Problems versus Symptoms and Formulating Research Objectives Steps leading to a formal research proposal.

Research Objectives Problem Definition Choice of Design

“Problem” Definition When research has been seen as ineffective, or inappropriate for marketing decisions, critics will often state “the problem was incorrectly defined.” A problem is defined in a single statement, rarely more than a few sentences long (the problem statement). How do we formulate a problem statement?

Problem or Symptom of Underlying Problem Classic symptoms of underlying problems: Low or declining sales Declining renewals of annual memberships Declining profits Declining share (in a growing market). Symptoms can be seen as either: a change indicating adverse consequences or imply an emerging market opportunity.

“Symptoms are changes in the level of some key monitor that measure the achievement of an objective.” “Sales are falling short… “Market share is low… “Store image is cheap… “Brand image is dowdy… “Customer satisfaction is low.. “Losing loan opportunities to competitors”

Treating Symptoms Cutting prices Heavy use of consumer coupons, promotions to retailers and wholesalers. Both address sales and market share, however, there maybe no sustainable profit, more likely less profits, for the long term. An underlying problem is more important because it leads to research that will correct the current situation and subsequent situations.

Killian’s Red: Key Comment “What is dandy about these brews for the big brewers is they are fairly cheap to do. They don't need - and indeed may even suffer from - large advertising budgets and television exposure. They sell by word of mouth. And, unlike brews aimed at broad audiences, specialty beers don't lend themselves to big-budget market research. "We can play around with beers that we couldn't make before because they, had to be one-million-barrel beers," says Vincent Prattico, marketing manager for Coors's Unibev. “And if nobody buys it? Well, we've learned something a lot cheaper than we could have with traditional research,” he says.

What we gain from Killian’s Case: Trial and error reaction to symptoms versus never attempting to understand consumer behavior, more specifically the associations that lead a segment to choose premium-priced beer. Several failed positioning attempts: The next Michelob (or Lowenbrau), “upscale” domestic A malt liquor target at urban markets “Red instead” Only by accidentally getting out of the Coors section of retail display case did it get the correct positioning.

Intended Marketing Strategy Promotion Distribution Product Pricing Target segment

Symptoms Declining market share Declining sales Declining profits High price competition Low brand loyalty Poor customer service evaluations Promotion Distribution Pricing Product Target segment Mismatches or “disconnects” lead to a marketing strategy disaster

Management and Researchers Defining Marketing Manager’s Problem (or Marketing Management Problem) Establishing Research Objectives, Developing the Research Proposal

Marketing Managers and the Marketing Management Problem (1) If the symptoms of failure to achieve a goal are present, the marketing manager must select a course of action to regain the goal, and (2) if the symptoms of the likelihood of achieving the goal are present, the manager must decide how best to seek the opportunity.

Two Views of Symptoms Symptoms indicating impending adverse consequences lead to research to correct a current problem in an existing marketing strategy. Symptoms implying an emerging market opportunity lead to research questions where a totally new market strategy is developed.

The Researcher and the Manager: Steps in Defining the Problems Assess the manager’s situation Clarify symptoms of the problem Pinpoint suspected causes of the problem Specify action that might alleviate the problem Speculate on anticipated consequences of the actions Identify the manager’s assumptions about the consequences Assess the adequacy of information on hand to specify research objectives.

Resultant Marketing Strategy Distribution Promotion Pricing Product Evolved Segment Target Segment Current market mix is satisfying an insufficient segment

Defining a Problem Statement for Unibev Division of Coors Changes in marketing strategy reflected by Unibev What is at stake for the managers? Symptoms of Killian’s Red—problem or emerging opportunity? What are suspected causes—what might alleviate the problem? What are the outcomes sought? Managers’ assumptions? What information is at hand?

Examples of underlying or marketing management problems portions of problems of problem statements. “The current product features are viewed as an inadequate option by target consumers. “The distribution of the product is too selective for the price points and market segment. “The segment is abandoning the product category.” “The price of our product is competitive in one market and over-priced in another.” “Price sensitive segment is displacing our traditional customer.”

“The current product features are viewed as an inadequate option by target consumers. Our firm needs research evaluating the impact of changing features of the product with our current customers. “The distribution of the product is too selective for the price points and market segment. To assure adequate market share, distribution needs to be expanded that will minimally affect support from current distributors. “The segment is abandoning the product category. An opportunity analysis will examine options which utilize our current strengths in this segment and compare plans for satisfying their needs. “The price of our product is competitive in one market and over-priced in another. Research is needed to examine the effects of price reductions on revenues in both markets.

The Research Proposal Serves as a “contract” or “blue-print” of: Specifics of data collection How variables/constructs will be measured Conceptual model that links the constructs, previous research that supports the study. Costs of the data collection How the analysis will be presented Length of the project How much the research will cost the client.

Specify constructs and operational definitions Constructs (or concepts) form the basic variables of management problem. Operational definitions indicate how the concept will be quantified. Segment demographics: Age, income, education, occupation, and race. Brand image: Brand awareness, attitude toward the brand, associations with the brand.

Identify relationships An agreement between the manager and researcher on basic relationship between the components of the marketing strategy. Customer satisfaction and repeat patronage Product positioning (through advertising) improves brand loyalty. Increased distribution (adding stores) will increase sales to target consumers.

Decide on a model Agreement between manager and researcher on an overall framework within which the relationships will be interpreted. Expectations of Service Quality Hierarchy of Effects Model: Diffusion Model: Retail Gravitation:

Specify marketing research objectives: Grocery Study “Determine the grocery stores most frequently shopped with a sample of 1000 household phone surveys. “Document the prices and depth of 10 grocery categories in 27 stores over a six-week period. “Develop demographic profiles of the neighborhoods in the core shopping area of each store.

THE FORMAL RESEARCH PROPOSAL Defines the Marketing Management Problem Company, Division, or Principals Symptoms Probable Causes of the Symptoms Anticipated Uses of the Research Information Specifies the Research Objectives Precise Detailed Clear Operational Details the Proposed Research Method

Saturn: Symptoms: Underlying Problems: Research Objectives: