Basics Of Business Research

Basic Concept & Business

Research Vocabulary
• Hypothesis  a proposition
(statement) that is empirically testable
• Deductive Reasoning is the logical process of
deriving a conclusion about a specific instance based on a
known general premise or something known to be true. (e.g.
all students are human being--- Daneesh is a student, then we
can deduce that Daneesh is a human being)
• Inductive Reasoning is the logical process of
establishing a general proposition on the basis of observation
of particular facts. (e.g. all students that have ever been seen
are human beings; therefore, all students are human beings)
 Research Vocabulary (cont.)

• Variables Anything that may assume

different numerical values (e.g. gender, religion,
age etc.)
• Independent Variables
• Dependent Variables
• Moderating Variables\
-- Example: The switch to commission from a
salary compensation system (IV) will lead to
increased sales productivity (DV) per worker,
especially among young workers(MV)
 The
Research Process
 THE RESEARCH PROCESS

Every research project is

different and unique.
However, research procedures
and activities are common and
constitute the research process .
 Research Process Defined:

• This process:
– is well-organized sequence of 9
steps involved in the systematic
collection and analysis of marketing
data.
– provides a description of how a
marketing investigation is designed
and implemented, and helps to guide
the execution of a research project.
 The Research Process: 9 Steps

1. Define the Problem

2. Establish Research Objective
3. Determine Research Design & Data Sources
4. Determine Methods & instrument of Data
Collection
5. Determine Sample Plan and Sample Size
6. Data Collection
7. Data Processing
8. Data Analysis
9. Prepare and Present Final Report
 The Research Process

• A 9 step process: there is nothing

magic about 9 steps

• Not all studies use all 9 steps

• Few studies follow the steps in order

 Step 1: Define the research problem

• The very first, and the most important step in

research:
– “A problem well-defined is half solved” Anonymous

– “The formulation of the problem is often more essential than

its solution” Albert Einstein

• Nature of the problem determines the type of study to

conduct.
– Symptoms, for example, declining sales, profit, market
share, or customer loyalty are not problems.
– Loss of market share is a symptom;
reason for the loss is the problem.
 Step 1: Define the research problem
• A research problem must be accurately and
precisely defined, otherwise the task of
designing a good research difficult.

• Marketing problems may be difficulty-related or

opportunity-related. For both, the prerequisite of
defining the problem is to identify and diagnose
it.
 Step 2: Establish Research Objectives

• “If you do not know what you are looking for,

you won’t find it”
• Research objectives, when achieved, provide the
information necessary to solve the problem identified in
step 1.
• Research objectives state what the researchers must
do.
• In establishing research objectives, the researcher must
answer the following questions:
 What specific information should the project provide?
 If more than one type of information will be developed from
the study, which is the most important?
 What are the priorities?
 Step 2: Establish Research Objectives

• When specifying research objectives,

development of hypotheses, might be
very helpful.

• When achieved, objectives provide

the necessary information to solve the
problem.
Step 2: Establish Research Objectives

• Example of Subaru Motors America

• Management problem: What can Subaru do to expand

its share of the automobile market?

• To conduct market research – need to define the

problems more precisely
Q.1 What needs do buyers of passengers cars, and
station wagons seek to satisfy?
Q.2 How well do existing automobile product offerings
meet these needs?
 Step 3: Research Design

• Research Design step involves the

development of a research plan for carrying
out the study.
– There are a number of alternative research designs. The choice
will largely depend on the research purpose.
 Step 3: Research Design

M A R K E T IN G R E S E A R C H

Q U A L IT A T IV E R E S E A R C H Q U A N T IT A T IV E R E S E A R C H

EXPLO RATO RY D E S C R IP T IV E CAUSAL

F o c u s G ro u p ; S u rv e y re s e a rc h L a b o r a t o r y E x p e r im e n t
O b s e r v a t io n ; F ie ld E x p e r im e n t
O th e rs .
 Step 3: Research Design
Qualitative (focus groups and depth interviews)

• generally used for exploratory purposes

• small number of respondents
• Much more interactive and involved 2-way
conversations and engagements
• generally softer and yields more subjective
information
 Step 3: Research Design
Example: Rose Petal Focus Group –
initiation of a new product line – tissue of
a different color

Characteristics of Focus Groups:

 Within closed doors
 Moderated
 Conducive environment
 Representatives of target segment
 Step 3: Research Design

Quantitative (Survey and Questionnaires)

• generally used to draw conclusions

• tests a specific hypothesis
• uses random sampling to infer for population
• involves a large number of respondents
• Numeric research. Very formal
Step 4: Specify the information required

• After defining the problem the

researcher must determine what
kind of information will best meet the
research objectives.

– Secondary information
– Primary information
Step 4: Specify the information required

• Secondary data:
have previously been gathered by someone
other than the researcher and/or for some
other purpose than the research project at
hand

– Internal e.g. such as invoices and warranty

cards, Customer records, sales data

– External e.g. Public commercially available

data
 Step 4: Specify the information
required
Advantages
• Secondary data are obtained
quickly.
• Secondary data are
inexpensive relative to
primary data.
• Secondary data are usually
available.
• Secondary data enhances
existing primary data.
• Secondary data may achieve
the research objective.
Disadvantages
• Incompatible reporting
units…need zip code data
and only have County data.
• Measurement units do not
match…need per capita
income and only have
household income.
• Class definitions are not
usable…need to know
percent of population with
income above $100k and
only have $50k and over.
• Outdated Data
 Step 4: Specify the information
required
• Primary data:
Refers to the information that is developed or gathered
by the researcher specifically for the research project at
hand.
• Some common types of primary data:
– Demographic and socio-economic characteristics Psychological
and life-style characteristics
– Attitudes and opinions
– Awareness and knowledge like brand awareness
– Intention, like purchase intention, while useful, may not be a
reliable indication of actual future behavior
– Motivation – this is more reliable than a person’s behavior, so
motivation is a better predictor of future behavior than is past
behavior. It is a precursor to behavior.
– Past behavior.
Step 5: Design the Information collection
methods
• Business research information may be
collected in many ways:

1. Secondary Research
2. Focus Group Interviews
3. Mail Surveys
4. Telephone Interviewing
5. Personal Interviewing
6. Product Placement
7. Test Marketing
 Step:5 Sample Design

• Most field market research relies on taking a sample

from the stated population.

• “Population” is not necessarily a group of individual

human beings – it is a statistical term covering
people, companies, school, etc. from which the
sample is to be drawn.

• Sampling strategy involves three stages:-

 
• Defining the population or target group.
• Determining sample size
• Choosing the right type of sample.
 Probability Samples
Simple random sample:
Every member has a known and equal chance of selection
Stratified sample:
Population is divided into mutually exclusive groups (such
as gender or age), and then random samples are drawn
from each group.
Cluster sample:
Population divided into mutually exclusive groups (such as
geographic areas), then random sample of clusters is
selected. The researcher then collects data from all the
elements in the selected clusters or from a probability
sample of elements within each selected cluster.
Systematic sample:
A list of the population and a skip interval is obtained. The
skip interval is obtained by dividing the sample size by the
population size
 Non-probability Samples
Convenience sample:
The researcher selects the easiest population members
from which to obtain information.
Judgment sample:
The researcher’s selection criteria are based on
personal judgment regarding accuracy of
information.
Quota sample:
The researcher finds a prescribed number of people in
several categories.
Snowball sample:
The selection of additional respondents is made on the
basis of Referrals from the initial respondents. This
is used when a desired type of respondent is hard to
find.
 Primary Data

• Primary data collection process

– Data collection methods
• surveys
• qualitative research—personal interviews & focus
groups
• observation
• Experiment
– Design study materials (e.g., questionnaire design)
– Sampling
– Data collection
 Step 6:Data Collection

• Data collection is very important because,

regardless of the data analysis methods used,
data analysis cannot “fix” bad data

• Non-sampling errors may occur during data

collection. These are related to poor design
and/or execution of the data gathering.

• Sampling errors may occur based purely on

chance
 Step 6:Data Collection

• Non-sampling errors by interviewers or

respondents
– Intentional
– Unintentional

• Such non-sampling errors can be reduced

through quality control techniques.
 Survey

• Survey
– Data collection by asking people questions
• personal interview
• telephone survey
• mail survey
• Internet survey
– Advantages
• large size data, flexibility
– Disadvantages
• errors in questionnaire, expensive, response error
 Personal Interview
• Survey (cont.)
– Personal interview
• Advantages
– flexible, more information
• Disadvantages
– expensive, time-consuming, interviewer
bias
• e.g., “shopping mall intercept”: a
convenient, low-cost method
– but lacks representativeness
 Mail Survey

• Survey (cont.)
– Mail survey
• Advantages
– low cost
• Disadvantages
– low response rate
– less control
 Internet Survey

• Survey (cont.)
– Internet survey
• Advantages
– low cost—much lower even than mail
• Disadvantages
– low response rate—large response
bias
– Data reliability—difficult to verify if
personal information is true
 Focus Group Interview
• Qualitative research (cont.)
– Focus group interview
• Loosely structured group discussion led by
interviewer
• The discussion is observed or videotaped
• Best for preliminary research
• Individual depth interview: similar interview
with a single person
• Difficult to understand without seeing it, so
we have a video.
 Step 7: Data Processing

• Data Entry
• Data Cleansing
• Summarization
• Editing
• Coding
• Error Assessment
• Reliability/Validity
 Step 7: Data Processing

• Tabulating
– Simple tabulations

– Cross tabulations
Cross tabulation is the most commonly utilized data
analysis method in the research. This technique
divides the sample into sub-groups to show how the
dependent variable varies from one subgroup to
another.

• Hypothesis Testing
• Tests of Statistical Significance
 Step 8: Data Analysis

• Purpose of the analysis is to interpret and

draw conclusions from the mass of
collected data

• Must select appropriate analytic tools to

match data, research objectives, and
information needs
 Step 9: Prepare and Present the Final
Research Report

• The last step is one of the most

important phases of business
research.
• Its importance cannot be overstated
because it is the report, or its
presentation, that properly
communicates the results to the
client.
ELEMENTS OF A RESEARCH Report

1. EXECUTIVE SUMMARY
2. MANAGEMENT PROBLEM
3. OBJECTIVES
Types of Data
Relevance
4. Value of Information. (“So What?”)
– RESEARCH APPROACH
– Data Collection Method
– Measurement Instrument
– Sample
– Analytical Technique
5. FINDINGS
ERRORS IN BUSINESS RESEARCH
 Errors in Business Research

• Mistakes done while performing each step

of business research process are called
business research errors.
• The errors may result in serious
misinformation being communicated to
managers.
• The control of these errors is of critical
concern in business research.
 Basic Types of Errors

• Sampling Errors
• Non sampling Errors
 Sampling Errors
• Errors related to business research
based on sampling of people, product or
store etc are called sampling errors.
• Sampling errors are measurable.
• Sampling errors decrease with increase
in sample size.
• The major reason of sampling error are:
– Sample too small.
– Sample not representative.
– Inappropriate sampling method used.
 Non sampling Errors

• Non sampling errors are all the errors that may

occur in the marketing research process
except the sampling error.
• Non sampling errors are not measurable.
• Non sampling errors increase with increase in
sample size.
One must be aware of following:
• What non sampling errors may occur
• Effect of errors on results
• Steps to reduce errors
The Effects of Non sampling Errors

• As Non sampling errors increases with

sample size they put a bias on results of
unknown direction and magnitude.
• Can render the results of the study
useless.
 Types of Non sampling Errors

• Faulty Problem Definition.

• Defective Population Definition
• Frame non representative of the population
• Non response Error
• Measurement Error
• Improper Casual Inference
• Poor Questionnaire Design