problem formulation

Conducting Marketing Research

• Key Steps

  1. Determine Research Design

  2. Formulate Problem

  3. Design Data Collection Forms

  4. Determine Data Collection Method

  5. Collect Data

  6. Design Sample

  7. Prepare the Research

  8. Analyze and Interpret Data

  9. Aggregate Data

  10. Identify Data Sources (Primary and Secondary Data)

Problem Formulation

• Definition:

  • Process of identifying specific areas needing more information about the marketing environment.

  • Recognized as the first and most crucial step in research.

Coke vs. Pepsi - Case Study

• Historical Context:

  • In the 1970s, Pepsi challenged Coke through the "Pepsi Generation" campaign in 1972.

  • The "Pepsi Challenge" campaign in 1975 showed Pepsi's market share increase from 6% to 14%.

  • Coca-Cola's growth rate dropped significantly from 13% in 1976 to only 2% in 1979.

Coca-Cola Consumer Loyalty

• Brand Loyalty Statistics:

  • Loyalty fractions among drinkers in 1972 and 1982:

    • Coke: 18% (1972) to 12% (1982)

    • Pepsi: 4% (1972) to 11% (1982)

  • Coke had a larger advertising budget and better distribution, yet faced declining loyalty.

Project Kansas (1982)

• Research Initiative:

  • Conducted 2000 interviews across 10 major markets.

  • Used storyboards and mock commercials to gauge consumer reactions to potential "change concepts."

  • Estimated 10-12% of consumers would be upset by changes, but most would adapt.

  • Developed a sweeter, less fizzy cola called "New Coke" after flavor tinkering.

New Coke Launch (1985)

• Marketing Strategies:

  • Bill Cosby was a key spokesperson.

  • 81% of the U.S. population was aware of the New Coke launch within 24 hours.

  • 150 million consumers tried New Coke, leading to high shipment levels.

Consumer Backlash

• Debacle Aftermath:

  • Received 5,000 calls per day and 40,000 letters with emotional responses.

  • Satisfaction ratings diminished from 53% to 30% within a few months post-launch.

  • Acknowledged the outcry, leading to the return of the original Coke on July 11.

Analysis of Mistakes

• Key Takeaways:

  • Taste alone does not dictate consumer preference.

  • Habits, nostalgia, and brand loyalty significantly influence decisions.

  • Previous marketing research didn’t reveal intentions to replace the original Coke.

  • Group reactions are more complex than individual responses.

Steps in Problem Formulation

• Process Overview:

  1. Meet with clients.

  2. Clarify the problem/opportunity.

  3. State the manager’s decision problem.

  4. Develop possible research problems.

  5. Select research problem(s) to be addressed.

  6. Prepare a research request agreement.

• Note: There’s no perfect method for defining marketing research problems.

Step 1 - Meeting with Clients

• Differentiation:

  • Researcher vs Client (Manager) motivations and goals.

  • Researchers seek facts; clients seek solutions.

  • The researchers are objective, while clients are often emotional.

Gathering Information from Clients

• Information Sources:

  • Obtain management’s definition of the problem/opportunity, background information, and research objectives.

  • Research problems can arise from planned or unplanned changes.

Step 2 - Clarifying the Problem

• Challenge Norms:

  • Assist managers in identifying the true issues by fostering new perspectives.

  • Encourage challenging of existing assumptions.

Step 3 - State the Decision Problem

• Definition:

  • A fundamental problem faced by managers that requires marketing research resolutions.

  • Decisions can be discovery-oriented or strategy-oriented.

Step 4 - Research Problems Development

• Conversion Steps:

  • From decision problems to research problems.

  • Characteristics of each include action vs. information orientation, detail level, and definitions.

Selecting Research Problems

• Action Steps:

  • Reiterating the decision problem and outlining the research problems associated with it.

Research Request Agreement

• Components:

  1. Background on the issue

  2. Description of the decision problem

  3. Research problem specifics

  4. Rationale for each research piece

  5. Population or subgroups for data collection

  6. Resource estimates for conducting the research.

Final Review

• Key Recap:

  • Summarization of key steps in problem formulation.

  • Distinction made between decision problems and research problems.