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Part Two
Beginning Stages of the Research Process
Chapter 6
Problem Definition: The Foundation of Business
Research
AT-A-GLANCE
I. Introduction
A. Importance of starting with a good problem definition
B. Problem complexity
Situation frequency
Dramatic changes
How widespread are the symptoms?
Symptom ambiguity
II. The Problem-Definition Process
A. Problems mean gaps
B. The problem-definition process steps
C. Understand the business decision
Interview process
Identifying symptoms
D. Identifying the relevant issues from the symptoms
E. Writing managerial decision statements and corresponding research objectives
F. Determine the unit of analysis
G. Determine relevant variables
What is a variable?
Types of variables
H. Write research objectives and questions
III. Clarity in Research Questions and Hypotheses
IV. How Much Time Should Be Spent on Problem Definition?
V. The Research Proposal
A. The proposal as a planning tool
B. The proposal as a contract
C. Anticipating outcomes
Dummy tables
Example dummy table
LEARNING OUTCOMES
1. Explain why proper “problem definition” is essential to useful business research
2. Know how to recognize problems
3. Translate managerial decision statements into relevant research objectives
4. Translate research objectives into research questions and/or research hypotheses
5. Outline the components of a research proposal
6. Construct dummy tables as part of a research proposal
CHAPTER VIGNETTE: Deland Trucking Has a “Recruitment” Problem
David Deland, the owner of Deland Trucking is concerned about his company’s recruitment costs that
have skyrocketed over the last six months. James Garrett, a business research consultant, has been hired
by Deland Trucking Company to get a handle on these costs. David thinks it is the increasing costs of
advertising, but James wants to look deeper. He compares the driver census data for the last six months
and finds the real problem.
SURVEY THIS!
Students are asked to look at the portion of the survey shown and to address the following:
Identify at least three decision statements that might have driven the construction of this
questionnaire.
Translate each decision statement from above into a research question and the related
research hypothesis or hypotheses.
What would a dummy table look like that might provide the data for these hypotheses?
What types of companies might be interested in this information?
Would any nonprofit institutions be interested in this data?
RESEARCH SNAPTSHOTS
Good Answers, Bad Questions?
Sometimes even the most successful companies make huge blunders that are often based on a
misunderstanding of exactly what the brand and/or product means to consumers. Some famous
blunders discussed are RJR’s introduction of a smokeless cigarette, Ford’s Edsel, and new Coke.
The blame is often placed on the researcher, but hindsight shows that the wrong questions were
asked. Management considered Coke as a beverage, not a brand, and thus, they concentrated on
taste and ignored the psychological meaning of Coke. The name of the Edsel could have led to its
demise, but that name was never tested (but hundreds of others were). Research did not address
whether or not taking the “smoke” out of “smoking” is the same thing.
Poor Questions Result in Poor Research in Japan!
French conglomerate BSN noted that the Japanese were becoming more Westernized and decided
to target that country as a priority market for its yogurt. BSN conducted research and the study
reported that Japanese consumers were indeed becoming more Westernized in their food choices
and eating habits and appeared to offer a strong potential market for yogurts. Sales, however,
were disappointing. BSN conducted further research and found that the “Yes/No” questions
asked previously were too simplistic and most Japanese consumers were simple too polite to
reply “No.” Furthermore, the respondents did not want to offend the researchers by criticizing
ads featuring a spoon as an eating utensil. As a result, the data was very misleading and presented
an overly optimistic picture of the market.
Opportunity Is a “Fleeting” Thing
Automobile companies thought Europeans prefer smaller or “light-cars,” so most were slow to
enter the SUV market. By 2004, however, European SUV sales reached 16.5 million units, and
today, Nissan, Toyota, Land Rover, and Suzuki are major players. Could it be that several
prominent automobile companies missed opportunities in Europe because they failed to know
how big the market truly was? On the flip side, the SMART car (a tiny car by U.S. standards) has
been introduced in the United States. While sales got off to a fast start, they slowed. However,
SMART may now be poised to take advantage of an opportunity created by the current $4.00 a
gallon gas prices. U.S. producers are turning production toward new entrants like the Chevrolet
Volt. Their success may also depend on the exchange rate, which presently makes European
entries expensive in the U.S. There might be a SMART SUV in the future.
Pricing Turbulence
A heavy equipment distributor sought out research because it believed there was an opportunity to
increase revenues by raising prices. A research project was conducted that demonstrated how
much customer characteristics and environmental characteristics influenced price elasticity and
identified market segments based on price elasticity. The research supported the hypotheses that
for business segments where delivery time was of critical importance, higher prices can be
charged. Similarly, in turbulent international markets, customers were less price sensitive. The
company was able to build in customer characteristics into a DSS that automated prices.
OUTLINE
I. INTRODUCTION
Importance of Starting with a Good Problem Definition
The chances that a research project will prove useful are directly related to how well the
research objectives correspond to the true business “problem.”
When the client fails to understand their situation, or when they insist on studying an
irrelevant problem, the research is very likely to fail even if it is done properly.
Translating a business situation into something that can be researched 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.
The term 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.
Problem Complexity
This stage of the research process can be the most complex.
Factors influencing problem complexity include:
Situation Frequency – cyclical, routine problems are easier to define.
Dramatic changes – when sudden change in the business situation takes place, it
can be easier to define the problem.
How Widespread are the Symptoms? – the more scattered any symptoms are,
the more difficult it is to put them together into some coherent problem
statement.
Symptom Ambiguity – the greater the ambiguity of the symptoms, the more
difficult it is to define the problem.
II. 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 (i.e., a gap exists between the way things are now and the
way that things could be better).
A gap can come about in a number of ways:
1. Business performance is worse than expected (e.g., sales, profits, margins are below
targets set by management).
2. Actual business performance is less than possible business performance (note that
realization of this gap first requires that management have some idea of what is
possible).
3. Expected business performance is greater than possible business performance.
The Problem-Definition Process Steps
1. Understand the business situation – identify the key symptoms.
2. Identify key problem(s) from symptoms.
3. Write managerial decision statement and corresponding research objectives.
4. Determine the unit of analysis.
5. Determine the relevant variables.
6. Write research questions and/or research hypotheses.
Understand the Business Decision
A situation analysis involves the gathering of background information to familiarize
researchers and managers with the decision-making environment.
Often requires exploratory research.
The situation analysis begins with an interview between the researcher and management.
Interview Process
Researcher should be granted access to all individuals who have specific knowledge or
insight of the situation.
It is important that the researcher not blindly accept a convenient problem definition for
expediency’s sake.
Helpful hints that can be useful in the interview process include:
1. Develop many alternative problem statements.
2. Think about potential solutions to the problem.
3. Make lists – use free association and interrogative techniques (i.e., asking multiple
what, where, who, when, why, and how questions).
4. Be open-minded.
Identifying Symptoms
Probing is an interview technique that tries to draw deeper and more elaborate
explanations from the discussion with key decision makers.
One of the most important questions to ask – “What has changed?” (i.e., customers,
competitors, internal conditions of the company and in the external environment).
Then, the researcher should probe to identify potential causes of the change.
Identifying the Relevant Issues from the Symptoms
Exhibit 6.4 illustrates how symptoms can be translated into a problem and then a decision
statement.
Writing Managerial Decision Statements and Corresponding Research Objectives
Decision statements should capture objectives in a way that invites multiple solutions.
At this point, the researcher is starting to visualize what will need to be measured and what
type of study will be needed.
Each research objective should state a corresponding, potential result(s) of the research
project.
The researcher should reach a consensus agreement with the decision maker regarding the
overall decision statement(s) and research objectives before proceeding.
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 (i.e., individuals, households, organizations, departments, geographical
areas, or objects).
A problem may be investigated at more than one level of analysis.
Determine Relevant Variables
What Is a Variable?
A variable is anything that varies or changes from one instance to another.
Can exhibit differences in value, usually in magnitude or strength, or in direction.
It is either observed or manipulated.
Converse of a variable is a constant (i.e., something that does not change).
Types of Variables
Continuous variable – one that can take on a range of values that correspond to some
quantitative amount (e.g., sales volume, profits, and margin).
Categorical variable (a.k.a. classificatory variable) – one that indicates membership in
some groups (e.g., male or female, 1, 2, or 3).
Dependent variable – a process outcome or a variable that is predicted and/or explained
by other variables (conventionally represented by the letter Y).
Independent variable – variable that is expected to influence the dependent variable in
some way (conventionally represented by the letter X).
Dependent variables will not change independent variables.
Managers and researchers must be careful to identify relevant (i.e., a change in the
variable matters) and actionable (i.e., a variable can be controlled by managerial actions)
variables.
Theory should help distinguish relevant from superfluous variables.
Write Research Objectives and Questions
Research questions express the research objectives in terms of questions that can be
addressed by research.
Hypotheses are more specific than research questions, and one key distinction is that
hypotheses can generally specify the direction of a relationship.
Research questions are interrogative whereas research hypotheses are declarative.
III. CLARITY IN RESEARCH QUESTIONS AND HYPOTHESES
A research question is the researcher’s translation of the problem into a specific inquiry.
Asking specific research questions helps the researcher design a study that will produce
useful results.
A formal hypothesis has considerable practical value in planning and designing research
because it forces researchers to be clear about what they expect to find through the study, and
it raises crucial questions about data required.
In cases of a “go/no go” decision, the research involves a managerial action standard that
specifies a specific performance criterion upon which a decision can be based.
Objectives should be limited to a manageable number.
IV. HOW MUCH TIME SHOULD BE SPENT ON PROBLEM DEFINITION?
Budget constraints usually influence how much effort is spent on problem definition.
Generally, allowing more time and money will help make sure the research objectives that
result are relevant and can demonstrate which influences management should focus on.
V. THE RESEARCH PROPOSAL
The research proposal is a written statement of the research design.
Always includes a statement explaining the purpose of the study (in the form of research
objectives and deliverables) and a definition of the problem – often in the form of a decision
statement.
Outlines the particular research methodology and details procedures that will be used during
each stage of the process.
Normally includes a schedule of costs and deadlines.
Becomes the primary communication document between the research doer and the research
user.
The Proposal as a Planning Tool
Preparation of the proposal forces the researcher to think critically about each stage of the
research process.
Researcher submits the proposal to management for acceptance, modification, or
rejection.
Research clients (management) evaluate the proposal with respect to whether or not it
will provide useful information and will do it within a reasonable resource budget.
The proposal must be explicit about sample selection, measurement, fieldwork, and data
analysis.
Exhibit 6.9 presents an overview of some of the basic questions that managers and
researchers typically must answer when planning a research design.
The Proposal as a Contract
The written proposal serves as an outside research supplier’s bid to offer a specific
service, and clients typically solicit several competitive proposals.
Wise researchers will not agree to do a research job for which no written proposal exists.
The proposal is in many ways the same as the final research report without the actual
results.
Both the researcher and the client should sign the proposal indicating agreement on what
will be done, thus protecting both party’s interests.
Funded business research generally refers to basic research usually performed by
academic researchers and supported by some public or private institution.
Anticipating Outcomes
Dummy Tables
Placed in research proposals and are exact representations of the actual tables that
will show results in the final report, except the results are hypothetical.
The researcher fills in, or “dummies up,” the tables with likely but fictitious data so
that decision makers can determine if this is the information they desire.
Example Dummy Table
Exhibit 6.10 shows a dummy table taken from the research proposal for David
Deland’s trucking company (see chapter vignette).
Tables should stand alone and be interpreted by someone who is not an experienced
researcher.
When the final report is compiled, these tables will be included with the results replaced
with the actual research results.
