Copyright © 2010 Pearson Education, Inc.4-1

The Problem “Problems” are situations calling for managers to make choices among alternatives. Managers make decisions because they have a problem. With the right information, managers can choose the correct decision alternative. Copyright © 2010 Pearson Education, Inc.4-2

VW’s CNG Touran VW management must choose between two decision alternatives: Introduce a CNG vehicle in the U.S. vs. Do Not introduce a CNG vehicle in the U.S. Copyright © 2010 Pearson Education, Inc.4-3

Research Objectives Research objectives are totally dependent on the “problem” but they are different in that they tell the researcher what he/she must do. Research objectives state specifically what information will be collected in order to allow the manager to select the correct decision alternative. Copyright © 2010 Pearson Education, Inc.4-4

Research Objective Example Research Objective: To gather information from a sample representative of the U.S. population among those who are “very likely” to purchase an automobile within the next 6 months, which assesses preferences (measured on a 1–5 scale ranging from “very likely to buy” to “not likely at all to buy”) for the model (Touran) operating on either (a) CNG, (b) gasoline, or (c) diesel at three different price levels. Such data would serve as input into a forecasting model that would forecast unit sales, by geographic regions of the country, for each combination of the model’s different prices and fuel configurations. Copyright © 2010 Pearson Education, Inc.4-5

Research Objectives Once VW managers have the information generated via the research objectives, they can decide between the two decision alternatives. Copyright © 2010 Pearson Education, Inc.4-6

The Importance of Properly Defining the Problem Properly defining the problem is the most important step in the marketing research process. If the wrong problem is defined, all the remaining steps in the marketing research process are wrong. Copyright © 2010 Pearson Education, Inc.4-7

Define the Problem Two sources of problems: – A problem exists when a gap exists between what was supposed to happen and what did happen, i.e., failure to meet an objective. Copyright © 2010 Pearson Education, Inc.4-8

Define the Problem Two sources of problems: – An opportunity occurs when there is a gap between what did happen and what could have happened…called an opportunity, i.e. Auto manufacturers are examining opportunities for more fuel efficient vehicles. “What will happen to sales, market share if we do not have a hydrogen fuel cell vehicle?” Copyright © 2010 Pearson Education, Inc.4-9

Recognizing the Problem To recognize a problem, managers must be knowledgeable of objectives and actual performance. Must have a control system in place To be aware of opportunities, managers must have a process for monitoring opportunities, such as opportunity identification. Copyright © 2010 Pearson Education, Inc.4-10

A Process for Defining the Problem and Research Objectives – See Figure 4.1 Copyright © 2010 Pearson Education, Inc.4-11

The Role of Symptoms in Problem Recognition “We have a problem … we are losing money.” – No! This is NOT a problem..it is a symptom. – Managers must be careful to avoid confusing symptoms with problems. Copyright © 2010 Pearson Education, Inc.4-12

The Role of Symptoms in Problem Recognition Symptoms are changes in the level of some key monitor that measures the achievement of an objective. The role of the symptom is to alert management to a problem; there is a gap between what should be happening and what is happening. Copyright © 2010 Pearson Education, Inc.4-13

The Role of Symptoms in Problem Recognition Researchers should ensure managers are defining the problem correctly. This is particularly true when the manager has already defined the problem in very specific terms. Researchers sometimes take additional investigations, known as a “situation analysis,” to ensure the problem is adequately defined. Copyright © 2010 Pearson Education, Inc.4-14

A Process for Defining the Problem and Research Objectives Opportunities are “problems” in the sense that they require managers to make decisions. Copyright © 2010 Pearson Education, Inc.4-15

The Role of ITBs and RFPs ITBs are Invitations to Bid. RFPs are Requests for Proposals. When ITBs and RFPs are issued, management has already defined the problem. Remember: Phony ITBs and RFPs present an ethical problem in the marketing research industry. Copyright © 2010 Pearson Education, Inc.4-16

Identification of Causes Once symptoms have been validated, it is important to identify ALL POSSIBLE causes for the symptoms. The researcher and the manager should reduce ALL possible causes to PROBABLE causes. Copyright © 2010 Pearson Education, Inc.4-17

Specification of the Decision Essentially involves specifying decision alternatives Managers should anticipate consequences of each decision alternative…how well will it reduce the symptom? What assumptions are being made in determining the consequences of the decision alternatives? Copyright © 2010 Pearson Education, Inc.4-18

Specification of Decision Copyright © 2010 Pearson Education, Inc.4-19

Are We Certain of Consequences of Decision Alternatives? Assess the information state. Can managers be absolutely certain they have the information needed to support their assumptions? If so, there is no need for marketing research. However, if there are information “gaps,” research objectives should be specified which will provide the information needed to close these gaps. Copyright © 2010 Pearson Education, Inc.4-20

Research Objectives Call for the Information Needed to Select Alternative Stating the research objective is extremely important, for it defines what information will be collected from whom and in what format. The key assessment to be made of the research objective is: If this information, as stated in the research objective, is provided, can a decision alternative be selected? Copyright © 2010 Pearson Education, Inc.4-21

Research Objectives Should: Specify from whom the information will be collected Specify what construct/s will be measured Specify the unit of measurement (operational definition) Word the information requested from respondent using the respondent’s frame of reference Copyright © 2010 Pearson Education, Inc.4-22

When Information is Inadequate, Marketing Research is Needed Copyright © 2010 Pearson Education, Inc.4-23

Action Standards An action standard is the predesignation in a research objective of some quantity of the attribute or characteristic being measured that must be achieved in order for a predetermined action to take place. Copyright © 2010 Pearson Education, Inc.4-24

Action Standards The purpose of the action standard is to define what action will be taken given the results of the research findings. In other words, by specifying the action standard, we will know, once we receive the information collected by the researcher, which decision alternative to select. Copyright © 2010 Pearson Education, Inc.4-25

MRI 4.2 Copyright © 2010 Pearson Education, Inc.4-26

Impediments to Problem Definition Failure to change behavior for problem definition situations – Managers deal with outside suppliers efficiently with little interaction. Marketing research requires a great deal of interaction and communication. Copyright © 2010 Pearson Education, Inc.4-27

“It is an accepted wisdom that the stage within a marketing research project of defining the problem is critical; the solution to the research design problem is derived from a full understanding of the marketing problem. Still, it is not uncommon for initial discussions about a research project to involve relatively superficial dialog between clients and researchers; particularly if the latter are not members of the client organization.” Professor Sue Jones Copyright © 2010 Pearson Education, Inc.4-28

Impediments to Problem Definition There are differences between managers’ and researchers’ backgrounds. – Traditionally, researchers were technicians and managers were trained in general decision making. – But…today managers are much more aware of technical software, such as using your SPSS. Copyright © 2010 Pearson Education, Inc.4-29

The Marketing Research Proposal A marketing research proposal is a formal document prepared by the researcher; it serves three important functions: 1)states the problem 2)specifies the research objectives 3)details the research method proposed by the researcher to accomplish the research objectives Copyright © 2010 Pearson Education, Inc.4-30

The Marketing Research Proposal Proposals also contain 4) a timetable and 5) budget. Copyright © 2010 Pearson Education, Inc.4-31

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Copyright © 2010 Pearson Education, Inc Copyright © 2010 Pearson Education, Inc.