The Management Problem
versus
the Marketing Research Problem
Recap
What is Marketing Research?
Why do Organizations Need Market Research?
What sort of information is needed – generally?
Why and When does Marketing Research Work?
What is the Marketing Research Process
The Marketing Research Process
Step 1: Identify and define the Management Problem
Step 2: Define the Marketing Research Problem
Step 3: Establish Research Objectives
Step 4: Specify the Research Design
Step 5: Develop the Data Collection Procedure
Step 5: Design the Sampling Procedure
Step 6: Collect the Data
Step 7: Process and Analyze the Data
Step 8: Present the Results
Step 9: Follow-up
The Management Problem
versus
the Marketing Research Problem
A distinction must be made between the management problem
or opportunity and the marketing research problem.
Management Problem
• Focus on symptoms
• Action oriented
Marketing Research
Problems
• Focus on causes
• Data oriented
Step 1: Identify the Management Problem or
Opportunity
What Question Does the Management decision Problem ask?
What should the decision maker do?
Situation arises, management needs to make a decision. Simply
a statement of the issue that management is dealing with that
requires research, starts the research process
Moti Italian restaurant sales are low (the symptom) and if they
remain at current levels the restaurant will soon go out of
business. What broadly is the management decision problem?
What should the restaurant do to improve sales?
Is this enough?
Must discover the problem
What do we need to know to identify or
define the problem? – The problem audit
 distinguish between the symptom and the problem
History of the problem – what is the business issue prompting the
research
Ask: What caused this to occur. – Why are sales low?
What will the information be used for – what decisions made?
Environment in which it is being made (eg legal, competitive,
economic, financial, social) – situation analysis
What alternative courses of action are there?
What criteria should we use to decide between alternatives
(e.g. sales targets, market share, profitability, ROI)
Constraints, e.g.. timing, monetary
Who are the decision makers and what are their purposes?
why is the information is being sought
Why is it important to clearly define the
management decision problem?
 The problem definition process provides guidelines on how
to correctly define the marketing research problem
Because problem definition sets the course of the entire
project
 Because the client is paying for the research so both need to
know what to expect
 Because mistakes made at this level grow into larger, more
expensive mistakes later on.
 All the effort, time and money spent from this point on will
be wasted if the problem is not properly defined.
Step 2: Define the Marketing Research Problem
 A statement of the information needed by a decision maker to
help solve a management decision problem.
 Marketing research problem has to be narrowly defined
What’s wrong with these statements?
1. Develop a marketing strategy for the brand.
2. Improve the competitive position of the firm
3. Improve the company’s image
What’s wrong with this statement?
1. How should the company adjust its pricing given
that a major competitor has initiated price changes?
Tips for Accurately Defining
Research Problems
 Find out why the information is being sought.
 Determine whether the information already exists.
 Determine whether the question really can/should be
answered.
 Use exploratory research to define background of
the problem
• Situation analysis
• The iceberg principle
 Determine relevant variables
Management Decision Problem:
What should Moti restaurant do to improve sales?
Marketing Research Problem:
Why are Sales low?
What factors influence people to spend money in
restaurants and to what extent does Moti meet their
needs?
What information is needed to answer this question?
What can we say about restaurant patrons that
makes them go out to dinner to an Italian restaurant
and spend money? I.e. what’s our theory?
People who go out to restaurants like a wide menu
selection at a convenient location and demand good
tasting food, good service, at a reasonable price.
A Local health food store is interested in opening a branch
near the SAIT campus.
1. What is your management problem?
2. What is the Research Problem?
3. What information would be needed
4. What Secondary sources of information are available to
help you decide whether to open such a store
5. Summarize the data that would bear on their decision
on whether or not to open such a store.
Step 3 Definition of Research Objectives
 Marketing Research Objectives: the specific bits of knowledge
that need to be gathered to close the information gaps
highlighted in the research problem.
– Stated in action terms
– Serve as a standard to evaluate the quality and value of the
research
– Objectives should be specific and unambiguous
 Examples:
– To measure the number of marketing majors at the Calgary
campus
– To assess viewer recall of our ad campaign
– To describe the segments of the marketplace
– To determine the impact on sales and profits at various price
levels
– To determine the needs of product users and the extent to
which the needs are being met by the market.
Research Objectives and Hypotheses
1. What needs do restaurant goers seek to satisfy.
Hypotheses?
2. How well does Moti Italian restaurant meet these needs?
Hypotheses?
3. What are the psychographic and demographic
characteristics of the restaurant goers? Hypotheses?
4. Does Moti Italian restaurant cater to this segment?
Hypotheses?
make a list of the information that should be collected for each
research question and hypothesis
Putting It All Together
• Management Problem
– The U of L Placement office has noticed, while major companies make
annual recruiting visits to campus for engineers, few local companies
formally recruit business management majors through the placement
office
– What should the Placement office do get local companies to hire business
management majors ?
• Marketing Research Problem
– Why are companies not taking advantage of the resources that the
placement service offers?
• Hypotheses
– Companies are going around the service
– Companies are unaware of the U of L placement service?
– Companies are unaware of the reputation of the U of L FOM
– Companies use other recruitment methods
Marketing Research Objectives
• To determine to what extent companies are aware of the U of L placement
service
• Determine whether companies, especially locals, are aware of the strong
reputation of the U of L FOM Business School
Another Example
• Management Problem
– What price should we charge for our new product?
• Research Problem
– What are our costs of production and marketing (COGS)?
– What are our pricing objectives and position in the market?
– What price does similar types of products sell for?
– What is the perceived value of our product in the marketplace?
– Are there any norms or conventional practices in the marketplace (e.g.,
customary prices, continual discounting)
• Research Objectives
– To assess the costs involved in producing and selling our product
– To determine corporate objectives and their implications for pricing
– To examine current prices for direct and indirect competition
– To determine potential customer reaction to various prices and their
perception of the benefits of owning the product
Practice, Practice
• For the following management problems, identify
the underlying research problems and a couple of
research objectives.
– “Should our retail chain offer online shopping?”
– “What advertising media should we use to reach
our market?”
– “How do we get more people to attend our
outdoor festival/event?”
– “Should we buy a new cube van to deal with our
increased demand?”
– “How can we increase customer retention?”
– “Should the amount of in-store promotion for
an existing product line be increased?”
Marketing Decision Problem
Should a new product be
introduced?
Should the advertising
campaign be changed?
Marketing Research Problem
To determine consumer preferences
and purchase intentions for the
proposed new product.
To determine the effectiveness
of the current advertising
campaign among the target audience.
Should the price of the
brand be increased?
To determine the price elasticity
of demand and the impact on sales
and profits of various levels
of price changes.
In 2002, Westjet added service to two new Ontario destinations,
London and Toronto. As Westjet expanded into Eastern Canada
it began to run into competition from Montreal-based discount
carrier Jetsgo, which started in 2002 (and ended March 2005).
In 2003 Jetsgo expanded into Western Canada to compete
directly on flights between Calgary and Toronto and Montreal.
In the first six months of 2004, Westjet’s net earnings were $8.0
million compared to $15.5 million during the first six months of
2003. Both Jetsgo and Westjet modeled themselves on the highly
successful US Carrier Southwest Airlines. Both airlines offered
the same schedules, the same service, and the same fares. With
little to differentiate the two airlines Westjet began to look at a
way to increase passenger loyalty especially on the longer haul
domestic flights.
Management decision problem
How to attract more loyal
customers
Marketing Research Problem
Identify the factors that influence
loyalty of airline passengers
Marketing Research Objective
How to differentiate Westjet from
the competition.
Exploratory research revealed that the consumer’s choice of an
airline is influenced by safety, ticket price, frequent flyer
program, convenience of scheduling and brand name.
A theoretical model stipulated that consumers evaluate
competing airlines based on factors of the choice criteria to
select a preferred airline. Since both airlines offer the same
schedules, same service, and fares Westjet had to find a way to
differentiate itself.
Food turns out to be the solution.
Secondary data, like the J. D. Power and Associates survey on
“current and future trends in the airline food industry” indicated
that “food service is a major contributor to customer loyalty”.
This survey also emphasized the importance of food brands.
Westjet then conducted a survey to evaluate the importance of
food service to its customers
The following research questions and hypothesis may be posed
RQ1 How important is food for the airline customers?
H1 Food is an important factor for airline travelers
H2 Travelers value branded food
H3 Travelers prefer larger food portions, but with consistent quality
H4. Travelers prefer exotic food.
Characteristics which influence the research design will include the
identification of competing airlines, factors of the choice criteria
(already identified) measurement of airline travel loyalty.
This kind of research helped Westjet to define their marketing
research problem and approach. Focus groups and surveys were
conducted to check customers perceptions of food in Westjet
aircraft. The results provided support for all the hypotheses.
The survey conducted by Westjet told them that “customers
wanted more varied and up-to-date food”
Westjet Airlines then made a few changes: new “culinary menus”
larger portions of food, new coffee and branded products, eg.
Bernard Callebaut chocolates.. This has resulted in better service
increasing customer satisfaction fostering loyalty.
Defining the marketing/management problem
Problem Formulation and Approach
Understand and define the managerial
decision problem/opportunity
Translate into research objective(s) (what
information is needed)
Pose the right research questions
State questions in terms of hypotheses
The management decision problem asks what the DM needs to do
The marketing research problem asks what information is needed
and how it can be obtained effectively and efficiently.
The marketing research objective is a restatement, in general terms,
of what management needs to know to make a decision