The Management Problem the Marketing Research Problem
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Presentation on theme: "The Management Problem the Marketing Research Problem"— Presentation transcript:
1 The Management Problem the Marketing Research Problem versusthe Marketing Research Problem
2 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
3 The Marketing Research Process Step 1: Identify and define the Management ProblemStep 2: Define the Marketing Research ProblemStep 3: Establish Research ObjectivesStep 4: Specify the Research DesignStep 5: Develop the Data Collection ProcedureStep 5: Design the Sampling ProcedureStep 6: Collect the DataStep 7: Process and Analyze the DataStep 8: Present the ResultsStep 9: Follow-up
4 The Management Problem the Marketing Research Problem versusthe Marketing Research ProblemA distinction must be made between the management problem or opportunity and the marketing research problem.Management ProblemMarketing ResearchProblemsFocus on symptomsAction orientedFocus on causesData oriented
5 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 processMoti 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
6 What do we need to know to identify or define the problem What do we need to know to identify or define the problem? – The problem auditdistinguish between the symptom and the problemHistory of the problem – what is the business issue prompting the researchAsk: 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 analysisWhat 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, monetaryWho are the decision makers and what are their purposes?why is the information is being sought
7 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 problemBecause problem definition sets the course of the entire projectBecause the client is paying for the research so both need to know what to expectBecause 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.
9 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 definedWhat’s wrong with these statements?Develop a marketing strategy for the brand.Improve the competitive position of the firmImprove the company’s imageWhat’s wrong with this statement?How should the company adjust its pricing given that a major competitor has initiated price changes?
10 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 problemSituation analysisThe iceberg principleDetermine relevant variables
11 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?
12 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.
13 A Local health food store is interested in opening a branch near the SAIT campus. What is your management problem?What is the Research Problem?What information would be neededWhat Secondary sources of information are available to help you decide whether to open such a storeSummarize the data that would bear on their decision on whether or not to open such a store.
14 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 termsServe as a standard to evaluate the quality and value of the researchObjectives should be specific and unambiguousExamples:To measure the number of marketing majors at the Calgary campusTo assess viewer recall of our ad campaignTo describe the segments of the marketplaceTo determine the impact on sales and profits at various price levelsTo determine the needs of product users and the extent to which the needs are being met by the market.
15 Research Objectives and Hypotheses What needs do restaurant goers seek to satisfy. Hypotheses?How well does Moti Italian restaurant meet these needs? Hypotheses?What are the psychographic and demographic characteristics of the restaurant goers? Hypotheses?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
16 Putting It All Together Management ProblemThe 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 officeWhat should the Placement office do get local companies to hire business management majors ?Marketing Research ProblemWhy are companies not taking advantage of the resources that the placement service offers?HypothesesCompanies are going around the serviceCompanies are unaware of the U of L placement service?Companies are unaware of the reputation of the U of L FOMCompanies use other recruitment methods
17 Marketing Research Objectives To determine to what extent companies are aware of the U of L placement serviceDetermine whether companies, especially locals, are aware of the strong reputation of the U of L FOM Business School
18 Another Example Management Problem What price should we charge for our new product?Research ProblemWhat 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 ObjectivesTo assess the costs involved in producing and selling our productTo determine corporate objectives and their implications for pricingTo examine current prices for direct and indirect competitionTo determine potential customer reaction to various prices and their perception of the benefits of owning the product
19 Practice, PracticeFor 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?”
20 Marketing Decision Problem Marketing Research Problem Should a new product be To determine consumer preferencesintroduced? and purchase intentions for theproposed new product.Should the advertising To determine the effectivenesscampaign be changed? of the current advertisingcampaign among the target audience.Should the price of the To determine the price elasticitybrand be increased? of demand and the impact on salesand profits of various levels of price changes.
21 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).
22 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 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.
23 Management decision problem How to attract more loyal customersMarketing Research ProblemIdentify the factors that influence loyalty of airline passengersMarketing Research ObjectiveHow 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.
24 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
25 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 travelersH2 Travelers value branded foodH3 Travelers prefer larger food portions, but with consistent qualityH4. 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.
26 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.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.The survey conducted by Westjet told them that “customers wanted more varied and up-to-date food”
28 Problem Formulation and Approach Understand and define the managerial decision problem/opportunityTranslate into research objective(s) (what information is needed)Pose the right research questionsState questions in terms of hypotheses
30 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