization. It is a concept and
intensive study of business situation.
 Case study is method of investigation for exploring a live situation it is a in-depth study of situation as
whole. It is in the form of qualitative and quantitative analysis where careful observation of situation is done.
 A case study uses various methods for collecting information may be in form of interview, questionnaires,
observation and documentary analysis. By this, wide variety of relevant dta is collected.
 A case is report containing facts and opinions expressed by the people. The cases are designed to acclimatize
the situation to participant. This provides the description of the decision taken in particular situation.

6. Field Investigation
 The field investigation is conducted in the assessment of actual situations. The results in this type of work is
more realistic. In order to have these results accuracy is required to be maintained by making selection of proper
sample. In field investigation it is very difficult to control variables and informants in the field.
7. Library Research
 When secondary data is reliable enough to be used for drawing conclusions than library research is very
useful. This type of research is based on the assessment of the data available from books, periodicals and journals
available in the library.
The observations and conclusions drawn in these cases may be bias if data is not used carefully. As this is only
compilation of available data it is not considered as actual research work. If systematic investigation is made it
can also be very useful research study.
EXPLORATORY RESEARCH

 The major emphasis in exploratory research is on converting broad, vague

problem statements into small, precise sub-problem statements which is done in order
to formulate specific hypothesis.
 The hypothesis is a statement that specifies, “how two or more variables are
related?” In the early stages of research, we usually lack from sufficient
understanding of the problem to formulate a specific hypothesis. Further, there are
often several tentative explanations.
 Example: “Sales are down because our prices are too high”, “Our dealers or sales
representatives are not doing a good job”, “Our advertisement is weak” and so on.
 In this scenario, very little information is available to point out, what is the actual
cause of the problem.
 We can say that the major purpose of exploratory research is to identify the
problem more specifically. Therefore, exploratory study is used in the initial stages of
research.
CAUSAL RESEARCH

Causal research refers to the existence of a cause and effect relationship.

This research provides evidence that suggests whether a cause and effect
relationship exists or does not exist.
It describes whether an independent variable directly influences the behavior
of a dependent variable.
This can be explained with an example. Suppose managers at a hospital want
to know the extent to which advertising creates revenue for hospitals, they
can go in for causal research.
This information will enable them to decide how much money to allocate
towards advertising for hospitals.
 Cross- Sectional Research

A cross-sectional study is concerned with a sample of elements from a given population. Thus, it may deal with
households, dealers, retail stores, or other entities.
Data on a number of characteristics from the sample elements are collected and analysed. The cross-sectional study
is the most frequently used descriptive design in marketing research.
Cross-sectional design involves the collection of information from any given sample of population elements only
once.
They may be either single cross-sectional or multiple cross-sectional. In single cross-sectional designs, only one
sample of respondents is drawn from the target population and information is obtained from this sample only once.
These designs are also called sample survey research designs.

Time Series Research

Time-series design is an additional evaluation research design type. This design type entails measurements made
over a fixed time period, such as the study of traffic accident rates before and after the lowering of the speed limit in
an area.
RESEARCH QUESTIONS

A research question is the hypothesis of choice that best states the objective of the research study. It is a more
specific management question that must be answered. It may be more than one question, or just one.
A research process that answers this more specific question provides the manager with the information necessary
to make the direction he or she is facing.

Fine tuning the research question

•The term fine-tuning might seem to be an odd usage for research, but it creates an image that most researchers
come to recognize. Fine-tuning the question is precisely what a skilful practitioner must do after the exploration is
complete.
•At this point, a clearer picture of the management and research questions begins to emerge. After a preliminary
review of the literature, a brief exploratory study, or both the project begins to crystallize in one of two ways:
 1. It is apparent the question has been answered and the process is finished.
 2. A question different from the one originally addressed has appeared.

The research question does not have to be materially different, but it will have evolved in some fashion. This is
not cause for discouragement.
The refined research questions will have better focus and will move the research forward with more clarity than
the initially formulated questions.
In addition to fine-tuning the original question, other research question-related activities should be addressed
in this phase to enhance the direction of the project:

• Examine the concepts and constructs to be used in the study. Are they satisfactorily defined? Have
operational definitions been employed where appropriate?
• Review the research questions with the intent of breaking them down into specific second and third
level question.
• If hypotheses are used, be certain they meet the quality tests.
• Determine what evidence must be collected to answer the various questions and hypotheses.
• Set the scope of the study by stating what not a part of the research question is. This will establish a
boundary to separate contiguous problems from the primary objective.

When the characteristics or plausible causes of the problem are well defined and the research question is
clearly states, it is possible to deduce the essential sub questions that will guide the project planning at this
stage of the research process.

However, if the research question is somewhat or very poorly defined, the researcher will need further
exploration and question revision to refine the original question and generate the material for constructing
investigative questions.
INVESTIGATIVE QUESTIONS:

Investigative questions are questions the researcher must answer to satisfactorily arrive at a
conclusion about the research question.
To formulate them, the researcher takes a general research question and breaks it into more
specific questions about which to gather data.
This fractionating process can continue down through several levels of increasing specificity.
Investigative questions should be included in the research proposal, for they guide the
development of the research design. They are the foundation for creating the research data
collection instrument.

In developing your list of investigative questions, include:

 Performance considerations (like the relative costs of the options, the speed of packing serviced lap-tops
and the condition of test laptops packaged with different materials).
 Attitudinal issues (like perceived service quality),
 Behavioral issues (like employees’ ease of use in packing with the considered materials).
MEASUREMENT QUESTIONS

Measurement questions should be outlined by completion of the project-planning activities but

usually await pilot testing for refinement.
There are two types of measurement questions: predesigned, pretested questions and custom-
designed questions.
Predesigned measurement questions are questions that have been formulated and tested by
previous researchers, are recorded in the literature, and may be applied literally or be adapted for
the project at hand. Some studies lend themselves to the use of these readily available
measurement devices. This provides enhanced validity and can reduce the cost of the project.
More often however, the measurement questions should be custom-tailored to the investigative
questions. The resources for this task will be the collective insights from all the activities in the
research process completed to this point, particularly insights from exploration.Later, during pilot
testing of the data collection instrument(s) these custom-designed questions will be refined.
In surveys, measurement questions are the questions we actually ask the respondents. They
appear on the questionnaire. In an observation study, measurement questions are the observations
researchers must record about each subject studied.
RESEARCH PROBLEMS

The entire research activity is based on the proper identification of the research problem. Unless
the researcher diagnoses the problem correctly no appropriate solution can be provided.
Therefore research activities form a cycle which starts with identification of research problem and
ends on the solution to the problem. It means research problem is an axis, where a whole research
activity revolves. This research problem will speak out the aims and objectives of the research
work.
Research problem is the situation that causes researcher to feel confused. It is the demarcation of
the problem area within the context of the problem situation. It is the problem situation which
may give rise to research problem.
The researcher who is conducting research study experiences some difficulties in relations to
solutions to be sought. Therefore sources usually contribute to identification, selection and
formulation of the research problem.
The research problem forms a cycle, as research start with problem and ends on the problem. The
problem arises on account of difficulties in research faced by the researchers and he has definite
objectives to be attended by the research.
As there are various alternative available for research and researcher has to opt for one. In this case
he is totally undecided about selection of the alternatives.
In precise
A research problem refers to some difficulty which an organization
faces and wishes to obtain a solution for the same.
While doing research, defining the problem is very important
because “problem clearly stated is half-solved”. This shows how
important it is to “define the problem correctly”.
While defining the problem, it should be noted that definition should
be ambiguous. If the problem defining is ambiguous, then the
researcher will not know “what data is to be collected” or “What
technique is to be used” etc.
NEED OF DEFINING A
PROBLEM:

The definition of a problem serves the following purposes:

1. The definition of a problem sets the direction of the study.
2. The definition reveals the methodology or procedure of the study.
3. The definition helps the researcher to control subjectivity or biases
of the researcher.
4. The definition of the problem suggests and specifies the variables
to be taken-up into the investigation through a problem involved into
so many variables.
5. The definition makes the researcher work practicable.
COMPONENTS OF A
RESEARCH PROBLEM

There must be an individual or a group, which has some difficulty or the problem.
There must be some objective to be attained at. If one wants nothing, one cannot have a problem.
There must be alternative means for obtaining the objectives one wished to attain. This means that
there must be at least two means available to a researcher for if he has no choice of means, he
cannot have a problem.
There must remain some doubt in the mind of as researcher with regard to the selection of
alternatives. This means that research must answer the question concerning the relative efficiency
of the possible alternatives.
There must be some environment(s) to which the difficulty pertains.
Thus, a research problem is one, which requires a researcher to find out the best solution for the
given problem, i.e., to find out by which course of action the objective can be attained optimally in
the context of a given environment.
CRITERIA FOR SELECTING
RESEARCH PROBLEM

Researcher should take utmost care in selecting research problem. It should be his
independent thinking in relation to the problem. The necessary guidance can be sought
to work out the problem and following facts must be given due consideration while
selecting research problem.

o The subjects which are overdone and on which sufficient work has already been conducted in
particular area should be normally avoided by the researcher. It will be very difficult to throw
new light on such type of the topics.
o There are certain topics which are controversial in nature and in spite of our all efforts no
purposeful conclusions can be drawn.
o While selecting research problem, the problem which is very narrow or very vague should be
avoided for the purpose of the study.
o Whatever subject is selected for the study must have the resources available, which should be
within the reach of the researcher.
o Selection of research problems require due consideration for time, training and cost involved in
the research project.
o No research problem should be selected without having primary study of the subject.
IDENTIFICATION OF THE PROBLEM

The desire to solve research problem or to know more about the fact is the
main motivation for which the research study is conducted. Therefore it is necessary
for researchers to identify the research problem.
The identification of research problem can be classified as under
a. Conceptual Problem:
This type of problem can be solved by creative thinking for the problem.
b. Empirical Problem:
This type of problems can be solved by inductive reasoning, which should be
based on the observation made.
c. Logical Problem:
This problem can be solved by deductive methods.

Now it is very clear from the above expiation of the fact that identification of
the research problem means clear and accurate assessment of the research problem.
In order to solve the research problem.
SELECTION OF THE RESEARCH
PROBLEM:

The problem which is selected on specific rational helps us to complete the project in stipulated time period
and within the prescribed financial outlay. In order to boost up the moral of the researcher proper selection of
the problem is essential.
The factors which requires due consideration for selecting research problems are stated as below:
1. Interest of the researcher:
The interest of the researcher is the main factor while selecting problem. It is the attitude, spirit and dedication
of the researcher towards his research study, that will generate the interest in the research study. Therefore the
personal interest of the researcher is very much essential in any of the research study.
2. Importance of the topic of the study
Topic selected for the study should not only be socially relevant but it must be useful for the society. It should
be having the reference to the practical field. The results of this type of social relevant study will be used by
the concerned individual or group of the individuals.
3. Avoid the selection of the monotonous problem
The researcher should avoid to use monotonous problem for the purpose of the research study. Such topic for
the research may not be able to generate solution for utility of the subject matter. Therefore there should be
novelty of ideas in the subject so as to have the proper utility of the research study.
Research Problems in Management/ Types of Business Problems Encountered by Researchers:
Business executives in each of eh functional areas of management, viz, marketing, production, finance
and personnel are confronted with several interacting decision-making problems in their day-to-day
operation. Many of these problems demand a systematic research which will aid the executives to take
optimal and effective decisions.
Marketing: Different research topics studied under marketing management are:
1. Product identification
2. Demand-supply analysis
3. Market Segmentation
4. Pricing
5. Design of advertisements
Production:
1. Forecasting
2. Inventory control
3. Line of balance
4. Project management
5. Modern production system design, like JIT, computer integrated manufacturing, flexible
manufacturing, agile manufacturing, logistics management, total quality management etc.
3. Finance:

Economic evaluation of alternatives

Portfolio management
Primary market study.
Inflation
Economic growth models

4. Personnel:

Manpower planning
Conflict management
Leadership styles
Training methods
Labour welfare study.
RESEARCH OBJECTIVES

•Promoting better decision-making

•Research is the basis for innovation
•Research helps in the optimal utilization of resources
•Research identifies the problem areas
•Research helps in forecasting, which is very useful for managers
•Research helps in formulation of policies and strategies
•Research helps in identifying marketing opportunities and constraints.
•Research helps in evaluating marketing plans
•Research helps in the development of new products or in modifying
existing products and in understanding the competitive environment.
Research Hypotheses
HYPOTHESIS
Meaning of hypothesis
It is considered as main instrument in research. The formulation of hypotheses plays an important
part in the growth of knowledge in every science.
A hypothesis is a tentative proposition relating to certain phenomenon, which the researcher wants to
verify when required.

Meaning of Null hypothesis:

A null hypothesis is a statement about the population, whose credibility or validity the researcher
wants to assess based on the sample.
It is formulated specifically to test for possible rejection or nullification. Hence it is named as ‘null
hypothesis’.
Null hypothesis always states “no difference”. It is this null hypothesis that is tested by the
researcher.
Types of Hypothesis
Hypotheses are classified in several ways. With reference to their function, hypotheses are of two
types: 1. Descriptive Hypothesis 2.Relational Hypothesis.

Another approach is to classify them into 1.Working hypotheses, 2.Null hypotheses and
3.Statistical hypotheses.

Third approach is to divide them on the basis of the level of abstraction. Three broad levels may be
distinguished: 1. Simple description 2. Logical derivation, and 3. Abstraction. Accordingly there are
three types of hypotheses Common-sense hypotheses, Complex hypotheses and Analytical
hypotheses.
A GOOD HYPOTHESIS
The skill of researcher is an important factor on which usefulness of hypotheses is
based. Hypotheses being basis of research study it should be developed with
thoughtful consideration.

A good hypothesis should have following contents:

Content of Hypotheses:
1. It should have logical consistency.
2. It must provide good rational for stepping away from main stream.
3. It must be able to test. A hypothesis is meaningful only when we design to conduct
research.
4. It should be stated in simple and clear term to avoid confusion.
STEPS INVOLVED IN HYPOTHESIS
TESTING

Steps involved in hypothesis testing

Formulate the Null hypothesis, with H0 and HA, the alternate hypothesis. According to
the given problem, H0 represents the value of some parameter of population.

Select on appropriate test assuming H0 to be true.

Calculate the value.

Select the level of significance other at 1% or 5%.

Find the critical region.

If the calculated value lied within the critical region, then reject H 0.

State the conclusion in writing.

 There are two types of tests.
One-tailed and two-tailed tests

A hypothesis test may be one-tailed or two-tailed.

In one-tailed test the test-statistic for rejection of null hypothesis falls only in one-tailed of
sampling distribution curve.

Example: In a right side test, the critical region lies entirely in the right tail of the sample
distribution. Whether the test is one-sided or two-sided depends on alternate hypothesis.

Example: A tyre company claims that mean life of its new type is 15,000 km. Now the
researcher formulates the hypothesis that type life is =15,000 km.
 A two-tailed test is one in which the test statistics leading to rejection of null hypothesis falls
on both tails of the sampling distribution curve as shown.

When we should apply a hypothesis test that is one-tailed or two-tailed depends on the
nature of the problem.
One-tailed test is used when the researcher’s interest is primarily on one side of the issue.
Example: “Is the current advertisement less effective than the proposed new advertisement”?
A Two tailed test is appropriate, when the researcher has no reason to focus on one side of
the issue. Example: “Are the two-markets – Mumbai and Delhi different to test market a
product?”
 Example: A product is manufactured by a semi-automatic machine. Now, assume
that the same product is manufactured by the fully automatic machine. This will be two-
sided test, because the null hypothesis is that the “Two methods used for manufacturing
the product do not differ significantly”.
H0 = µ1 = µ2

Sign of alternative hypothesis Type of Test

= Two-sided
> One-sided to right
< One-sided to left
 Degree of freedom

It tells the researcher the number of elements that can be chosen freely.
`Example: a+b/2=5. Fix a=3, b = 7. Therefore the degree of freedom is 1.

Compute
Carry out computation.

Make Decisions:

Accepting or rejecting of the null hypothesis depends on whether the

computed value falls in the region of rejection at a given level of significance.
 Errors in Hypothesis testing

There are two types of errors:

1. Hypothesis is rejected when it is true.
2. Hypothesis is not rejected when it is false.

First one is called Type 1 error (α) , and the second is called Type 2 error(β).

When a= 0.10 it means that true hypothesis will be accepted in 90 out of 100
occasions. Thus, there is a risk of rejecting a true hypothesis in 10 out of every 100
occasions.

To reduce the risk, use a= 0.01 which implies that we are prepared to take a 1%
risk i.e. the probability of rejecting a true hypothesis is 1%.

It is also possible that in hypothesis testing, we may commit Type 2 error (β) i.e
accepting a null hypothesis which is false. The only way to reduce Type 1 and Type 2
error is by increasing the sample size.
  Example of Type 1 and Type 2 error:

Type 1 and Type 2 error is presented as follows. Suppose a marketing

company has 2 distributors (retailers) with varying capabilities. On the basis of
capabilities, the company has grouped them into two categories (1) Competent
retailer (2) Incompetent Retailer. Thus R1 is a competent retailer and R2 is an
incompetent retailer.

When the firm has failed to reward a competent retailer, it has committed type
-2 error. So also, when it was rewarded to an incompetent retailer, it has
committed type- 1 error.

The firm wishes to award a performance bonus (as a part of trade promotion)
to encourage good retailer ship. Assume that two actions A1 and A2 would represent
whether the bonus or trade incentive is given and not given. This is shown as
follows:
 Action (R1) Competent retailer (R2) Incompetent Retailer
A1 Performance bonus is
awarded Correct Decision In Correct Decision Error (β).

A2 Performance bonus is not

awarded In Correct Decision Error (α) Correct Decision

When the firm has failed to reward a competent retailer, it has

committed type -2 error. So also, when it was rewarded to an
incompetent retailer, it has committed type- 1 error.
 Types of Tests:
• Parametric test
• Non-parametric Test

Parametric Test:
• Parametric tests are more powerful. The data in this test is derived from interval
and ratio measurement.
• In parametric tests, it is assumed that the data follows normal distributions.
Examples of parametric tests are Z-test, T-test, F-test.

•Z-test: when sample size is > 30.

• Prof.R.A. Fisher has developed the z-test.
• It is based on the normal distribution; it is widely used for testing the significance
of several statistics such as mean, median, mode, coefficient of correlation and
others.
• This test is used even when binomial distribution or‘t’ distribution is applicable
on the presumption that such a distribution tends to approximate normal
distribution as the sample size becomes larger.
• The relevant test statistic z is calculated and compared with its probable value (to
be read from the normal distribution table) at a specified level of significance for
judging the significance of the measure concerned.
•T- test when sample size is <30

The t test was developed by W.S. Gosset around 1915. Since he published his
findings under a pen name ‘student’. it is known as Student’s t-test.
It is suitable for testing the significance of a sample mean or for judging the
significance of difference between the means of two samples, when the samples are
less than 30 in number and when the population variance is not known.
When two samples are related, the paired t-test is used. The t-test can also be used
for testing the significance of the coefficients of simple and partial correlations.
The relevant test statistic t, is calculated from the sample data, and it is compared
with its corresponding critical value in the t-distribution table for rejecting or
accepting a null hypothesis.

•F-test
•The F-test is based on F distribution (which is a distribution skewed to the right
and tends to be more symmetrical, as the number of degrees of freedom in the
numerator and denominator increases).
•The F-test is used to compare the variances of two independent samples.
•It is also used in analysis of variance (ANOVA) for testing the significance of more
than two sample means at a time. It is also used for judging the significance of
multiple correlation coefficients.
Non-Parametric Test
Non-parametric tests are used to test the hypothesis with normal and ordinal data.
•We do not make assumptions about the shape of population distribution.
•These are distribution-free tests.
•The hypothesis of non-parametric test is concerned with something other than the value of a population
parameter.
•Easy to compute. There are certain situations particularly in marketing research, where the assumptions of
parametric tests are not valid. Example: In a parametric test, we assume that data collected follows a normal
distribution. In such cases, non-parametric-tests are used.
•Example: non-parametric tests are (a) chi-square test (c) Mann-Whitney U test (d) sign test.

Chi-square Test:
•It is used in several circumstances.
•Sample observations should be independent i.e. two individual items should be included twice in a sample.
•The sample should contain at least 50 observations or Total frequency should be greater than 50.
•There should be a minimum of five observations in any cell. This is called cell frequency constraint.

Example:

Age Group
Persons Total
Under 20-40 20-40 41-50 51 & above
Liked the Car 146 78 48 28 300
Disliked the
Car 54 52 32 62 200

Total 200 130 80 90 500

 Mann Whitney “U” Test

This test is used to determine whether two independent samples have been drawn from the same
population. Suppose an experiment has obtained two sets of samples from two populations and the
study wishes to examine whether the two populations are identical.

Example; A computer company XYZ would like to choose the performance of programmers,
working in 2 braches, located in different cities. The performance indices of employees.

Branch – A Branch - B
84 76
68 77
78 64
49 62
45 53

To find out whether there is any difference in the performance indices of employees of the
two branches.
 Sign Test:

Sign-test is used with matched pair. The test is used to identify the pairs and
decide whether the pair has more or less similar characteristics.
Example: Suppose, an experiment on the effect of brand name on quality
perceptions is to be conducted. 10 persons are selected and asked to taste and compare
the two products (beverage).
One of them is identified as branded well known beverage, and the other is a new
beverage. In reality, the samples are identical. The respondents who tested were asked
to rate the two samples on an ordinal scale. Two hypotheses are set up as follows:

H0 – There is no difference between the perceived qualities of two beverages.

HA – There is a difference in the perceived qualities of two beverages.

Advantages
1. They are quick and easy to use.
2. When data are not very accurate, these tests produce fairly good results.

Disadvantages:
Non-parametric test involves the greater risk of accepting a false hypothesis and
thus committing a Type 2 error.
Sign Test:

Sign-test is used with matched pair. The test is used to identify the pairs and decide
whether the pair has more or less similar characteristics.
Example: Suppose, an experiment on the effect of brand name on quality perceptions is to
be conducted. 10 persons are selected and asked to taste and compare the two products
(beverage).
One of them is identified as branded well known beverage, and the other is a new
beverage. In reality, the samples are identical. The respondents who tested were asked to
rate the two samples on an ordinal scale. Two hypotheses are set up as follows:

H0 – There is no difference between the perceived qualities of two beverages.

HA – There is a difference in the perceived qualities of two beverages.

Advantages
1. They are quick and easy to use.
2. When data are not very accurate, these tests produce fairly good results.
Disadvantages:
Non-parametric test involves the greater risk of accepting a false hypothesis and thus
committing a Type 2 error.
Research Design CHAPTER 4
70
LEARNING OBJECTIVES
To understand what research design is and why it is significant
To appreciate areas of ethical sensitivity in research design
To learn how exploratory research design helps the researcher gain a
feel for the problem by providing background information,
suggesting hypotheses, and prioritizing research objectives

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LEARNING OBJECTIVES
To know the fundamental questions addressed by descriptive
research and the different types of descriptive research
To explain what is meant by causal research and to describe types of
experimental research designs
To know the different types of test marketing and how to select test-
market cities

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RESEARCH DESIGN
Research design is a set of advance decisions that make up the
master plan specifying the methods and procedures for collecting and
analyzing the needed information.

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 WHY IS RESEARCH DESIGN
IMPORTANT?
Good research design is the “first rule of good research.”
Knowledge of the needed research design allows advance planning so that the
project may be conducted in less time and typically at a cost savings due to
efficiencies gained in preplanning.

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OBJECTIVES OF
RESEARCH DESIGN
To gain background information and to develop hypotheses
To measure the state of a variable of interest
To test hypotheses that specify the relationships between two or more
variables

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RESEARCH DESIGN: A
CAUTION
In many cases, research is an iterative process.
By conducting one research project, we learn that we may need
additional research, which may result in using multiple research
designs.

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THREE TYPES OF
RESEARCH DESIGNS
 Exploratory
 Descriptive
 Causal

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EXPLORATORY
RESEARCH
Exploratory research is usually conducted at the outset of research
projects.
It is usually conducted when the researcher does not know much
about the problems.

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USES OF EXPLORATORY
RESEARCH
Gain background information
Define terms
Clarify problems and hypothesis
Establish research priorities

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EXPLORATORY RESEARCH
METHODS
 Secondary data analysis: the process of searching for interpreting
existing information relevant to the research topic
 Experience surveys: refer to gathering information from those to
be knowledgeable on the issues relevant to the research problem
 Key-informant technique: gathering information from those thought to be
knowledgeable on the issues relevant to the problem
 Lead-user survey: used to acquire information from lead users of a new
technology

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EXPLORATORY RESEARCH
METHODS
Case analysis: a review of available information about a former
situation(s) that has some similarities to the current research problem
Focus groups: small groups brought together and guided by a
moderator through an unstructured, spontaneous discussion for the
purpose of gaining information relevant to the research problem

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DESCRIPTIVE RESEARCH
Descriptive research is undertaken to describe answers to questions
of who, what, where, when, and how.
It is desirable when we wish to project a study’s findings to a larger
population, if the study’s sample is representative.

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DESCRIPTIVE RESEARCH
CLASSIFICATIONS
 Cross-sectional studies
 Longitudinal studies

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DESCRIPTIVE RESEARCH
STUDIES
Cross-sectional studies measure units from a sample of the
population at only one point in time (or “snapshot”).
 Sample surveys are cross-sectional studies whose samples are drawn in such a way
as to be representative of a specific population.
 These studies are usually presented with a margin of error.

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DESCRIPTIVE RESEARCH
STUDIES
Longitudinal studies repeatedly measure the same sample units of a
population over time.
Since they involve multiple measurements over time, they are often
described as “movies” of the population.

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DESCRIPTIVE RESEARCH
STUDIES
Continuous panels ask panel members the same questions on each
panel measurement.
Discontinuous panels vary questions from one panel measurement
to the next.
 These are sometimes referred to as omnibus panels (omnibus meaning “including or
covering many things or classes”).

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DISCONTINUOUS PANELS
 Discontinuous panels are demographically matched to some larger
entity, implying representativeness.
 Discontinuous panels represent sources of information that may be
quickly accessed for a wide variety of purposes.

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CONTINUOUS PANELS
Brand-switching studies: studies examining how many consumers
switched brands
Market-tracking studies: those that measure some variable(s) of
interest—such as market share or unit sales—over time

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4-89
4-90
CAUSAL RESEARCH
 Causality may be thought of as understanding a phenomenon in
terms of conditional statements of the form “If x, then y.”
 Causal relationships are often determined by the use of
experiments.

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EXPERIMENTS
An experiment is defined as manipulating an independent variable
to see how it affects a dependent variable while also controlling the
effects of additional extraneous variables.

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EXPLORATORY RESEARCH
Ways to find out; P/NOR is Exploratory in your R.O:
 Exploring unknown
 Variables Unknown
 To study reasons behind an event (success/failure)
 To study the factors affecting D.V.
 Feasibility study

• To study the success behind Sun Pharma as a leading Pharma C/o

• To study the various concerns of Himalaya Drugs with respect to their supply chain &
logistics

• To explore the “Corporate Gift” market in the region of Mumbai

• To study the factors affecting the sales of PHO in the region of Mumbai.
DESCRIPTIVE RESEARCH
Ways to find out; P/NOR is Descriptive in your R.O:

 Describing Process/Person/Variable
 Variables Known
 To study the difference/relationship between variables

• To study the Merger & Acquisition of Reliance Infra with Pipav Defence

• To evaluate the Brand Equity of Kissan Ketchup for the fiscal year 2021-22

• To perform a comparative analysis of two types of Mutual Funds on specific parameters

CAUSAL RESEARCH
Ways to find out; P/NOR is Causal in your R.O:

 To study the impact/effect of 1/many variable or a factor over the other

 Variables are known – minimum 2 variables; Variables – DV/IV
 Best Results: Experimental Design/Statistical Model

• To study the impact of Market Potentiality, No. of dealers, Competitor Index on Sales of
Industrial Coolers

• To study the impact of Euro Crisis on the economic performance of the Indian Automobile
Industry

• To study whether there is a significant impact of change of packaging of PHO on Sales at

selective outlets in Mumbai.
 EXPERIMENTAL DESIGN ( TO
ESTABLISH CAUSALITY)
R.O: To study whether there is a significant impact of training on Sales of a
particular product
Sales Training: 1st Oct – 6th Oct
Data Collection of Sales Performance of 20 Executives Pre-Training 15 th-30th
Sept 2020: Avg Sales = 5.5 Lakhs
Data Collection of Sales Performance of 20 Executives Post-Training 8th Oct -
23rd Oct 2020: Avg Sales = 9.5 Lakhs

Is there a Sig. difference in the Sales between Pre & Post Training?
R.O.: To study whether there is a sigf. Difference in the sales Pre and Post
Training (Descriptive Research)
 EXPERIMENTAL DESIGN ( TO
ESTABLISH CAUSALITY)
If Yes; ie. There is a Sigf. Difference in Sales;
Can we comment that Training has impacted Sales?
No – This would be a loose way of establishing Causality.

The better way of establishing Causality is if this entire exercise (15 th Sept to 23rd Oct) is
conducted in a controlled environment

Controlled Environment – All the other external variable (apart from Training) are kept
constant – No change in the Price, Features, Packaging, Promotion etc.. Try & Observe:
There is no major Macro Economic event has taken place between 15th Sept- 23rd Oct)

Such a research conducted in a controlled environment is called Experimental Design

 DATA COLLECTION
SOURCE

Primary Secondary
 DATA COLLECTION SOURCE
Primary: First Hand Information, Straight from the source
• To study the various concerns of Excel Technology employees wrt their working
conditions.
Secondary: Second Hand Information – External/Internal (Credible source)

 Internal – within the four boundaries of the organization; Internal records

 External – WWW.FICCI.COM, WWW.ASSOCHAM.ORG, WWW.BSEINDIA.COM, NIELSEN- RETAIL AUDITS, IRS-Survey
• To compare the performance of Infosys Stock vis-a-vis Wipro for the last 10 Quarters.
• To understand the sociological challenges faced by Indian settled in the western part of
the world pre-Independence.
Criteria to be considered when you can go for either Primary/Secondary Data Collection
1. Availability of Data
2. Time constraint
3. Cost factor
METHOD/APPROACH IN
PRIMARY RESEARCH

Qualitative Methodology Quantitative Methodology

DEPENDENT VARIABLES
Dependent variables are those variables that we have little or no
direct control over but a strong interest in changing.
A dependent variable is one being measured in an experiment,
reflecting an outcome. Researchers do not directly control this
variable. Instead, they hope to learn something about the relationship
between different variables by observing how the dependent variable
reacts under different circumstances.
Although "dependent variable" is the most commonly used term,
they may also be referred to as response variables, outcome variable,
or left-hand-side variable. These alternate names help to further
illustrate their purpose: a dependent variable shows a response to
changes in other variables, displaying the outcome.

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The meaning of "left-hand-side" is less immediately transparent, but
becomes more obvious when considering the format of a basic
algebraic equation. Typically, the dependent variable in these is
referred to as "Y" and placed on the left-hand-side of the equation.
Because of this standard, dependent variables may also be called
the Y variable as well, and the dependent variable is usually seen on
the y-axis in graphs.
One example of a dependent variable would be a student's test
scores. Several factors would influence these scores, such as the
amount of time spent studying, amount of sleep, or the stress levels
of the student. Ultimately, the dependent variable is not static or
controlled directly, but is subject to change depending on the
independent variables involved.
INDEPENDENT VARIABLE
An independent variable is one that the researcher controls or otherwise
manipulates within a study. In order to determine the relationship between
dependent and independent variables, a researcher will purposefully change an
independent variable, watching to see if and how the dependent variable changes
in response.
The independent variable can alternately be called
the explanatory, predicator, right-hand-side, or X variable. Similarly to dependent
variables, these reflect the uses of independent variables, as they are intended
to explain or predict changes in the dependent variables. Likewise, independent
variables are often referred to as "X" in basic algebraic equations and plotted
using the x-axis. In research, the experimenters will generally control independent
variables as much as possible, so that they can understand their true relationship
with the dependent variables.
For example, a research study might use age as an independent variable, since it
influences some potential dependent variables. Obviously, a researcher cannot
randomly assign ages to participants, but they could only allow participants of
certain ages into a study or sort a sample into desired age groups.
COMPARING DEPENDENT AND INDEPENDENT
VARIABLES

Research Topic Independent Variable Dependent Variable

Manipulated by the Measured by the
All Research Topics
researcher. researcher.
What is changing in
All Research Topics What is being changed.
response.
Plants grow faster in
Temperature Plant Growth
warmer temperatures.
To what extent does
traffic affect a person's Traffic Mood
mood?
People walk slower after
Drinking Coffee Walking Speed
drinking coffee.
EXAMPLES
 How does sleep the night before an exam affect scores in students? The
independent variable is the amount of time slept (in hours), and the
dependent variable is the test score.
 How does caffeine affect hunger? The amount of caffeine consumed
would be the independent variable, and hunger would be the dependent
variable.
 Is quality of sleep affected by phone use before bedtime? The length of
time spent on the phone prior to sleeping would be the independent
variable and the quality of sleep would be the dependent variable.
 Does listening to classical music help young children develop their
reading abilities? The frequency and level of classical music exposure
would be the independent variables, and reading scores would be the
dependent variable.
EXTRANEOUS
VARIABLES
 Extraneous variables are those variables that may have some
effect on a dependent variable yet are not independent variables.
 An extraneous variable is any factor that is not the Independent
Variables that can affect an experiment's Dependent Variables,
which are the controlled conditions. Since unexpected variables can
change an experiment's interpretation and results, it's important to
learn how to control them.
 Extraneous variables can be natural characteristics of the
participant, such as age or gender, or they could be features of the
environment such as noise or lighting.

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EXAMPLE

Rahul conducted a study to examine how lack of sleep affects college

students. Each student participant is a dependent variable, while the
independent variable is the amount of sleep that they get. In this
study, an extraneous variable could include other factors that affect
college students, such as living in a loud dormitory or having a
smoke detector malfunction one night and wake up a participant. To
control this extraneous variable, Rahul might ask students to sleep in
a quiet location for the duration of the experiment
EXPERIMENTAL DESIGN
Experimental design is a procedure for devising an experimental
setting such that a change in a dependent variable may be attributed
solely to the change in an independent variable.

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SYMBOLS OF
EXPERIMENTAL DESIGN
O = measurement, or observation, of a dependent variable
X = manipulation, or change, of an independent variable
R = random assignment of subjects to experimental and control
groups
E = experimental effect (change in the dependent variable due
to the independent variable)

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PRETEST AND POSTTEST
Pretest refers to the measurement of the dependent variable taken
prior to changing the independent variable.
Posttest refers to measuring the dependent variable after changing
the independent variable.

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EXPERIMENTAL DESIGN
A “true” experimental design: isolates the effects of the
independent variable on the dependent variable while controlling for
the effects of any extraneous variables.
Quasi-experimental design: ones that do not properly control for
the effects of extraneous variables on our dependent variable.

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EXPERIMENTAL DESIGN
Before-after with control group design may be achieved by
randomly dividing subjects of the experiment in two groups:
 The control group
 The experimental group

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EXPERIMENTAL DESIGN
Control group: control of extraneous variables typically achieved by
the use of a second group of subjects
Experimental group: the group that has been exposed to a change in
the independent variable

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HOW VALID ARE
EXPERIMENTS?
An experiment is valid if the following are true:
 The observed change in the dependent variable is due to the independent variable.
 The results of the experiment apply to the “real world” outside the experimental
setting.

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HOW VALID ARE
EXPERIMENTS?
 Two forms of validity are used to assess the validity of an
experiment:
 Internal validity is concerned with the extent to which the change in the
dependent variable is actually due to the change in the independent variable.
 External validity refers to the extent that the relationship observed between the
independent and dependent variables during the experiment is generalizable to
the “real world.”

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TYPES OF EXPERIMENTS
Laboratory experiments are those in which the independent
variable is manipulated and measures of the dependent variable are
taken in a contrived, artificial setting for the purpose of controlling
the many possible extraneous variables that may affect the dependent
variable.

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TYPES OF EXPERIMENTS
Field experiments are those in which the independent variables are
manipulated and the measurements of the dependent variable are
made on test units in their natural setting.

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TEST MARKETING
Test marketing is the phrase commonly used to indicate an
experiment, study, or test that is conducted in a field setting.
Main uses of test markets:
 To test sales potential for a new product or service
 To test variations in the marketing mix for a product or service

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TYPES OF TEST MARKETS
The standard test market is one in which the firm tests the product
or marketing-mix variables through the company’s normal
distribution channels.
Controlled test markets are conducted by outside research firms
that guarantee distribution of the product through prespecified types
and numbers of distributors.

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TYPES OF TEST MARKETS
 Electronic test markets are those in which a panel of consumers
has agreed to carry identification cards that each consumer presents
when buying goods and services.
 Simulated test markets (STMs) are those in which a limited
amount of data on consumer response to a new product is fed into a
model containing certain assumptions regarding planned marketing
programs, which generates likely product sales volume.

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SELECTING TEST-
MARKET CITIES
Three main criteria:
 Representativeness
 Degree of isolation
 Ability to control distribution and promotion

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PROS AND CONS OF TEST
MARKETING
Advantages:
 Test marketing allows for the most accurate method of forecasting future sales, and it
allows firms the opportunity to pretest marketing-mix variables.

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PROS AND CONS OF TEST
MARKETING
Disadvantages:
 Test markets do not yield infallible results.
 Competitors may intentionally try to sabotage test markets.
 Test markets bring about exposure of the product to the competition.
 Test markets may create ethical problems.

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