Management decision problem in marketing research

MARK977: Research for Marketing Decisions

Dr. Thomas Lee Trimester 1, 2018

AT3 – Research Proposal

• See case study on Moodle

• 1500 words (excluding cover page, reference list and appendices)

• 60% of 40 marks = 24 marks

• See marking criteria/guide on Moodle

• Submit via relevant TII link on Moodle

• Deadline – Monday 16 April (Study Week) by 11:30pm

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AT3 – Research Proposal

• Cover page • Executive summary • Table of contents • Introduction • Main body

– Literature review and hypotheses development – Research design

• Conclusion • Appendix • References

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AT3 – Research Proposal

Introduction

• Set the scene

• Define problem

• Identify research question(s) and objective(s)

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AT3 – Research Proposal

Body

• Literature review and hypotheses development – Critically analyse previous studies to establish foundation – Advance/propose hypotheses

• Research design – Sample (who) – Data collection procedure (how) – Measures (what) – include data collection instrument in Appendix

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AT3 – Research Proposal

Conclusion

• Briefly discuss how overall focus and purpose of proposed project is addressed – Ensure entire report is integrated and coherent, and tells a clear and

compelling story

• Briefly discuss the significant issues pertaining to the project’s ethical concerns, limitations, and/or recommendations – E.g., what did you overlook, what could be done better/differently,

etc.

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AT3 – Research Proposal

• 1.5 line spacing

• Times New Roman 12-point font

• 2.54cm margins all around

• Ensure submitted work is thoroughly spell-checked and free of spelling, grammatical, punctuation, and formatting errors

• Rewrite your report until it is clear and interesting. The first draft never works!

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Problem Definition and Approach Development

WEEK 2 READING: CHAPTER 2

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Learning objectives

1. Understand the importance of and process used for defining the marketing research problem.

2. Clarify the distinction between the management decision problem and the marketing research problem.

3. Discuss in detail the various components of the approach: analytical models, research questions and hypotheses, and identification of the information needed.

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Relationship of This Chapter to the Marketing Research Process

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Problem definition • The most important step • Problem  discovery of opportunities

• E.g., declining sales  identification of new market segment(s) • Think PLC and extension strategies

• Involves:  The management decision problem  Marketing research problem

 Broad statement  Specific components

 See Harley Davidson case (p. 54) • Clarity between management decision problem and marketing

research problem is critical

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The Problem Definition & Approach Development Process

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Tasks Involved in Problem Definition

• Discussions with Decision Makers (DM)

– Serves as an additional source of information that the DM should

consider in making decisions

• Interviews with Industry Experts

– Knowledgeable about the firm and industry

– May be found inside and outside the firm

– Purpose is to help define the marketing research problem rather than

to develop a conclusive solution

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Tasks Involved in Problem Definition • Secondary Data Analysis

– Information collected for some purpose other than the problem at hand

– Quick source of background information

– Should always precede primary data collection

– Provide valuable insights into the problem situation

– Identify innovative courses of action

• (Sometimes) Qualitative Research

– Exploratory in nature

– Based on small samples

– Focus group interviews

– Refer to Harley case (p. 54) and Amtrak case (p. 61) to see how qualitative research facilitates identifying the problem correctly

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Factors to be Considered in the Environment Context of the Problem

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Past information and forecasts • Forecasts of trends with respect to sales, market share,

profitability, technology, population, demographics, lifestyle, etc.

• Firm vs. industry level of analysis – E.g., decreasing sales – affecting firm only or the whole industry?

• E.g., recent trend towards takeout food and delivery – Pizza Hut opened takeout outlets only

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Objectives • Must accomplish objectives of:

– The organisation (goals of the organisation) • E.g., to become a dominant brand in the market

– The decision maker

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Resources and constraints • Need to take into account the organisation’s available

resources (e.g., money) and constraints (e.g., cost) • Adjusting scope of marketing research to budget constraints

– E.g., national vs. global, focus on specific areas of the problem

Marketing and technological skills • Relates to the firm’s marketing mix elements and

technological skills • E.g., superior product innovation skills and marketing

capabilities to achieve superior firm performance

Buyer behaviour • Consumers’ reactions based on specific characteristics • Buyer behaviour factors include:

– Number and geographical locations – Demographic and lifestyle – Product (and related products) consumption habits – Media consumption and response to promotions – Price sensitivity – Retail outlets patronised – Buyer preferences

• In the Harley case (p. 54) – brand image and brand loyalty were identified as significant drivers of buyer behaviour

• See also Puma case (p. 64) – fashion vs. sport

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Legal environment • Regulatory policies and norms by which firms must abide • Includes:

– Public policies – Laws – Government agencies – Pressure groups

• Can influence each element of the marketing mix

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Economic environment • Relates to purchasing power, income, prices, savings, general

economic conditions (e.g., inflation, recession), etc. • Can influence the willingness of consumers (and businesses) to

spend

Management decision problem vs.

Marketing research problem

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Errors in defining the marketing research

problem

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Common Errors

Problem Definition is Too Broad

• Does not provide guidelines for subsequent steps

• E.g., improving the company’s Image (but how?)

Problem Definition is Too Narrow

• May miss important components of the problem

• E.g., changing prices in response to a competitor’s price change (what about other P’s?)

Management decision problem and

Marketing research problem

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Harley-Davidson Example

Management Decision Problem:

• Should Harley-Davidson invest to produce more motorcycles? • (action-oriented, focuses mainly on symptoms and visible issues)

Marketing Research Problem: Broad Statement

• To determine if customers would be loyal buyers of Harley- Davidson in the long term.

• (information-oriented, focuses mainly on underlying issues and causes)

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Harley-Davidson: Specific Components

Marketing Research Problem: Specific Components

1. Who are the customers? What are their demographic and psychographic (lifestyle) characteristics?

2. Can different types of customers be distinguished? Is it possible to segment the market in a meaningful way?

3. How do customers feel regarding their Harleys? Are all customers motivated by the same appeal?

4. Are the customers loyal to Harley-Davidson? What is the extent of brand loyalty?

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Components of an Approach

• Analytical Framework and Model

• Research Questions and Hypotheses

• Specification of the Information Needed

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Models

An analytical model is a set of variables and their interrelationships designed

to represent, in whole or in part, some real system or process.

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Research questions and hypotheses

• Research questions (RQs) are refined statements of the specific components of the problem.

– Designed to ask the specific information required to address each research problem component

– For example:

• What is the relative importance of brand name, price, and quality in influencing consumers’ selection of automobiles?

• Which factor is the most important?

• Which factor is the least important?

• Does the relative importance of these factors vary across consumers?

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Research questions and hypotheses

• A hypothesis (H) is an unproven statement or proposition about a factor or phenomenon that is of interest to the researcher. Often, a hypothesis is a possible answer to the research question.

– Tentative statements about proposed relationships discussed in theory or analytical framework or represented in the analytical model

– For example:

• Brand name is positively related to automobile purchase intention.

• The relationship between brand name and automobile purchase intention is stronger when status consumption among consumers is high rather than low.

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Research questions and hypotheses

• A hypothesis (H) is often communicated in the form of

a statement specifying conditions, directions and/or

differences that make the RQ more specific.

• Example:

– RQ: Will the incentive program benefit employees?

– Bad Hypo: It will benefit employees.

– Good hypo: (Gender/Department) are more likely to exhibit

stronger OCB.

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Development of research questions and

hypothesis

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Harley-Davidson Example

• RQ: Can the motorcycle buyers be segmented based on psychographic characteristics?

• H1: There are distinct segments of motorcycle buyers.

• H2: Each segment is motivated to own a Harley for a different reason.

• H3: Brand loyalty is high among Harley-Davidson customers in all segments.

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Specification of information needed By focusing on each component of the problem and the analytical framework

and models, research questions, and hypotheses, the researcher can

determine what information should be obtained (e.g., research design,

measures of constructs, sample, etc.). See also United Airlines case on p. 73.

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Harley-Davidson: Specification of Information

Component 1 – who are the customers? What are their demographic and psychographic characteristics?

• Ownership of motorcycles (Harley-Davidson and its competitors). Interest in potentially owning a motor cycle if they do not currently have one.

• Standard demographic characteristics (e.g., gender, marital status, household size, age, education, occupation, income, and type and number of automobiles owned) and psychographic characteristics. Psychographic characteristics include outdoor and recreational activities, family orientation, and attitude toward adventure.

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Harley-Davidson: Specification of Information

Component 2 – can different types of customers be distinguished? Is it possible to segment the market in a meaningful way?

• No new information to be collected. The segment can be identified based on information obtained for the first component.

Component 3 – how do customers feel regarding their Harleys? Are all customers motivated by the same appeal?

• Ratings of Harley-Davidson motorcycles on image, features, brand name, and subjective perceptions.

Component 4 – are the customers loyal to Harley? What is the extent of brand loyalty?

• Attitudes towards, preferences for and repurchase intention of Harley-Davidson motorcycles.

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Acronym: Problem

The factors to be considered when analyzing the environmental context of the problem can be summed up by the acronym PROBLEM: P ast information and forecasts R esources and constraints O bjectives of the decision maker B uyer behavior L egal environment E conomic environment M arketing and technological skills

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Discussion – Dell Running Case

Q1.1 – Discuss the role that marketing research can play in helping Dell maintain and build on its leadership position in the personal computers market.

Q1.2 – What problem-identification research should Dell undertake? Explain using examples.

Q1.3 – What problem-solving research should Dell undertake? Explain using examples.

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Discussion – Dell Running Case

Q2.2 – Define the management decision problem facing Dell as it seeks to maintain and build its leadership position in the personal computer market.

Q2.3 – Define an appropriate marketing research problem that corresponds to your definition of the management decision problem.

Q2.5 – Describe three research questions, with one or more hypotheses associated with each.

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Preparation for next week

• Go through the relevant chapter reading(s) • Tutorial/Lab Task 1 – In-class Quiz (10 marks)

– 30 minutes to answer 20 T/Fs and MCQs based on content covered in Weeks 1 and 2

• Develop draft for AT3 – Research Proposal, identifying using brief bullet points the relevant: – Problem(s) – RQ(s) and RO(s) – Hypo(s) – Information needed