3-5. The Marketing Research Proposal

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CHAPTER 3 • THE MARKETING RESEARCH PROCESS AND DEFINING THE PROBLEM AND RESEARCH OBJECTIVES



4. Statement of deliverables. How and when will the research results be communicated?

A written report? An oral presentation? Will there be meetings with clients to discuss

implementation issues?

5. Cost. What are the expenses for the project? Which expenses are paid in advance and on

what dates? Which subcontractors are to be paid directly by the client?

6. Timetable. On what dates will the different stages of the research project be completed?

ETHICAL ISSUES AND THE RESEARCH PROPOSAL

The marketing research proposal process is an area where clients and researchers should

be sensitive to ethical issues. Clients should not expect marketing research firms to provide

value-added services prior to signing a contract. They should not provide one research company’s proposal to other research firms for the purpose of competitive bidding. The research

proposal, which may include many hours of work and contain details of proposed methods

and cost structures, should be viewed as proprietary information.19

Some specific codes from the standards of the Marketing Research Association deal with

issues related to the proposal:

Section A: All Marketing Research Association Members agree that they:

18. Work must be performed as specified in the agreement with the client.

19. … maintain trusted relationships with clients and research sponsors by keeping confidential all sensitive or proprietary research techniques, methodologies and business

information. Maintain the confidential identity of clients and research sponsors.

(MRA CODE OF MARKETING RESEARCH STANDARDS http://www.mra-net.

org/resources/documents/expanded_code.pdf, page 7)



Summary

Although there is great variability in marketing research

projects, there are enough commonalities among these

projects to enable us to characterize them in terms of

steps of the research process. The value in characterizing

research projects in terms of successive steps is that (1) the

steps give researchers and other parties an overview of the

entire research process, and (2) they provide a procedure in

the sense that a researcher, by referring to the steps, knows

what tasks to consider and in what order. The steps are

(1) establish the need for marketing research, (2) define the

problem, (3) establish research objectives, (4) determine

research design, (5) identify information types and sources,

(6) determine methods of accessing data, (7) design data

collection forms, (8) determine sample plan and size,

(9) collect data, (10) analyze data, and (11) prepare and

present the final research report.

The first step is determining the need to conduct marketing research. Can the needed information be obtained

from the internal reports system? From the marketing intelligence system? From the decision support system? If these

ongoing sources of information do not supply the needed

data, marketing research may be needed. Sometimes the

need to respond quickly to competition means there isn’t

time to conduct marketing research. Though placing a



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dollar figure on value is difficult, value can be estimated,

and a more informed decision may be made justifying or

not justifying marketing research.

Problems are situations calling for managers to make

choices among alternatives. Research objectives state specifically what information the researcher must produce so

that the manager can choose the correct alternative to solve

the problem. Figure 3.3 depicts a process that may be used

for defining the problem. There are two sources of problems. “Failure to meet an objective” arises when there is

a gap between what was supposed to happen and what did

happen. “Opportunity” refers to problems that arise when

there is a gap between what did happen and what could have

happened. Managers recognize problems either through

monitoring control systems (in the case of failure to meet

an objective) or through opportunity identification systems.

Symptoms are changes in the level of some key

monitor that measures the achievement of an objective.

Symptoms alert managers to both types of problems. The

researcher is responsible for ensuring that management

has properly defined the problem even in cases when

management has already defined the problem through

invitations to bid or requests for proposals. In many cases,

a situation analysis is required to help define the problem.



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REVIEW QUESTIONS/APPLICATIONS



When defining the problem, researchers must validate

the symptoms that alerted management to the problem to

ensure the symptoms are correctly reporting what they portend to report. Researchers should work with managers to

determine all possible causes for the symptoms.

Researchers should work with managers to reduce

all possible causes down to probable causes. The selection of a probable cause creates the decision. The decision

itself must specify alternatives that may be used to eliminate the symptom. Researchers must work with managers

to clearly state the decision alternatives and to determine

the consequences of each alternative. Researchers should

assess the assumptions managers have made in determining the consequences of each alternative. If the manager is

certain about the assumptions made, a decision alternative

may be selected without any further research. However, in

most cases, managers are uncertain about their assumptions. Lack of sufficient information creates an information gap, which serves as the basis for establishing research



87



objectives. Sometimes hypotheses are stated to help to

guide the development of the research objective.

A research objective is a goal-oriented statement or

question that specifies what information is needed to solve

a problem. Research objectives should be clear, specific,

and actionable.

Action standards refer to the predesignation of some

quantity of a measured attribute or characteristic that must

be achieved for a research objective for a predetermined

action to take place. Problem definition is sometimes

impeded because managers fail to change their normal

behavior of dealing with outside suppliers in an efficient

manner during problem-solving situations.

Marketing research proposals are formal documents

prepared by the researcher serving the functions of stating the problem, specifying research objectives, detailing

the research method, stating the deliverables and costs, and

specifying a timetable. There are ethical issues involved in

submitting and evaluating a research proposal.



Key Terms

11 steps in the marketing research

process (p. 68)

Field services firms (p. 73)

Problems (p. 74)

Marketing opportunity (p. 75)

Symptoms (p. 76)

Situation analysis (p. 76)

Decision alternatives (p. 78)



Consequences (p. 78)

Assumptions (p. 79)

Information state (p. 79)

Information gaps (p. 79)

Problem statement (p. 80)

Research objective (p. 80)

Hypotheses (p. 81)

Construct (p. 81)



Variables (p. 82)

Operational definition (p. 82)

Action standard (p. 83)

Marketing research proposal (p. 85)

Invitation to bid (ITB) (p. 85)

Request for proposal (RFP) (p. 85)



Review Questions/Applications

3-1. What are the steps in the marketing research

process?

3-2. Are all 11 steps in the marketing research process

used at all times? Why or why not?

3-3. Use an example to illustrate that the steps in the

marketing research process are not always taken in

sequence.

3-4. Explain why firms may not have a need for marketing research.

3-5. Why is defining the problem the most important step

in the marketing research process?

3-6. Discuss why defining the problem is really stating

the decision alternatives.

3-7. Explain why research objectives differ from the definition of the problem.

3-8. What is meant by the problem?

3-9. What is the research objective?



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3-10. What are the two sources of marketing problems?

3-11. Explain how managers should recognize they have a

problem.

3-12. What is the role of symptoms in problem recognition?

3-13. What is the role of the researcher when management

has already defined the problem?

3-14. What is a situation analysis, and when would it likely

be used in defining the problem?

3-15. What is the role of the researcher when management

has not already defined the problem?

3-16. In what respect do researchers act much like

detectives?

3-17. What is the difference between “all possible causes”

and “probable causes”?

3-18. What is meant by consequences of the decision

alternatives?



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CHAPTER 3 • THE MARKETING RESEARCH PROCESS AND DEFINING THE PROBLEM AND RESEARCH OBJECTIVES



3-19. Explain why it is importance for managers to make

assumptions in the process of defining a research

problem.

3-20. Explain the information state when there are information gaps.

3-21. What is needed to close information gaps?

3-22. What is the role of a hypothesis in defining the problem?

3-23. What are some relevant factors in determining

research objectives?

3-24. What role do constructs play in the problem definition/research objectives process?

3-25. What is an operational definition, and where would it

likely be used?

3-26. What is an action standard?

3-27. Discuss how a researcher and a manager can foster a

good working relationship in the process of defining

the research problem and objectives.

3-28. What are the elements of the marketing research

proposal?

3-29. Search the Internet for marketing research firms.

Choose one of them. What is the range of services

offered by it? What information does it require from

potential clients in order to determine costs and timescales of research projects?

3-30. Formulate a problem statement and research objectives for the following situations:



a. A Chinese manufacturer wants to investigate

whether or not Chinese nationals would be effective sales representatives in the European market.

b. A Japanese sushi chain wants to see if menu prices

should be broadly equivalent to home prices for

their new South Korean outlets.

c. A software manufacturer wants to gauge customer

reaction to automated updates initiated without

customer authorization.

d. An Indian tea cultivator wants to find out how to sell

his premium tea blends directly to the UK market.

3-31. Use the Internet to look for templates and other aids

that would help in creating a marketing research proposal. Analyze and assess five of them. In your view,

are these standardized formats suitable for most

instances? Do they contain all the elements required

to create a successful research proposal? Explain

how you would individualize the templates.

3-32. Observe a business in your community. Examine what

it does, what products or services it provides, how it

prices and promotes its products or services, and other

aspects of the business. If you managed the business,

would you have conducted research to determine the

firm’s products, design, features, prices, promotion,

and so on? If you decide you would not have conducted marketing research in a given area, explain why.



CASE 3.1

Golf Technologies, Inc.

Golf Technologies, Inc. (GTI) relies on high-level scientific

testing to design golf clubs that provide larger “sweet spots,”

resulting in fewer missed hits and maximum yardage. In the

last year, GTI discovered a technical breakthrough in club

design. Its newest clubs, for the same level of energy, hit the

golf ball longer than any existing clubs on the market. CEO

Harvey Pennick is very excited about this breakthrough and

believes these clubs will create a new level of excitement and

enthusiasm among players. Pennick is well aware that many

club manufacturers tout “new scientific breakthroughs” with

each year’s new model clubs. He also knows that consumers have become fairly immune to these claims. He believes

he must do something different to convince potential buyers

that the newest GTI clubs actually do have a larger sweet

spot and really do hit the ball farther. Armed with objective

tests that prove these claims, Pennick and his marketing staff

believe they need a highly credible golfer to be used in their

promotional materials (TV ads, magazine ads, infomercials,

and special event promotions). The credibility of the message in GTI’s promotions will be critical if golfers are to

really believe their claim of a breakthrough in club design.



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Pennick’s staff presents the two golfers whom they

believe are the best known: Rory McIlroy and Bubba

Watson. Both golfers are considered among the best in

the world and have very high name recognition. However,

both these golfers have exclusive contracts with other club

manufacturers. Both contracts have buyout clauses so, if

GTI is to hire either one of them, it will be expensive to

buy out the existing contract and to offer enough money

to attract one of these world-class golfers to be GTI’s new

spokesperson.

1. Assuming Pennick agrees with his staff on the choice

of McIlroy or Watson, what now is Pennick’s decision

in terms of decision alternatives?

2. Assuming Pennick is not confident in his assumptions

about the consequences of the outcomes associated

with your decision alternative, what should Pennick

consider doing?

3. If Pennick decides to conduct marketing research, write

the research objective.



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REVIEW QUESTIONS/APPLICATIONS



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CASE 3.2 INTEGRATED CASE

Auto Concepts

Recall back in Case 1.2 that Nick Thomas, CEO of Auto

Concepts, a new division of a large automobile manufacturer, has been slowly losing market share to other

competitors. Auto Concepts was created to reclaim the

manufacturer’s highly competitive level in the auto industry by developing new models that are more competitive in

today’s new car market.

Auto Concepts now has five different models that are

feasible in terms of engineering and production. Nick has

assigned tentative model names to them.

1. “Super Cycle,” one-seat all electric, mpg-e rating 125;

estimated MSRP (manufacturer’s suggested retail

price) $30,000; range 200 miles.

2. “Runabout Sport,” two-seat all electric, mpg-e 99; estimated MSRP $35,000; range 150 miles.

3. “Runabout Hatchback,” two-seat gasoline hybrid,

mpg-e 50; runs on battery for 50 miles and then

switches to gas engine; estimated MSRP $35,000;

range 250 miles.

4. “Economy Hybrid,” four-seat diesel hybrid, mpg-e 75;

runs on battery for 75 miles and then switches to efficient diesel engine; estimated MSRP $38,000; range

300 miles.

5. “Economy Standard,” five-seat economy standard gasoline, mpg 36; runs on gasoline with computer control

for maximum efficiency; estimated MSRP $37,000;

range 350 miles.

Note: mpg-e is a measure of the average distance traveled per unit of energy used. It is the U.S. Environmental

Protection Agency’s measure of efficiency when alternative

fuels (e.g., electricity) are used. It allows for a comparison

of new energy propulsion with the fuel efficiency.

Nick knows no single model will have universal appeal

to a huge market. Rather, different models will appeal to

market segments, and Auto Concepts will be sharing those

segments with other able competitors that are working just

as hard to develop car models that satisfy consumer needs

in those segments. In other words, Auto Concepts wants

to reach target markets for the models it produces without

wasting promotional dollars on those who aren’t interested

in the model. For example, if the company decides to produce a particular model, a decision must be made in terms

of choosing among media types (TV, radio, magazine,

newspaper, social media) in which to promote the product.

Nick would like to know each market segment’s media habits. Which TV show types do most people in each market



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prefer? Radio genres? Magazine types? Sections of local

newspapers? Also, the marketing department has moved to

spending large sums of the budget on online promotions.

Nick wants to know which market segments he can reach

through blogs, content communities such as YouTube,

social network sites such as Facebook, and online games

and virtual worlds.

Knowing that consumers like a particular medium is

not enough. For example, Nick may learn that the target

market for a particular model prefers one magazine type

over another, but there are many choices of magazines

within that type. Knowledge of the demographic profiles

of the target market segments can be helpful in selecting

one newspaper, one magazine, or one social medium for

a selected market. Because all media provide information

to potential advertisers on the demographics they reach,

Auto Concepts should have a demographic profile of each

market segment it attempts to target. To make the most

of that information, the carmaker needs information on

the demographics of those who most desire each model:

gender, age, size of hometown or city, marital status,

number of people in family, education, income, and

dwelling type.

In terms of positioning the cars, Nick knows fuel

economy will be the key motivator. In addition, he wants

to know if appealing to consumers’ concerns for global

warming will have an impact on sales. Auto Concepts is

making a major effort to reduce carbon emissions by moving to more efficient propulsion systems; should that effort

be a prominent part of its positioning statement in promotions and, if so, for which models? Nick gets a lot of mixed

information in the general information environment about

global warming. He wants to know what consumers think

about two issues: (1) Are consumers worried about global

warming? (2) Do they believe gasoline emissions contribute to global warming?

Finally, there is the Internet of Things factor: What innovations do consumers expect and desire on their autos

of the future? Do they wish for self- and/or assisted driving, types of infotainment, dashboard diagnostic features,

or other smartphone driving aids?

Assume that Nick Thomas decides to conduct marketing research and that the marketing researcher agrees with

the problems stated in this case.

1. State the problems.

2. Write the research objective for one of the problems

defined in your answer to the first question.



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4



Research Design



LEARNING OBJECTIVES

In this chapter you will learn:



Designing Research to Develop

Great Ideas



4-1 What research design is and why

it is important



Founded in Munich, Ger-



4-2 The three major types of research

design: exploratory, descriptive,

and causal



many (1989), Happy Think-



4-3 How exploratory research

design helps the researcher gain

understanding of a problem



world’s leading indepen-



ing People is one of the

dent qualitative marketing

research and consulting



4-4 The fundamental questions

addressed by descriptive

research and the different types

of descriptive research



companies. With offices in

Berlin, Munich, Paris, Zürich,

and Mumbai employing



4-5 What is meant by causal research

and to describe types of

experimental research designs

4-6 The different types of test

marketing and how to select

test-market cities



over 100 people, we have

over 25 years of in-depth

experience in understandSven Arn, Managing Director and

Partner, Happy Thinking People.



ing people across the globe

and in helping our clients to

build relationships between



“WHERE WE ARE”



brands, products, services, and their customers that lead to business

1 Establish the need for marketing



research.

2 Define the problem.

3 Establish research objectives.



▶



4 Determine research design.



success.

We have provided qualitative research training for ESOMAR and

BVM (the German Market Research Association) for over 15 years. In

2013 we were voted “Best in Class in Analysis” by the German Association of Market Researchers.



5 Identify information types and sources.



Happy Thinking People works for a wide range of clients and cat-



6 Determine methods of accessing data.



egories, focusing on four main areas: exploring markets, creating con-



7 Design data collection forms.



cepts, evaluating ideas, and brand consulting.



8 Determine the sample plan and size.



Exploring markets is about understanding people in the contexts,



9 Collect data.



places, and situations in which they make their decisions. We have a



10 Analyze data.



range of innovative tools working across the blurring boundaries of



11 Prepare and present the final research



online and offline from Brazil to Shanghai, from mobile ethnographies



report.



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and online communities to behavioral semiotics.



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