Topic 2

Business Problem definition and

the research design

1
1
 This Week’s Agenda
• Review: last week’s end-of-session task
• The nature of business problems
• Defining the business problem
• Categorising the business problem
• Research design principles
• Friendly reminder: Client briefing for Assignment 1A
• Wrap up after class
• Preview: to complete by next week

19/01/2019 RMIT University Vietnam 2

 Working Groups for Assignment 1
• Group 1: (insert names)
• Group 2: (insert names)
• Group 3: (insert names)
• Group 4: (insert names)
• Group 5: (insert names)

• Please now re-arrange the room so that groups are seated

together ....

19/01/2019 RMIT University Vietnam 3

Topic Highlights
• Recap of the Marketing Research process
• The preliminary stages of the Marketing
Research process

• Business Problem definition

RECAP
Monitoring and Description of Clarification
Evaluation the opportunity
1. Problem
Management Definition and
Decision setting
Making research
Clarification objectives
and Revision

6. Report
preparation 2. Research
and Design
presentation

5. Data
preparation,
3. Sampling
analysis and
interpretation
4. Data
Collection The Marketing
Research Process
 Stage 1: Problem definition
• What is the purpose of the study?
• How much is already known?
• Is additional background information necessary?
• What is to be measured? How?
• Can the data be made available?
• Should research be calculated?

6
 Step 2: Research Design

Research
A master plan that Design

specifies the methods

and procedures for Exploratory Conclusive
Research Research
collecting and Design Design
analysing the needed
information Descriptive Causal
Research Research
 Stage 2: Selection of basic
research design

• What types of questions need to be answered?

• Are descriptive or causal findings required?
• What is the source of the data?
• What should be data collection methods?
• How quickly is the information needed?
• How should survey questions be worded?
• How should experimental manipulations be made?

8
 Uncertainty and Research Design
Exploratory Descriptive Causal
Research Research Research
Decreasing Certainty Increasing Certainty
Degree of
problem
Unaware of problem Aware of problem Problem clearly
definition
defined
Research data: Research data:
Qualitative data Quantitative data Research data:
Research data &
methods (using: in-depth (using: survey as Quantitative data
interview/ Focus research methods) (using: experiments as
group discussion as research method)
research methods)
 Research Design examples
Exploratory Descriptive Causal Research
Research Research

Research data: Qualitative Research data:

data Quantitative data (using:
(using: in-depth interview/ survey as research methods)
Focus group discussion as Research data:
research methods) Quantitative data (using:
experiments as research
method)
Basic comparison of research designs
Exploratory Descriptive Causal
Objective: Discovery of ideas and Describe market Determine cause and
insights characteristics or effect relationships
functions
Characteristics: • Flexible • Marked by the • Manipulation of
• Versatile prior formulation one or more
• Often at the of specific independent
beginning of the hypotheses variables
research design • Pre-planned and • Control of other
structured design mediating
variables
• Experiments
Methods: • Expert surveys • Secondary data • Experiments
• Pilot surveys • Surveys
• Case studies • Panels
• Secondary data • Observational and
• Qualitative other data
research
 Data collection methods
Qualitative Methods Quantitative Methods
• Research mostly used to gain • Research that places heavy
preliminary insights into decision emphasis on producing
problems and opportunities generalizable data
• Places emphasis on words, • Places emphasis on numbers
stories, visual portrayals and and rigorous mathematical
expressive descriptions – no analysis
mathematical analysis! • Typically associated with
• Typically associated with descriptive and causal designs
exploratory designs

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2.1. Exploratory Research
• Conducted to clarify ambiguous situations or
discover ideas that may be potential business
opportunities
• Initial research conducted to clarify and define the
nature of the problem
o Does not provide conclusive evidence
o Subsequent research is expected
• Particularly useful in new product development
• Exploratory Research and Problem Solving
o Symptoms – observable cues that serve as a signal
of a problem because they are caused by that
problem/
2.2. Descriptive Research
• Describes characteristics of objects, people,
groups, organizations, or environments
- Addresses who, what, when, where, and how questions.
- Considerable understanding of the nature of the problem exists.
- Does not provide direct evidence of causality.

• Diagnostic analysis
- Seeks to diagnose reasons for market outcomes and focuses
specifically on the beliefs and feelings consumers have about and
toward competing products.
2.2. Descriptive Research
Examples
-The average Weight Watchers’ Diet Company
customer
- is a female about 40 years old
- has a household income of about $50,000
- has at least some college education
- is trying to juggle children and a job
-The men’s fragrance market
- is one-third the size of women’s fragrance market
- is growing at a faster pace than women’s market
- women purchase 80% of men’s fragrances
2.3. Causal Research
Research conducted to identify cause and effect
relationships (inferences)

Evidence of causality:
•Temporal sequence
o the appropriate causal order or sequence of events.
•Concomitant variation
o two phenomena vary together
•Nonspurious association
o Recognise the presence or absence of alternative plausible
explanations
Experiments
• Experiment
- A carefully controlled study in which the researcher manipulates
a proposed cause and observes any corresponding change in the
proposed effect
• Experimental variable
- Represents the proposed cause and is controlled by the
researcher by manipulating it
• Manipulation
- The researcher alters the level of the variable in specific
increment
• Test-market
- An experiment that is conducted within actual market
conditions
Which research design is most
appropriate in this scenario?

Operation Smile wishes to identify the demographic

characteristics of individuals who donate more than $500
each year
Which research design is most
appropriate in this scenario?
Pantene shampoo wants to establish the functional
relationship between their advertising campaigns and
sales
Which research design is most
appropriate in this scenario?
Unilever would like to investigate consumer reactions to
the idea of a new laundry detergent that prevents
shrinkage in hot water
Answers
Descriptive

Causal

Exploratory
Data collection methods
Qualitative Methods Quantitative Methods
• Research mostly used to gain • Research that places heavy
preliminary insights into emphasis on producing
decision problems and generalizable data
opportunities • Places emphasis on numbers
• Places emphasis on words, and rigorous mathematical
stories, visual portrayals and analysis
expressive descriptions – no • Typically associated with
mathematical analysis! descriptive and causal
• Typically associated with designs
exploratory designs
 Stage 3: Selection of sample
• Who or what is the source of the data? (Sampling unit:
person, household, stores, etc..)
• Can the target population be identified? (Target population)
• How accurate must the sample be? (Sampling error)
• How to select the sampling units? (Sampling method)
- Probability versus non-probability sampling
• Is a national sample necessary? (Sample vs Population
decision)
• How large a sample is necessary? (Sample Size)
• How will the sample be selected? (Sample criteria)
• Sampling is NOT a data collection method or research
design – sampling is a process

23
Step 4. Data collection
• Who will gather the data?
(fieldwork employee)
• How long will data
gathering take? (2 weeks,
few months or few years)
• How much supervision is
needed? (Quality Control)
• What operational
procedures need to be
followed? (introduction,
incentives, recording,
venue, etc..)
Step 5. Data preparation, Analysis &
Interpretation
• Will standardised editing and coding procedures be used?
- Editing involves checking the data collection forms for omissions,
legibility, and consistency in classification.
- Codes are rules for interpreting, categorizing,
recording and transferring the data to the data storage media.
• Will computer or hand tabulation be used?
• What is the nature of the data?
• How many variables are to be investigated simultaneously?
• What questions need to be answered? (so what data analysis
should be done?)
- Data analysis
Step 6. Report preparation &
Presentation
• Steps in communicating the research findings:
- Interpreting the research results
- Describing the implications
- Drawing the appropriate conclusions for managerial
decisions
• Reporting requirements
- Conclusions fulfil the deliverables promised in the
research proposal
- Consider the varying abilities of people to
understand the research results
- A clearly-written, understandable summary of the
research findings
 Stage 6: Type of report
• Who will read the report?
• Are managerial recommendations requested?
• How many presentations are required?
• What will be the format of the written report?

27
Now, let’s go specifically into
each stage together!

And understand more about marketing research!

Stage 1: Constructing a Problem Statement

Problem Definition
The nature of marketing problems
• Managers usually
grasp the general
nature of the
objectives they
wish to achieve,
but often remain
uncertain about
the full details of
the problem.
• Ambiguity needs
to be cleared up
before making a
formal statement
of the marketing
problem.
30
 The importance of proper
problem definition
• The right answer to the wrong
question may be worthless or
even harmful.
o Coca-Cola and ‘new’ Coke:
o The problem that New Coke
faced is that they focused too
much on the ‘taste test’ so
that they were confident to
withdraw the original Coke
from the shelves. This led to
customer protest.
o They forgot to insert the
questions regarding to
‘emotional attachment’ and
‘brand loyalty’ into their
research.
31
The process of defining the problem

• A problem definition:
o indicates a specific marketing decision to be
clarified or problem to be solved
o specifies research questions to be answered and
the objectives of the research
o involves several interrelated steps.

32
 Management Challenges
• Business managers are continually faced with a never-ending
range of “situations”

• Some are positive and exciting challenges; others are negative

and disturbing barriers to progress

• These are the Os and Ts of a conventional SWOT analysis

• And they exist within each of the main disciplinary elements of the
managerial role

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 Where Are The Opportunities and
Threats?

Operations Financial
Management Management

General Management

Human Resource Sales and Marketing

Management Management

19/01/2019 RMIT University Vietnam 34

 Business Management and Marketing
Research
• Marketing Research is not a process carried out in isolation
• It is an essential “value add” to business management decision
making

• Business management decisions are made in response to

commercially relevant situations identified and analysed by the
business manager

• So they are often phrased in the descriptive language of a

workplace phenomenon that is currently being experienced.

19/01/2019 RMIT University Vietnam 35

 Three “Business Situations”
• Our competitors are much further down the track of social media
marketing than we are, and we suspect this might be hurting us
somehow.

• We have developed a brand new product that doesn’t have any

direct competitors in the market place, but we aren’t sure what the
best selling price point might be.

• The board has given us an overall marketing budget for the year,
but no guidance in terms of what activities we should undertake
nor what media we should use.

19/01/2019 RMIT University Vietnam 36

 And Three More ....
• A competitor has embarked on an aggressive discounting
campaign that has the potential to develop into a price war.

• Government is about to introduce legislation that will add

significant costs to a product range that is currently only marginally
profitable.

• Our firm seems to be much more successful in marketing its

products to the “over 60s” age group than it is in marketing to
younger and mid-life demographics.

19/01/2019 RMIT University Vietnam 37

 From Business Situation to Problem
Identification
• Workplace situation: Our competitors are much further down the
track of social media marketing than we are, and we suspect this
might be hurting us somehow.

• Business problem: the firm must devise an appropriate response to

competitor action in the social media marketing space.

• Now work in small groups to translate the remaining workplace

situations into valid problem statements.

19/01/2019 RMIT University Vietnam 38

 Defining the Problem
• “Business situations” are often poorly defined, imperfectly
understood, and resistant to accurate analysis or evaluation

• Problems can therefore be difficult to accurately identify, for they

are “usually buried under symptoms, memos, record, opinions and
(sometimes) egos.” (Chapman, 1989)

• As a result, any given business situation can be incorrectly

translated into a problem statement that has the potential to
become damaging if allowed to continue unchallenged

26/08/2016 RMIT University Vietnam 39

 Some Examples
Organisation Symptoms Apparent problem True problem

Twenty-year-old
Organisation local Membership has been
Symptoms Local
Problem residents prefer
definition Demographic changes:
True problem
swimming association. declining for years. basedthe onmore expensive
symptom children in this 20-year-
New water park with water park and have a old local area have
Twenty-year-old wave pool
Membership and water Local negative
has been residents image
prefer of Demographic
grown changes:
up; olderchildren
local swimming slides
declining movedNew
for years. into a the more
swimming pool.
expensive residents no
in this 20-year-old longer
local area
association in water park with wavedistrict
neighbouring pool a water park and have a have grown
swimup; older residents
District 1. and water
few slides
years moved
ago. negative image of no longer swim
into a neighbouring district swimming pool.
a few years ago.
Manufacturer of palm- Distributors complain Investigate business Sales management:
Manufacturer of
sized computer with Distributors complain
prices are too high. Investigate business
users to learn how Sales management: distributors
distributors do not have
palm-sized prices
wireless internet access are too high. users to learn how do not have adequate
much prices need to be adequate product product
computer with much reduced
prices need to be knowledge to communicate
knowledge to
wireless internet reduced product’s value.
communicate product’s
access
value.
Boutique beer Consumers prefer the What type of Package: old-fashioned
brewery beer brewery
Boutique taste ofConsumers
competitor’sprefer thereformulated tasteofis
What type package influences
Package: taste
old-fashioned
brand taste of competitor’s needed? reformulated taste isperception
package influences
brand needed? taste perception
26/08/2016 RMIT University Vietnam 40
 Problem Definition: What Does It
Do?
• Reviews a specific situation that is of interest to marketing
managers, and is phrased in the language of commercial activity

• Identifies a specific marketing decision to be clarified, opportunity

to be exploited, or problem to be solved

• Specifies research questions to be answered ....

• And summarises the intent of those questions through
identification of the objectives of research

• There are six steps in the process

26/08/2016 RMIT University Vietnam 41

The process of problem definition
Step 1: Ascertain the decision-maker’s
objectives

• Researchers must attempt to

satisfy decision-makers’
objectives (those of brand
manager, sales manager, etc.)
• Managerial goals should be
expressed in measurable terms
(e.g. to launch the new product/
to increase sales, etc.)
• The iceberg principle is the idea
that the dangerous part of many
marketing problems is neither
visible to nor understood by
marketing managers.
43
Step 2: Understand the background
of the problem

• Exercising managerial judgement when decision

maker’s objectives are clear.

• Situation analysis: Informal gathering of background

information to familiarise researchers or managers with
the decision area

• Literature review is a good way to understand the

background of the problem.

44
Step 3: Isolate and identify the
problems,
not the symptoms

• Problems and symptoms can be confusing and may

only be symptoms of deeper problem.

45
 Easy example
Symptoms Possible problems True
(based on symptoms) problems

Stomach- Eating sour food, eating Stress due to

ache, disorder study MR
heartburn
(hot burp)
If you don’t find real problems that cause/created the symptoms,
there will be no cure for the problems. Sometimes you need to
look at the problems from different angles.
Step 4: Determine the unit of
analysis

• Individuals, households, organisations etc.

• Problems may be investigated at more than one
level of analysis.

47
Step 5: Determine the relevant
variable

• A variable is anything that varies in value.

o For example, attitudes toward airlines may be a
variable ranging from positive to negative.
• Categorical/classificatory variable: Limited number
of
distinct values. Gender
• Continuous: Infinite number of values
• Dependent: Variable that is to be predicted or
explained
• Independent: Variable that is expected to influence
the dependent variable
48
Using a fishbone diagram to determine all
relevant variables

• Diagram that illustrates the most important independent

variables (‘ribs’) influencing dependent variable (‘head’)
Step 6: State the research questions and
research objectives

• Research questions – once the unit

of analysis and variables of interest
are identified, what exactly is going to
State the be asked?
research
questions and • Research objectives – once all
research
objectives research questions have been
satisfactorily answered, what will the
research project have accomplished?

• The complete problem definition

50
should now have three components.
Step 6: State the research questions and
research objectives

• Written statement of research questions and

research objectives that clarifies any ambiguity
about what the research hopes to accomplish.
(example: Project Melody in next slides)

51
Activity: Generate research
objectives!
• Based on a file from Nielsen Case Competition (2013),
please create the research objectives for this project!
About your client

• Lee’s Korea Universal (Lee) is headquartered in Seoul, South

Korea and known for their natural and premium personal care,
home care and food products.

• Lee’s products are distributed in South Korea, Japan, China and

other Southeast Asian countries.

• They sell products ranging from snacks, deli food, soft drinks,
alcohol and even personal care products (soap, shampoo, tissue,
etc.)
Lee’s Korea Universal – Product
Overview
Background/Situation
• The most recent market entry to Thailand has proven a great
success for Lee, where their products are distributed in high-end
supermarkets and convenience stores. They are now keen to enter
the Vietnamese market with the right distribution channels.

• They have entrusted Nielsen to be their market research partner to

find out the solution for their distribution strategy and how to best
reach their target consumer.
Background/Situation
• Despite the global slowdown, In 2010, their revenue
reached 830 Million USD (12% increase vs. previous
year) with staff totaling nearly 2,600 worldwide.

• Lee is finalizing approval from the Vietnamese

government to enter the market within one year.
Project’s requirements:
• You are a Nielsen consultant hired by Lee, a South Korean
manufacturer and they wish to understand how to best enter the
market.

• Identify at least 3 relevant research objectives for this project.

• Then come to the white board and write them down!
• Remember that research objectives are broader than questions in
the questionnaire but will be more specific than the general
business problems!

• Example: See next slide

 Distinction between business problem & research
objectives & specific research questions

Marketing problem Research objectives Specific questions (in

the questionnaire)
The leather handbag 1) To re-define the target 1. What is their age
producer does not have market of young range?
much knowledge about customers 2. Where do they live?
young Vietnamese 3. Their education?,
customers. etc…

1) To understand more 2.1. What is your

about young favourite leather
customer’s preference accessory product?
(bag/wallet/belt)
2.1. What is your
favourite design style?
(modern & Western
look/ traditional look/
Vintage look, etc..)
 The Completed Problem
Statement: an Example
• The Management Decision Problem: how can my airline build a
higher degree of loyalty amongst business travellers?

• The Marketing Research Problem: what are the factors that

influence the degree of loyalty a business traveller has towards an
airline?

• The Research Questions: How important is on-time performance

(convenient scheduling/ safety record/ customer service/ pricing of
tickets etc.) in determining a business traveller’s airline choice?

26/08/2016 RMIT University Vietnam 59

 Key Lessons ....
• Business decision makers work with problems and opportunities
• Marketing researchers work with data and information
• Problems and opportunities generate questions; and questions
generate data

• Analysis of data generates information; information helps capitalise

on opportunities and to solve problems

THE QUALITY OF BUSINESS DECISIONS IS HEAVILY

DEPENDENT ON THE QUALITY OF THE QUESTIONS WE ASK!

19/01/2019 RMIT University Vietnam 60

 Other issues: Clarity in research questions
and hypotheses
• Research questions and hypotheses add clarity to the
statement of the marketing problem.
• A hypothesis is an unproven proposition or a possible
solution to a problem.
o For example, if consumers’ attitudes toward a
product change in a positive direction, consumption
of the product will increase.
o Southern consumers like the new instant noodle of
Omachi than Northern consumers.
• A hypothesis should provide information that will be
useful in decision-making.
61
 Other issues: Decision-oriented research
objectives
• The research objective is the researcher’s version of
the marketing problem.
o Explains the purpose of the research in measurable
terms
o Defines standards for what the research should
accomplish
o Influences decisions about the research design
o Managerial action standard: a performance
criterion or objectives that express specific actions
that will be taken if the criterion is achieved
(Example next slide)

62
Example of ‘Action Standard’
 Decision-oriented research objectives

64
 Research proposal
• A written statement of the research design, including
a statement explaining the purpose of the study
• Detailed outline of procedures associated with a
particular methodology
• All ambiguities about why and how the research will
be conducted must be clarified before the proposal
is complete.
• A mechanism that allows managers to evaluate the
details of the proposed research design and
determine if alterations are necessary

65
 Research proposal

• Helps managers decide if proper information will be

obtained to accomplish what’s desired

• Format follows the six stages in the research

process
Data

Stage 5
Problem Selection of Selection of Data Type of
Stage 1

Stage 2

Stage 3

Stage 4

Stage 6
definition basic sample gathering analysis report
research and
design evaluation

66
Research proposal
• Helps managers decide if proper information will be
obtained to accomplish what is desired.

• The format follows the six stages in the research

process outlined in Exhibit 1.2.
 Figure 3: Parts of a Research Proposal, and an Example
Project Title: Marketing Problem
Research on Your Consumers
Brief description of general problem; reason for conducting
research
Sum up preliminary discussions
between researcher & manager; demonstrate
knowledge of
situation & particular info needs
by bidding Marketing Research Firm

1 2

Purpose of Research Project Data Sources & Methodology

 State goals & objectives, w rationales Describe secondary data to be used
 Describe scope of project (i.e., what will not Describe how primary data will be gathered (surveys,
be investigated) experiments)
 Spell out specific research questions to be Keep methods descriptions nontechnical
answered
Describe sample and proposed size
 Address possible limitations due to time or
budget constraints (to avoid later Include draft of questionnaire or focus group moderator
disagreement) 3 4 outline (etc.), if applicable

Time and Personnel

 Provide time estimates for each phase
of the research
 Specify personnel required and their
rates of pay
 Calculate nonpersonnel costs (e.g.,
supplies, printing, mailing, etc.)

5
 Eau de Internet: Marketing Opportunity
Selling Fragrances Online $27billion U.S. beauty market
45% U.S. population Internet access
Related Internet site (fashion) up, possible profitable link?
Manager concern fragrances cannot be sampled electronically
Past research: trial is important
by Marketing Researchers R Us
1 2 Can image & brand dominate?

Purpose of Research Project Data Sources & Methodology

Objective: determine consumers intention to buy perfumes Secondary data: sales in beauty, perfumes, online
online apparel
Focus on women’s attitudes (buying for self or gift), not yet Primary data: email contact directed to Internet surveys
purchase
Analysis: averages, cross-tabs
Concerns women have re: buying fragrances online?
Sample size goal of 300 women, given time constraints,
What factors lower resistance (brand, price, return target
policy?) those w internet access, modify
Client desires results in 3months… 4 questions for gift purchases
3

Time and Personnel

Preliminary phase, 3 weeks
Survey pre-test, debug, 2 weeks
Sample select & solicitation, 2 wks
Administer survey, follow-up, 1 wk
Analyses, 1 month
Discuss required staff (& salaries)
Other costs minimal (given format of electronic contact
and survey execution)
5