Chapter 3: Problem Definition: The Foundation of Business Research
Learning Outcomes
After studying this chapter, you should be able to
- Explain why proper “problem definition” is essential to useful business research
- Know how to recognize problems
- Translate managerial decision statements into relevant research objectives
- Translate research objectives into research questions and/or research hypotheses
Chapter Vignette: Deland Trucking Has a “Recruitment” Problem
David Deland, who has owned his trucking business for 20 years, struggles with the spreadsheet in front of him. His recruitment specialist sits glumly across from his desk, pondering what kind of response to give to the inevitable question, “Why are our recruitment costs so high?” Next to the specialist sits James Garrett, a business research consultant who has been hired by the Deland Trucking Company to get a handle on the recruitment expenses the company has seen skyrocket over the last six months.
“I just don't get it,” David sighs in frustration. “We have seen a 45 percent increase in our trucker recruitment advertising costs, and our trucker intake and orientation expenses are killing us! James, I just don't understand what is happening here.”
James and the specialist have had some initial discussions, but there is no easy way to reduce those costs without reducing the number of truckers that Deland hires. “Perhaps we can find a more efficient way of advertising our openings,” suggests the recruiting specialist. “Maybe we can reduce the number of orientation sessions or travel expenses associated with the hiring process.” David counters, “Well, I don't see how we are any different from our competitors. We use the same recruitment and orientation approach that they use. I have no handle on their expenses, but the fact that our expenses are skyrocketing must mean something is going on.”
James stares at his copy of the spreadsheet. “There is no easy way to do this, without hurting your ability to keep drivers in your trucks,” he says. “Is it that the costs for driver selection and recruitment have gone up?” “No, the costs have been the same,” responds the recruiter. “It's just that we have had to do so many orientation and hiring sessions since the first of the year.”
“David, it might be best if I get a look at some of your hiring statistics, as well as your driver census over the last year,” comments James. Turning to the recruiter, James asks, “Can you give me some of your driver data to look through?”
“Sure,” says the recruiter. “We have lots of info about our drivers, and the driver census is updated monthly. We even have some exit data we have gathered from a few drivers who have left us. I don't know exactly what the trend is with those drivers who leave, since we haven't had a chance to really analyze the data. I will send it to you through e-mail this afternoon.”
James drives back to his office, reflecting on his meeting. As he passes by trucks on the way, he peeks at the drivers who are going in the same direction as he is. What do they think about their company? Would they see Deland as a great place to work? What would make Deland Trucking's recruitment costs go so high?
At his office, the e-mail with the trucker census and the hiring data has already arrived. Opening the numerous spreadsheets, James continues to wonder. Does Deland Trucking have a recruitment problem? Is the problem the company itself? What is going on?
As he examines the hiring worksheet, he compares it to the driver census figures for the last six months. “There is the problem!” he exclaims. “I think I need to put together a proposal for David on this. I'm sure he will be surprised about what his company's problem really is.”
Introduction Importance of Starting with a Good Problem Definition
This chapter looks at this important step in the research process more closely. Some useful tools are described that can help translate the business situation into relevant, actionable research objectives. Research too often takes the blame for business failures when the real failure was really management's view of its own company's situation. The Research Snapshot “Good Answers, Bad Questions?” describes some classic illustrations involving companies as big and successful as Coca-Cola, R.J. Reynolds, and Ford. While the researcher has some say in what is actually studied, remember that the client (either the firm's management team or an outside sponsor) is the research customer and the researcher is serving the client's needs through research. In other words, when the client fails to understand their situation or insists on studying an irrelevant problem, the research is very likely to fail, even if it is done perfectly.
Translating a business situation into something that can be researched is somewhat like translating one language into another. It begins by coming to a consensus on a decision statement or question. A decision statement is a written expression of the key question(s) that a research user wishes to answer. It is the reason that research is being considered. It must be well stated and relevant. The researcher then further expresses these in precise and scientific research terminology by creating research hypotheses from the research objectives.
In this chapter, we use the term problem definition. Realize that sometimes this is really opportunity seeking. For simplicity, the term problem definition is adapted here to refer to the process of defining and developing a decision statement and the steps involved in translating it into more precise research terminology, including a set of research objectives. If this process breaks down at any point, the research will almost certainly be useless or even harmful. It will be useless if it presents results that simply are deemed irrelevant and do not assist in decision making. It can be harmful both because of the wasted resources and because it may misdirect the company in a poor direction.
Ultimately, it is difficult to say that any one step in the research process is most important. However, formally defining the problem to be attacked by developing decision statements and translating them into actionable research objectives must be done well or the rest of the research process is misdirected.
Problem Complexity
Ultimately, the quality of business research in improving business decisions is limited by the quality of the problem definition stage. This is far from the easiest stage of the research process. Indeed, it can be the most complex. Exhibit 3.1 helps to illustrate factors that influence how complex the process can be.
Situation Frequency
Many business situations are cyclical. Cyclical business situations lead to recurring business problems. These problems can even become routine. In these cases, it is easy to define problems and identify the
types of research that are needed. In some cases, problems are so routine that they can be solved without any additional research. Recurring problems can even be automated through a company's DSS.
For example, pricing problems often occur routinely. Just think about how the price of gas fluctuates when several stations are located within sight of each other. One station's prices definitely affect the sales of the other stations as well as of the station itself. Similarly, automobile companies, airline companies, and computer companies, to name just a few, face recurring pricing issues. Because these situations recur so frequently, addressing them becomes routine. Decision makers know how to communicate them to researchers and researchers know what data are needed.
Dramatic Changes
When a sudden change in the business situation takes place, it can be easier to define the problem. For example, if Deland's business had increased sharply at the beginning of the year, the key factors to study could be isolated by identifying other factors that have changed in that same time period. It could be that a very large trucking contract had been obtained, or that a current customer dramatically increased their distribution needs, which Deland is benefiting from.
In contrast, when changes are very subtle and take effect over a long period of time, it can be more difficult to define the actual decision and research problems. Detecting trends that would permanently affect the recruitment challenges that Deland faces can be difficult. It may be difficult to detect the beginning of such a trend and even more difficult to know whether such a trend is relatively permanent or simply a temporary occurrence.
Symptom Ambiguity
Ambiguity is almost always unpleasant. People simply are uncomfortable with the uncertainty that comes with ambiguity. Similarly, an environmental scan of a business situation may lead to many symptoms, none of which seem to point in a clear and logical direction. In this case, the problem area remains vague and the alternative directions are difficult to ascertain.
A retail store may face a situation in which sales and traffic are up, but margins are down. They may have decreased employee turnover, but lower job satisfaction. In addition, there may be several issues that
Research Snapshot
What Features Indian Women want in a Scooter?
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Hero Honda is initiating to understand specific needs of Indian women in a vehicle that they can use. Having a tough and strong body of their vehicle was really not wanted by Indian women when they sought an independent vehicle for their use. Hero Honda, during designing Pleasure scooter found that it is difficult for Indian women to handle a scooter which is heavy. While an iron body of the vehicle would give higher strength, however, is inconvenient for a woman rider.
What could they do to address that? They conducted several researches and found that the weight of the scooter as well as the position of stand of the scooter could be designed differently so that the vehicle weights light as well as standing and de-standing becomes much easier for women. They noticed how Indian women stand a vehicle, de-stand a vehicle, move a vehicle, and start a vehicle. Additionally, they also researched what quality of material could be used to construct the body of the scooter.
On the basis of the research, Hero Honda designed the scooter which is made of plastic and changed the position and type of the stand. Instead of inclined stand, Hero Honda designed article stand in such a way that it is easier for women to stand and de-stand the vehicle.
The Problem-Definition Process
Problems Mean Gaps
A problem occurs when there is a difference between the current conditions and a more preferable set of conditions. In other words, a gap exists between the way things are now and a way that things could be better. The gap can come about in a number of ways:1
- Business performance is worse than expected business performance. For instance, sales, profits, and margins could be below targets set by management. This is a very typical type of problem analysis. Think of all the new products that fail to meet their targeted goals. Trend analysis would also be included in this type of problem. Management is constantly monitoring key performance variables. Previous performance usually provides a benchmark forming expectations. Sales, for example, are generally expected to increase a certain percentage each year. When sales fall below this expectation, or particularly when they fall below the previous year's sales, management usually recognizes that they have a potential problem on their hands. The Research Snapshot “Why Did Our Employees Leave?” illustrates this point.
- Actual business performance is less than possible business performance. Realization of this gap first requires that management have some idea of what is possible. This may form a research problem in and of itself. Opportunity-seeking often falls into this type of problem-definition process. Many American and European Union companies have redefined what possible sales levels are based upon the expansion of free markets around the world. China's Civil Aviation Administration has relaxed requirements opening the Chinese air travel market to private airlines.2 Suddenly, the possible market size for air travel has increased significantly, creating opportunities for growth.
- Expected business performance is greater than possible business performance. Sometimes, management has unrealistic views of possible performance levels—either too high or too low. One key problem with new product introductions involves identifying realistic possibilities for sales. While you may have heard the old adage that 90 percent of all new products fail, how many of the failures had a realistic sales ceiling? In other words, did the company know the possible size of the market? In this case, the problem is not with the product but with the plan. Some product “failures” may actually have been successful if management had a more accurate idea of the total market potential. Management can close this gap through decision making. Researchers help managers make decisions by providing relevant input.
The Problem-Definition Process Steps
The problem-definition process involves several interrelated steps, as shown in Exhibit 3.2. Sometimes, the boundaries between each step aren't exactly clear. But generally, completing one step leads to the other and by the time the problem is defined, each of these steps has been addressed in some way. The steps are
- Understand the business situation—identify key symptoms
- Identify key problem(s) from symptoms
- Write managerial decision statement and corresponding research objectives
- Determine the unit of analysis
- Determine the relevant variables
- Write research questions and/or research hypotheses
EXHIBIT 3.2: The Problem-Definition Process View PDF
A separate section deals with each stage below.
Understand the Business Decision
A situation analysis involves the gathering of background information to familiarize researchers and managers with the decision-making environment. The situation analysis can be written up as a way of documenting the problem-definition process. Gaining an awareness of marketplace conditions and an appreciation of the situation often requires exploratory research. Researchers sometimes apply qualitative research with the objective of better problem definition. The situation analysis begins with an interview between the researcher and management.
Interview Process
The researcher must enter a dialogue with the key decision makers in an effort to fully understand the situation that has motivated a research effort. This process is critical and the researcher should be granted access to all individuals who have specific knowledge of or insight into this situation.
Researchers working with managers who want the information “yesterday” often get little assistance when they ask, “What are your objectives for this study?” Nevertheless, even decision makers who have only a gut feeling that the research might be a good idea benefit greatly if they work with the researcher to articulate precise research objectives.3 Even when there is good cooperation, seldom can key decision makers express the situation in research terms:
There are many ways to discover problems and spot opportunities. While there are other sources that address creative thinking in detail, some helpful hints that can be useful in the interview process include
- Develop many alternative problem statements. These can emerge from the interview material or from simply rephrasing decision statements and problem statements.
- Think about potential solutions to the problem.4 Ultimately, for the research to be actionable, some plausible solution must exist. After pairing decision statements with research objectives, think about the solutions that might result. This can help make sure any research that results is useful.
- Make lists. Use free-association techniques to generate lists of ideas. The more ideas, the better. Use interrogative techniques to generate lists of potential questions that can be used in the interview process. Interrogative techniques simply involve asking multiple what, where, who, when, why, and how questions. They can also be used to provoke introspection, which can assist with problem definition.
- Be open-minded. It is very important to consider all ideas as plausible in the beginning stages of problem solving. One sure way to stifle progress is to think only like those intimately involved in the business situation or only like those in other industries. Analogies can be useful in thinking more creatively.
Identifying Symptoms
Interviews with key decision makers also can be one of the best ways to identify key problem symptoms. Recall that all problems have symptoms just as human disease is diagnosed through symptoms. Once symptoms are identified, then the researcher must probe to identify possible causes of these changes. Probing is an interview technique that tries to draw deeper and more elaborate explanations from the discussion. This discussion may involve potential problem causes. This probing process will likely be very helpful in identifying key variables that are prime candidates for study.
In addition, the researcher should look for changes in company documents, including financial statements and operating reports. Changes may also be identified by tracking down news about competitors and customers. Exhibit 3.3 provides a summary of this approach.
Think back to the opening vignette. Often, multiple interviews are necessary to identify all the key symptoms and gain a better understanding of the actual business situation.
Researchers should make sure that they have uncovered all possible relevant symptoms and considered their potential causes. Perhaps more interview time with key decision makers asking why people choose Coke would have helped identify some of the less tangible aspects of the Coke-Pepsi-New Coke battle. Similarly, as seen in the Research Snapshot “Opportunity Is a Fleeting Thing,” the makers of automobiles in the United States should examine more carefully the possible ways that consumers make choices about the vehicles they buy. It can help avoid mistakes later.
Identifying the Relevant Issues from the Symptoms
Anticipating the many influences and dimensions of a problem is impossible for any researcher or executive. The preceding interview is extremely useful in translating the decision situation into a working problem definition by focusing on symptoms. The probing process discussed on pages 115–116 begins this process. However, the researcher needs to be doubly certain that the research attacks real problems and not superficial symptoms.
For instance, when a firm has a problem with advertising effectiveness, the possible causes of this problem may be low brand awareness, the wrong brand image, use of the wrong media, or perhaps too small a budget. Certain occurrences that appear to be the problem may be only symptoms of a deeper problem. Exhibit 3.4 illustrates how symptoms can be translated into a problem and then a decision statement.
To the Point
The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.
| EXHIBIT 3.4: Symptoms Can Be Confusing | ||||
| Firm'sSituation | Symptoms | Probable Problem | Decision Statement | |
| Research Action | Conduct Situation Analysis including interviews with key decision makers | Consider results of probing and apply creative processes | Express in actionable terms and make sure decision makers are in agreement | |
| Situation 1 | 22-year-old neighborhood swimming association seeks research help |
| Swim facility is outdated and does not appeal to younger families. Younger families and children have a negative image of pool. Their “old market” is aging. | What things can be done to energize new markets and create a more favorable attitude toward the association? |
| Situation 2 | Manufacturer of palmsized computer with wireless Internet access believes B2B sales are too low |
|
| What things can be done to improve competitive positioning of the new product in B2B markets? |
| Situation 3 | A new microbrewery is trying to establish itself |
| Is there a negative flavor gap? Do consumers appreciate the microbrew approach and the full beer tasting (as opposed to drinking) experience? | How can we encourage more consumers to come to the microbrew and try our products? Should we redesign the brewery to be more inviting? |
Writing Managerial Decision Statements and Corresponding Research Objectives
The situation analysis ends once researchers have a clear idea of the managerial objectives from the research effort. Decision statements capture these objectives in a way that invites multiple solutions. Multiple solutions are encouraged by using plural nouns to describe solutions. In other words, a decision statement that says in what “ways” a problem can be solved is better than one that says in what “way” a problem can be solved. Ultimately, research may provide evidence showing results of several ways a problem can be attacked.
Decision statements must be translated into research objectives. At this point, the researcher is starting to visualize what will need to be measured and what type of study will be needed. Exhibit 3.5 extends the examples from Exhibit 3.4, showing research objectives that correspond to each decision statement. Note that each research objective states a corresponding potential result(s) of the research project. Thus, in some ways, it is stating the information that is needed to help make the decision. Once the decision statement is written, the research essentially answers the question, “What information is needed to address this situation?”
Referring back to the opening vignette, the analysis of the symptoms has led to the conclusion that there is an employee retention problem. Perhaps drivers are dissatisfied with being away from their families for so long and this is leading to higher levels of driver turnover. Or, perhaps it is the cents per mile that is leading to driver frustration and a desire to go to a higher-paying competitor. David and James eventually agree on the following decision statement:
| EXHIBIT 3.5: Translating Decision Statements | ||||
| Decision Statement | Research Objectives | Research Questions | Research Hypotheses | |
| Research Action | Express in actionable terms and make sure decision makers are in agreement | Expresses potential research results that should aid decisionmaking | Ask a question that corresponds to each research objective | Specific statement explaining relationships, usually involving two variables, and including the direction of the relationship |
| Situation 1 | What things can be done to energize new markets and create a more favorable attitude toward the association? | Determine reasons whyf amilies may choose to join or not join a “swim club.” | How do the type of facilities and pricing relate to family attitudes toward a swim facility? | Child-friendly pool designs are positively related to attitudes toward the facility. Flexible pricing policies are positively related to attitudes toward the facility. |
| Situation 2 | What product features can be improved and emphasized to improve competitive positioning of the new product in B2B markets? | List actions that may overcome the objections (switching costs) of B2B customers toward adoption of the new product. | What are the factors that most lead to perceptions of high switching costs? | Perceived difficulty in learning how to use the new device is related to switching costs. Price is positively related to switching costs. Knowledge of new product is positively related to switching costs. |
| Situation 3 | How can we encourage more consumers to come to the microbrew and try our products? Should we redesign the brewery to be more inviting? | Describe how situational factors influence beer consumption and consumer attitudes toward beer products. List factors that will improve attitudes toward the microbrewery. | Do situational factors (such as time of day, food pairings, or environmental factors) relate to taste perceptions of beer? | Microbrew beer is preferred when consumed with food. An exciting atmosphere will improve consumer attitudes toward the microbrew. |
In what ways can Deland Trucking build driver loyalty so that retention increases and subsequent recruitment costs decrease?
What information or data will be needed to help answer this question? Obviously, we'll need to study the driver census and the number of hires needed to fill open positions. James needs to find out what might cause employee dissatisfaction and cause turnover to increase. Thinking back to the interview, James knows that there have been several changes in the company itself, many related to saving costs. Saving costs sounds like a good idea; however, if it harms driver loyalty even slightly, it probably isn't worth while. Thus, the corresponding research objectives are stated as follows:
- Determine what key variables relate to driver loyalty within the company, meaning (1) how does the lower level of pay impact driver retention and (2) what does the increase in long-haul trucking do to Deland Trucking's ability to increase retention?
- Assess the impact of different intervention strategies on driver satisfaction
These research objectives are the deliverables of the research project. A research study will be conducted that (1) shows how much each of several key variables relates to loyalty and retention and (2) provides a description of likelihood of different intervention strategies on driver satisfaction.
The researcher should reach a consensus agreement with the decision maker regarding the overall decision statement(s) and research objectives. If the decision maker agrees that the statement captures the situation well and understands how the research objectives, if accomplished, will help address the situation, then the researcher can proceed. The researcher should make every effort to ensure that the decision maker understands what a research project can deliver. If there is no agreement on the decision statement or research objectives, more dialogue between decision makers and researchers is needed.
Determine the Unit of Analysis
The unit of analysis for a study indicates what or who should provide the data and at what level of aggregation. Researchers specify whether an investigation will collect data about individuals (such as customers, employees, and owners), households (families, extended families, and so forth), organizations (businesses and business units), departments (sales, finance, and so forth), geographical areas, or objects (products, advertisements, and so forth). In studies of home buying, for example, the husband/wife dyad typically is the unit of analysis rather than the individual because many purchase decisions are made jointly by husband and wife.
Researchers who think carefully and creatively about situations often discover that a problem can be investigated at more than one level of analysis. For example, a lack of worker productivity could be due to problems that face individual employees or it could reflect problems that are present in entire business units. Determining the unit of analysis should not be overlooked during the problem-definition stage of the research.
Determine Relevant Variables
What Is a Variable?
What things should be studied to address a decision statement? Researchers answer this question by identifying key variables. A variable is anything that varies or changes from one instance to another. Variables can exhibit differences in value, usually in magnitude or strength, or in direction. In research, a variable is either observed or manipulated, in which case it is an experimental variable.
The converse of a variable is a constant . A constant is something that does not change. Constants are not useful in addressing research questions. Since constants don't change, management isn't very interested in hearing the key to the problem is something that won't or can't be changed. In causal research, it can be important to make sure that some potential variable is actually held constant while studying the cause and effect between two other variables. In this way, a spurious relationship can be ruled out. At this point however, the notion of a constant is more important in helping to understand how it differs from a variable.
What Is a Random Variable?
Random variable is a variable that assumes value from a measurement process which is a random process. In other words, occurrence of different values of a random variable is probabilistic within a particular range, and not deterministic. For instance, age of respondent is a random variable which might take value between 18 years and 80 years for a randomly selected respondent.
Types of Variables
There are several key terms that help describe types of variables. The variance in variables is captured either with numerical differences or by an identified category membership. In addition, different terms describe whether a variable is a potential cause or an effect.
A continuous variable is one that can take on a range of values that correspond to some quantitative amount. Consumer attitude toward different airlines is a variable that would generally be captured by numbers, with higher numbers indicating a more positive attitude than lower numbers. Each attribute of airlines’ services, such as safety, seat comfort, and baggage handling can be numerically scored in this way. Sales volume, profits, and margin are common business metrics that represent continuous variables.
A categorical variable is one that indicates membership in some group. The term classificatory variable is sometimes also used and is generally interchangeable with categorical variable. Categorical variables sometimes represent quantities that take on only a small number of values (one, two, or three). However, categorical variables more often simply identify membership.
For example, people can be categorized as either male or female. A variable representing biological sex describes this important difference. The variable values can be an “M” for membership in the male category and an “F” for membership in the female category. Alternatively, the researcher could assign a “0” for men and a “1” for women. In either case, the same information is represented.
A common categorical variable in consumer research is adoption, meaning the consumer either did or did not purchase a new product. Thus, the two groups, purchase or not purchase, comprise the variable. Similarly, turnover, or whether an employee has quit or not, is a common organizational variable.
In descriptive and causal research, the terms dependent variable and independent variable describe different variable types. This distinction becomes very important in understanding how business processes can be modeled by a researcher. The distinction must be clear before one can correctly apply certain statistical procedures like multiple regression analysis. In some cases, however, such as when only one variable is involved in a hypothesis, the researcher need not make this distinction.
A dependent variable is a process outcome or a variable that is predicted and/or explained by other variables. An independent variable is a variable that is expected to influence the dependent variable in some way. Such variables are independent in the sense that they are determined outside of the process being studied. That is another way of saying that dependent variables do not change independent variables.
For example, average customer loyalty may be a dependent variable that is influenced or predicted by an independent variable such as perceptions of restaurant food quality, service quality, and customer satisfaction. Thus, a process is described by which several variables together help create and explain how much customer loyalty exists. In other words, if we know how a customer rates the food quality, service quality, and satisfaction with a restaurant, then we can predict that customer's loyalty toward that restaurant. Note that this does not mean that we can predict food quality or service quality with customer loyalty.
Dependent variables are conventionally represented by the letter Y. Independent variables are conventionally represented by the letter X. If research involves two dependent variables and two or more independent variables, subscripts may also be used to indicate Y1, Y2 and X1, X2, and so on.
The process of identifying the relevant variables overlaps with the process of determining the research objectives. Typically, each research objective will mention a variable or variables to be measured
or analyzed. As the translation process proceeds through research objectives, research questions, and research hypotheses, it is usually possible to emphasize the variables that should be included in a study (as in Exhibits 3.5 and 3.6).
| EXHIBIT 3.6: Example Business Decision Situations, Corresponding Research Hypotheses, and Variable Descriptions | ||||
| Managerial Decision | Research Question(s) | Research Hypotheses | Categorical Variable(s) | Continuous Variable(s) |
| Retail grocer considering Web-based delivery service | Is there sufficient demand? How much should delivery personnel be paid? Will delivery service (new retail form) cannibalize current business? | Projected sales volume will exceed $5 M annually. Delivery personnel can be paid less than cashiers and achieve the same job satisfaction. Web customers express lower intentions to visit store than other customers. | Type of employee (delivery, cashier, etc.) Retail form (independent variable): classifies respondents based on whether they shopped(1) in store or (2) via the Web (delivery). | Sales volume: dollar amount based on a test trial in one geographic market (i.e., Phoenix/Scottsdale). Hourly wages and satisfaction with pay. Intentions to visit store (dependent variable): the percentage likelihood that a survey respondent would visit the store within the next 7 days. |
| What market segments should be served? | Does nationality matter? Will French and German consumers express interest in our product? Does the attitude toward Korean companies influence purchase intentions? | French consumers have more interest in purchasing our product than German consumers. Attitude toward Korean companies is related positively to product purchase interest. | Nationality (independent variable): represents which country a survey respondent lives in: (1) France (2) Germany. | Attitude toward Korean companies (independent variable): ratings scale that describes how favorably survey respondents view Korean companies (quality, reputation, value—higher scores mean better attitude). |
| Product purchase interest: ratings scale that shows how interested a consumer is in buying the Korean product (higher scores = more interest). | ||||
EXHIBIT 3.6: Example Business Decision Situations, Corresponding Research Hypotheses, and Variable Descriptions View PDF
Exhibit 3.6 includes some common business research hypotheses and a description of the key variables involved in each. In the first case, a regional grocery chain is considering offering a delivery service that would allow consumers to purchase groceries via the store Web site. They have conducted a trial of this in one market and have conducted a survey in that area. In the second case, a Korean automobile company is considering offering one of its models for sale in Europe. The company has also conducted a survey in two key European auto markets.
Write Research Objectives and Questions
Both managers and researchers expect problem-definition efforts to result in statements of research questions and research objectives. At the end of the problem-definition stage, the researcher should prepare a written statement that clarifies any ambiguity about what the research hopes to accomplish. This completes the translation process.
Research questions express the research objectives in terms of questions that can be addressed by research. For example, one of the key research questions involved in the opening vignette is “Are wages and long-haul distance related to driver loyalty and retention?” Hypotheses are more
specific than research questions. One key distinction between research questions and hypotheses is that hypotheses can generally specify the direction of a relationship. In other words, when an independent variable goes up, we have sufficient knowledge to predict that the dependent variable should also go up (or down as the case may be). One key research hypothesis for Deland Trucking is:
Higher cents per mile are related positively to driver loyalty.
At times, a researcher may suspect that two variables are related but have insufficient theoretical rationale to support the relationship as positive or negative. In this case, hypotheses cannot be offered. At times in research, particularly in exploratory research, a proposal can only offer research questions. Research hypotheses are much more specific and therefore require considerably more theoretical support. In addition, research questions are interrogative, whereas research hypotheses are declarative.
To the Point
I don't know the key to success, but the key to failure is trying to please everybody.
—Bill Cosby
Clarity in Research Questions and Hypotheses
Research questions make it easier to understand what is perplexing managers and to indicate what issues have to be resolved. A research question is the researcher's translation of the marketing problem into a specific inquiry.
A research question can be too vague and general, such as “Is advertising copy 1 better than advertising copy 2?” Advertising effectiveness can be variously measured by sales, recall of sales message, brand awareness, intention to buy, recognition, or knowledge, to name a few possibilities. Asking a more specific research question (such as, “Which advertisement has a higher day-after recall score?”) helps the researcher design a study that will produce useful results, as seen in the Research Snapshot “Pricing Turbulence.” Research question answers should provide input that can be used as a standard for selecting from among alternative solutions. Problem definition seeks to state research questions clearly and to develop well-formulated, specific hypotheses.
A sales manager may hypothesize that salespeople who show the highest job satisfaction will be the most productive. An advertising manager may believe that if consumers’ attitudes toward a product are changed in a positive direction, consumption of the product also will increase. Hypotheses are statements that can be empirically tested.
A formal hypothesis has considerable practical value in planning and designing research. It forces researchers to be clear about what they expect to find through the study, and it raises crucial questions about data required. When evaluating a hypothesis, researchers should ensure that the information collected will be useful in decision making. Notice how the following hypotheses express expected relationships between variables:
- There is a positive relationship between buying on the Internet and the presence of younger children in the home.
- Sales are lower for salespeople in regions that receive less advertising support.
- Consumers will experience cognitive dissonance after the decision to adopt a TiVo personal video recorder.
- Opinion leaders are more affected by mass media communication sources than are non-leaders.
- Among non-exporters, the degree of perceived importance of overcoming barriers to exporting is related positively to general interest in exporting (export intentions).5
Management is often faced with a “go/no go” decision. In such cases, a research question or hypothesis may be expressed in terms of a meaningful barrier that represents the turning point in such a decision. In this case, the research involves a managerial action standard that specifies a specific performance criterion upon which a decision can be based. If the criterion to be measured (for example, sales or attitude changes) turns out to be higher than some predetermined level, management will do A; if it is lower, management will do B.6 In Exhibit 3.6, the specified sales volume of $5 million represents a managerial action standard for the retail grocery chain.
Research Snapshot
Pricing Turbulence
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A heavy equipment distributor sought out research because it believed there was an opportunity to increase revenues by raising prices. After several weeks of discussion, interviews, and proposal reviews, they settled on a decision question that asked, “In what ways could revenues be increased by altering pricing policies across customers?” A research project was conducted that offered the following deliverables: (1) demonstrate how much customer characteristics and environmental characteristics influence price elasticity and (2) identify market segments based on price elasticity. This led to several hypotheses including the following:
H1: The desired delivery time for equipment is negatively related to price sensitivity.
H2: The degree of market turbulence is negatively related to price sensitivity.
In addition, a research question specifically addressing market segments was asked:
RQ1: Are there market segments that can be identified based on customers’ desired benefits or environmental characteristics?
In other words, the more critical a piece of heavy equipment is to a company, the less concerned they are with the price. Similarly, customers are less concerned with price in markets that are more turbulent, meaning there are ever-changing environmental, competitive, and political pressures.
A study of heavy equipment purchasers around the world supported both hypotheses. For business segments where delivery time is of critical importance, higher prices can be charged without the fear of losing business. Similarly, in turbulent international markets, customers have other important concerns that make them less sensitive to equipment price and more sensitive to reliability and service. In the end, the heavy equipment company was able to build customer characteristics data into a DSS system that automated prices.
Interestingly, management did not express any concerns about either market segments or market turbulence in the initial interviews. Thus, this research succeeded because good research objectives, questions, and hypotheses were developed before any study was implemented.
Sources: Smith, M.F., I. Sinha, R. Lancianai, and H. Forman, “Role of Market Turbulence in Shaping Pricing,” Industrial Marketing Management 28 (November 1999), 637–649; Peters, G., “Combating Too Much Information,” Industrial Distribution 94 (December 2005), 22.
How Much Time Should Be Spent on Problem Definition? Budget constraints usually influence how much effort is spent on problem definition. Business situations can be complex and numerous variables may be relevant. Searching for every conceivable cause and minor influence is impractical. The more important the decision faced by management, the
Tips of the Trade
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- Researchers should allocate a substantial amount of time toward identifying and refining decision statements, research problems and questions, and research hypotheses. This is a way that the relevance of the research can be increased.
- Use qualitative research tools to probe the key decision makers during early interviews.
- Ask what has changed.
- Ask the decision maker to tell more about situations for clarification.
- Ask the decision maker to compare and contrast situations.
- Express decision statements in creative terms whenever possible. For example, state them in plural form by using terms such as “what ways” might solve a problem rather than trying to find “the way” to solve a problem.
- Research questions and research hypotheses clearly identify the variables that need to be studied.
- Dummy tables are a very effective way to communicate exactly how a research problem might be linked to better decision making.
EXHIBIT 3.7: Influence of Decision Statement of Marketing Problem on Research Objectives and Research Designs View PDF
more resources should be allocated toward problem definition. While not a guarantee, allowing more time and spending more money will help make sure the research objectives that result are relevant and can demonstrate which influences management should focus on.
Managers, being responsible for decision making, may wish the problem-definition process to proceed quickly. Researchers who take a long time to produce a set of research objectives can frustrate managers. However, the time taken to identify the correct problem is usually time well spent.
Problem Definition: The Foundation of Business Research: Multiple Choice Questions
1. A researcher is conducting an experiment in which different formats of a prospectus sent to prospective investors are manipulated. The format of the prospectus is considered to be a(n) ______.
a. constant
b. unit
c. dependent variable
d. variable
2. All of the following are types of variables EXCEPT ______.
a. continuous
b. categorical
c. constant
d. dependent
3. A variable that can take on a range of values that correspond to some quantitative amount is called a ______.
a. categorical variable
b. continuous variable
c. classificatory variable
d. independent variable
4. A(n) ______ is a process outcome or a variable that is predicted and/or explained by other variables.
a. primary variable
b. absolute variable
c. dependent variable
d. independent variable
5. A(n) ______ variable is one that is expected to influence the dependent variable in some way.
a. primary
b. interactive
c. independent
d. first-order
6. Which of the following expresses the research objectives in terms of questions that can be addressed by research?
a. situation analysis
b. dependent variable
c. research question
d. independent variable
7. A statement such as: “Increasing price five percent will cause sales to drop by eight percent or more,” is an example of a ______.
a. hypothesis
b. dependent variable
c. problem definition
d. research objective
8. A specific performance criterion upon which a decision can be based is called a(n) ______.
a. managerial action standard
b. managerial benchmark
c. unit of analysis
d. standardized variable
9. Todd has prepared a document that includes the deliverables and a definition of the problem for a research client. In this document, he described how he will conduct a survey along with a schedule of costs and deadlines. What is this document called?
a. research proposal
b. research statement
c. research blueprint
d. managerial action statement
10. _____ refers to basic research usually performed by academic researchers that is financially supported by some public or private institution, as in federal government grants.
a. Philanthropic business research
b. Priority business research
c. Underwritten business research
d. Funded business research
Problem Definition: The Foundation of Business Research: Reviewcard
| Learning Objectives | Key Concepts |
| Explain why proper “problem definition” is essential to useful business research. | Problem definition is the process of defining and developing a decision statement and the steps involved in translating it into more precise research terminology, including a set of research objectives. While it is difficult to point to any particular research stage as the most important, a strong case can be made for this, the first stage. If this step falls apart, the entire research design is misguided. Effective problem definition helps make sure the research objectives are relevant and useful—meaning the results will actually be used. If problem definition is glossed over or done poorly, the results are likely irrelevant and potentially harmful. |
| Know how to recognize problems. | Problems and opportunities are usually associated with differences. The differences can occur because of changes in some situation, or they can occur because expectations were unrealistic. Problems occur when there is a difference, or gap, between the current situation and a more ideal situation. One very common type of gap is when business performance does not match the expectations of performance in that dimension. In addition, opportunities exist when actual performance in some area does not match the potential performance. Research can supply information to help close the gap. Thus, problems are noticed by spotting these gaps. While many of these gaps may just be symptoms, further steps are taken to make sure that research addresses relevant issues, not just symptoms. |
| Translate managerial decision statements into relevant research objectives. | The problem-definition process outlined in the chapter can help make sure that the research objectives are relevant. A situation analysis is helpful in this regard. In particular, interviews that identify symptoms and then probe the respondent for potential causes of these symptoms are helpful. One tool to help in this process is the “what has changed?” technique. The research objectives, once written, also indicate what variables are likely needed in the study. |
| Translate research objectives into research questions and/or research hypotheses. | Research questions simply restate the research objectives in the form of a question. When the researcher has sufficient theoretical reasoning to make a more specific prediction that includes the direction of any predicted relationship, the research question can be translated into one or more research hypotheses. |
Key Definitions
- decision statement A written expression of the key question(s) that the research user wishes to answer.
- problem definition The process of defining and developing a decision statement and the steps involved in translating it into more precise research terminology, including a set of research objectives.
- Problem Occurs when there is a difference between the current conditions and a more preferable set of conditions.
- situation analysis The gathering of background information to familiarize researchers and managers with the decision-making environment.
- interrogative techniques Asking multiple what, where, who, when, why, and how questions.
- Probing An interview technique that tries to draw deeper and more elaborate explanations from the discussion.
- unit of analysis A study indicates what or who should provide the data and at what level of aggregation.
- Variable Anything that varies or changes from one instance to another; can exhibit differences in value, usually in magnitude or strength, or in direction.
- Constant Something that does not change; is not useful in addressing research questions.
- random variable A variable that assumes value from a measurement process which is a random process.
- continuous variable A variable that can take on a range of values that correspond to some quantitative amount.
- categorical variable A variable that indicates membership in some group.
- classificatory variable Another term for a categorical variable because it classifies units into categories.
- dependent variable A process outcome or a variable that is predicted and/or explained by other variables.
- independent variable A variable that is expected to influence the dependent variable in some way.
- research questions Express the research objectives in terms of questions that can be addressed by research.
- managerial action standard A specific performance criterion upon which a decision can be based.
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