This chapter covers the first two of the six steps of the marketing research process described in defining the marketing research problem and developing an approach to the problem. Defining the problem ISthe most important step, because only when a problem has been clearly and accurately identified can a research project be conducted properly. Defining the marketing research problem sets the course of the entire project In this chapter, we allow the reader to appreciate the complexities Involved In defining a problem by identifying the factors to be considered and the tasks involved. Additionally, we provide guidelines for appropriately defining the marketing research problem and avoiding common types of errors. We also discuss in detail the components of an approach to the problem: objective/theoretical framework, analytical models, research questions, hypotheses, and specification of the Information
needed. The special consideranons involved In defining the problem and developing an approach in international marketing research are discussed. Several ethical Issuesthat arise at this stage of the marketing research process are considered. We Introduce our discussion \’,I!h an example from Harley-Davidson, which needed specific information about its ccsrcmers
Harley Goes Whole Hog
TI!e motorcycle manufacturer Harley-Davidson made such an important comeback in the early 2000s that there was a long waiting list to get a bike. In 2007, Harley-Davidson’s revenues exceeded $6 billion wi” a market share of about 50 percent in the heavyweight category. Although distributors urged Harley-Davidson to build more motorcycles, the company was skeptical about investing in new production facilities
The years of declining sales taught top management to be more risk averse than risk prone. Harley- Davidson was now performing well again, and investing in new facilities meant taking risks. Would the demand follow in the long run or would customers stop wanting Harleys when the next fad came along? TI!e decrease in motorcycles’ quality linked to Harley’s fast growth had cost the company all its bad years. Top management was afraid that the decision to invest was too early. On the other hand, investing would
help Harley-Davidson expand and possibly become the clear market leader in the heavyweight segment. Discussions with industry experts indicated that brand loyalty was a major factor influencing the sales and repeat sales of motorcycles. Secondary data revealed that the vast majority of motorcycle owners also owned automobiles such as cars, SUVs, and trucks. Focus groups with motorcycle owners further indicated that motorcycles were not used primarily as a means of basic transportation but as a means of recreation. TI!e focus groups also highlighted the role of brand loyalty in motorcycle purchase and ownership.
This process and the findings that emerged helped define the management decision problem and the marketing research problem. The management decision problem was: Should Harley-Davidson invest to produce more motorcycles? The marketing research problem was to determine if customers would be loyal buyers of Harley-Davidson in the long term. Specifically, the research had to address the following questions:
1. Who are the customers? What are their demographic and psycho graphic characteristics?
2. Can different types of customers be distinguished? Is it possible to segment the market in a meaningful way?
3. How do customers feel regarding their Harleys? Are all customers motivated by the same appeal?
4. Are the customers loyal to Harley-Davidson? What is the extent of brand loyalty?
RQ: Can the motorcycle buyers be segmented based on psycho graphic characteristics?
HI: There are distinct segments of motorcycle buyers.
H2: Each segment is motivated to own a Harley for a different reason.
H3: Brand loyalty is high among Harley-Davidson customers in all segments
• Seven categories of customers could be distinguished: (I) the adventure-loving traditionalist, (2) the sensitive pragmatist. (3) the stylish status seeker. (4) the laid-back camper. (5) the classy capitalist. (6) the cool-headed loner. and (7) the cocky misfit. Thus. HI was supported.
• All customers. however. had the same desire to own a Harley: It was a symbol of independence. freedom. and power. This uniformity across segments was surprising. contradicting H2.
• All customers were long-term loyal customers of Harley-Davidson, supporting H
This example shows the importance of correctly defining the marketing research problem and developing an appropriate approach.
Importance of Defining the Problem
Although each step in a marketing research project is important, problem definition is the most important step. As mentioned in Chapter I, for the purpose of marketing research, problems and opportunities are treated interchangeably. Problem definition involves stating the general problem and identifying the specific components of the marketing research problem. Only when the marketing research problem has been clearly defined can research be designed and conducted properly. Of all the tasks in a marketing research project, none is more vital to the ultimate fulfillment of a client’s needs than a proper definition of the research problem. All the effort, time, and money spent from this point on will be wasted if the problem is misunderstood or ill defined.i As stated by Peter Drucker, the truly serious mistakes are made not as a result of wrong answers but because of asking the wrong questions. This point is worth remembering, because inadequate problem definition is a leading cause of failure of marketing research projects. Further, better communication and more involvement in problem definition are the most frequently mentioned ways of improving the usefulness of research. These results lead to the conclusion that the importance of clearly identifying and defining the marketing research problem cannot be overstated. I cite an episode from personal experience to illustrate this point
Chain Restaurant Study
One day. I received a telephone call from a research analyst who introduced himself as o~e ot:.our alumni. He was working for a restaurant chain in town and wanted help in analyzmg the data he had collected while conducting a marketing research study. 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 When he looked perplexed. I explained that data analysis was not an independent exercise Rather. the goal of data analysis is to provide information related to the problem components. I was surprised to learn that he did not have a clear understanding of the marketing research problem and that a written definition of the problem did not exist-So, before proceeding any further. I had to define the marketing research problem. Once that was done. I found that much of the data collected were 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 identified