The problem definition and approach development process is shown in Figure 2.1. The tasks involved in problem definition consist of discussions with the decision makers. interviews with industry experts and other knowledgeable individuals, analysis of secondary data, and sometimes qualitative research. These tasks help the researcher to understand the background of the problem by analyzing the environmental context. Certain essential environmental factors bearing
on the problem should be evaluated. Understanding the environmental context facilitates the identification of the management decision problem. Then the management decision problem is translated into a marketing research problem. Based on the definition of the marketing research problem, an appropriate approach is developed. The components of the approach consist of an objective/theoretical framework, analytical models, research questions, hypotheses, and specification of the information needed. Further explanation of the problem definition process begins with a discussion of the tasks involved
(Discussions with Decision Makers)
Discussions with decision makers (DM) are extremely important. The DM needs to understand the capabilities and limitations of research,” Research provides information relevant to management decisions, but iI’Cannot provide solutions because solutions require managerial judgment. Conversely, the researcher needs to understand the nature of the decision managers face and what they hope to learn from the research.
The problem audit provides a useful framework for interacting with the DM and identifying the underlying causes of the problem. The problem audit, like any other type of audit, is a comprehensive examination of a marketing problem with the purpose of understanding its origin and naturef The problem audit involves discussions with the DM on the following issues that are illustrated with a probJem facing McDonald’s
1. The events that led to the decision that action is needed, or the history of the problem. McDonald’s, a long-time leader in the fast-food industry, was losing market share in 2003 and 2004 to competitors such as Burger King, Wendy’s, and Subway in some of the key markets. This problem came into sharper focus as these competitors launched new products and aggressive promotional campaigns, whereas the recent campaigns of McDonald’s were not as successful.
2. The alternative courses of action available to the DM. The set of alternatives may be incomplete at this stage, and qualitative research may be needed to identify the more innovative courses of action. The alternatives available to the management of McDonald’s
include introducing new sandwiches and menu items, reducing prices, opening more restaurants, launching special promotions, and increasing advertising.
3. The criteria that will be used to evaluate the alternative courses of action. For example, new product offerings might be evaluated on the basis of sales, market share, profitability, return on investment, and so forth. McDonald’s will evaluate the alternatives based on contributions to market share and profits.
4. The potential actions that are likely to be suggested based on the research findings. The research findings will likely call for a strategic marketing response by McDonald’s.
5. The information that is needed to answer the DM’s questions. The information needed includes a comparison of McDonald’s and its major competitors on all the elements of the marketing mix (product, pricing, promotion, and distribution) in order to determine relative strengths and weaknesses.
6. The manner in which the DM will use each item of information in making the decision. The key decision makers will devise a strategy for McDonald’s based on the research findings and their intuition and judgment.
7. The corporate culture as it relates to decision making,” In some firms, the decision-making process is dominant; in others, the personality of the DM is more important. Awareness of corporate culture may be one of the most important factors that distinguishes researchers who affect strategic marketing decisions from those who do not. The corporate culture at McDonald’s calls for a committee approach in which critical decisions are made by key decision makers
Look Who’s Picking Levi’s Pocket
For years, teenagers have considered store label jeans “uncool.” Although the lower price tag of store brand jeans, such as JCPenney’s Arizona brand jeans or the Gap’s in-house brand, has long appealed to valueconscious parents, teenagers have preferred big brand names such as Levi’s, Lee, and Wrangler. The big-name brands have historically dominated the $12 billion industry as a result. Through marketing research problem audits, the private labels determined that the real cause for their low market share was
lack of image. Therefore, the marketing research problem was defined as enhancing their image in the eyes of the target market-the lucrative teenage segment.
The results for the store brand jeans have been quite successful. According to the marketing research firm NPD Group, private label jeans’ market share has risen in the 2000s, Levi’s, the market leader, has seen their market share drop over the same time period. Levi’s drop is also indicative for the big brand names nationwide. These impressive results are encouraging other stores to consider introducing their own label jeans to capture a portion of the teenage market
As in the case of the private label jeans, a problem audit, which involves extensive interaction between the OM and the researcher, can greatly facilitate problem definition by determining the underlying causes. The interaction between the researcher and the OM is facilitated when one or more people in the client organization serve as a liaison and form a team with the marketing researcher. In order to be fruitful, the interaction between the OM and the researcher should be characterized by the seven Cs:
1. Communication. Free exchange of ideas between the OM and researcher is essential.
2. Cooperation. Marketing research is a team project in which both parties (OM and researcher) must cooperate.
3. Confidence. The interaction between the OM and the researcher should be guided by mutual trust.
4. Candor: There should not be any hidden agendas, and an attitude of openness should prevail.
5. Closeness. Feelings of warmth and closeness should characterize the relationship between the OM and the researcher. )
6. Continuity. The OM and the researcher must interact continually rather than sporadically.
7. Creativity. The interaction between the OM and the researcher should be creative rather than formulaic .