Problem Definition in Marketing Research: Chain Restaurant Study

1. Chapter Two Defining the Marketing Research Problem and Developing an Approach

2. One day I received a phone call from a research analyst who introduced himself as one of our alumni. He was working for a restaurant chain in town and wanted help analyzing the data he had collected while conducting a marketing research study. Chain Restaurant Study

3. When we met, he presented me with a copy of the questionnaire and asked how he should analyze the data. My first question to him was, What is the problem being addressed? Chain Restaurant Study

4. When he looked perplexed, I explained that data analysis is not an independent exercise. Rather, the goal of data analysis is toPROVIDE INFORMATION RELATED TO THE PROBLEM COMPONENTS. Chain Restaurant Study

5. I was surprised to learn that he did not have a clear understanding of the marketing research problem and that a written definition did not exist. So before going any further, I had to define the marketing research problem. Once that was done, I found that much of the data collected was not relevant to the problem. In this sense, the whole study was a waste of resources. A new study had to be designed and implemented to address the problem defined. Chain Restaurant Study

6. The Process of Defining the Problem and Developing an Approach

7. Tasks Involved in Problem Definition • Discussions with Decision Makers (DM) • Interviews with Industry Experts • Secondary Data Analysis • Qualitative Research

8. Tasks Involved in Problem Definition Discussions with Decision Makers (DM) The interaction between the Decision Maker (DM) and the researcher should be characterized by the seven Cs: • Communication • Cooperation • Confidence • Candor/Honesty • Closeness • Continuity • Creativity The problem audit is a comprehensive examination of a marketing problem with the purpose of understanding its origin and nature.

9. Tasks Involved in Problem Definition Interviews with Industry Experts Interviews with people very knowledgeable about the general topic being investigated. Secondary Data Analysis Data collected for some purpose other than the problem at hand. Qualitative Research An unstructured exploratory research methodology based on small samples intended to provide insight and understanding of the problem setting.

10. PAST INFORMATION AND FORECASTS RESOURCES AND CONSTRAINTS OBJECTIVES BUYER BEHAVIOR LEGAL ENVIRONMENT ECONOMIC ENVIRONMENT MARKETING AND TECHNOLOGICAL SKILLS Factors to be Considered in theEnvironmental Context of the Problem

11. Factors to be Considered in theEnvironmental Context of the Problem Past information and forecasts: Past information and forecasts provide industry data that put the current problem into context. Resources and constraints: Resources and constraints force the problem to be defined in an appropriate scope. Objectives: An understanding of the objectives of the organization and decision maker allows the researcher to pinpoint the exact desires for the study. Buyer behavior:An understanding of the ultimate consumer’s behavior is critical to understanding their response to specific marketing actions.

12. Factors to be Considered in theEnvironmental Context of the Problem Legal behavior:The legal environment may regulate certain aspects of the marketing mix and the research effort, thus affecting the problem definition. Economic environment:The economic environment can affect the decisions of consumers and impact the marketing mix. Marketing and technological skills:The abilities of the organization to develop and market products may affect the scope of the research to be done. In addition,technological advances offer new methods of conducting marketing research.

13. Management Decision Problem Vs. Marketing Research Problem • The management decision problem asks what the DM needs to do, whereas the marketing research problem entails determining what information is needed and how it can be obtained in the most feasible way.

14. Management Decision Problem Vs. Marketing Research Problem Management Decision ProblemMarketing Research Problem Should a new product be To determine consumer preferences introduced? and purchase intentions for the proposed new product Should the advertising To determine the effectiveness campaign be changed? of the current advertising campaign Should the price of the To determine the price elasticity brand be increased? of demand and the impact on sales and profits of various levels of price changes

15. Marketing Research Problem Broad Statement Specific Components Proper Definition of the Research Problem

16. Department Store Project Problem Definition In the department store project, the marketing research problem is to determine the relative strengths and weaknesses of Sears, concerning other major competitors, with respect to factors that influence store patronage. Specifically, research should provide information on the following questions. 1. What criteria do households use when selecting department stores?2. How do households evaluate Sears and competing stores in terms of the choice criteria identified in question 1?3. Which stores are patronized when shopping for specific product categories?4. What is the market share of Sears and its competitors for specific product categories?5. What is the demographic and psychological profile of the customers of Sears? Does it differ from the profile of customers of competing stores?

17. Components of an Approach • Objective/Theoretical Foundations • Analytical Model • Research Questions • Hypotheses • Specification of the Information Needed

18. Objective/Theoretical Foundations • Emphasize that the foundation of research should be objective and based on a theoretic foundation. • A theory is based on principles, which have either been proven or accepted as true. • A theory serves as a framework that can be used by the researcher in interpretation of the data collected.

19. Models Ananalytical modelis a set of variables and their interrelationships designed to represent, in whole or in part, some real system or process. Models can have many different forms. The most common are verbal, graphical and mathematical.

20. Verbal Model Inverbal models,the variables and their relationships are stated in style form. For example: A consumer first becomes aware of department store. That person then gains an understanding of the store by evaluation the store in terms of the factors comprising the choice criteria. Based on the evaluation, the consumer forms a degree of preference for the store. If preference is strong enough, the consumer will patronize the store.

21. Awareness Understanding: Evaluation Preference Patronage Graphical Model Graphical models are visual. They are used to isolate variables and to suggest directions of relationships but are not designed to provide numerical results.

22. n å a a x = + y 0 i i = 1 i Mathematical Model Mathematical modelsexplicitly specify the relationships among variables, usually in equation form. Where y= degree of preference = model parameters to be estimated statistically Xi = store patronage factors that constitute the choice criteria. a a , 0 i

23. Components of the Marketing Research Problem Objective/ Theoretical Framework Research Questions Analytical Model Hypotheses Development of Research Questions and Hypotheses

24. Research Questions and Hypotheses • Research questions(RQs) are refined statements of the specific components of the problem. • Ahypothesis(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.

25. Research Questions and Hypotheses

26. United Airlines, as other major airlines, had to deal withpassenger loyalty(management decision problem: how to attract more and more loyal passengers). The broadmarketing research problemwas to identify the factors that influence loyalty of airline travelers. At United, Food Is Uniting the Airline with Travelers

27. The basic answer is toimprove service.Exploratory research, theoretical framework, and empirical evidence revealed that the consumers’ choice of an airline is influenced by:safety, price of the ticket, frequent-flyer program, convenience of scheduling, and brand name. At United, Food Is Uniting the Airline with Travelers

28. At United, Food Is Uniting the Airline with Travelers A graphical model stipulated that consumers evaluate competing airlines based on factors of the choice criteria to select a preferred airline. The problem was that major airlines were quite similar on these factors. Indeed, "airlines offer the same schedules, the same service, and the same fares.” Consequently, United Airlines had to find a way to differentiate itself. Food turned out to be the solution.

29. Secondary data, like the J. D Power & Associates' survey on "current and future trends in the airline food industry," indicated that"food service is a major contributor to customers’ loyalty."This survey also emphasized the importance of food brands. At United, Food Is Uniting the Airline with Travelers

30. At United, Food Is Uniting the Airline with Travelers The airline's Market survey told United Airlines that "customers wanted more varied and up-to-date food.” The following research questions and hypotheses may be posed. RQ1: How important is food for 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.

31. At United, Food Is Uniting the Airline with Travelers This kind of research helped United Airlines define their marketing research problem and develop the approach. Focus groups and surveys were conducted to check customers' perceptions of food in United Airlines' aircraft. The results provided support for all the hypotheses (H1 to H4). United Airlines then made a few changes: new "culinary menus," larger portions of food, new coffee, and branded products (e.g., Godiva chocolates). This resulted in better service, increasing customer satisfaction and fostering loyalty.

32. International Marketing Research Examining the Impact of the Self-Reference Criterion (SRC) Self-reference criterion – The unconscious reference to one’s own culture values. • Define the marketing research problem in terms of domestic environmental and cultural factors. • Define the marketing research problem in terms of foreign environmental and cultural factors. Make no judgments.   • Isolate the self-reference criterion (SRC) influence on the problem and examine it carefully to see how it complicates the problem. • Redefine the problem without the SRC influence and address it for the foreign market situation.