Introduction, Nature & Scope

of Business Research
Ravi Shankar Rai
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Reference Books
Marketing Research an Applied
Orientation
Naresh Malhotra & S. Dash
Business Research Methods
Cooper & Schindler
Marketing Research Text &
Cases
Boyd, Westfall & Stasch

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Some Important Aspects
In order to understand and appreciate
Research Methodology following points must
be very clear
What is Research?
What is Bus Res Methods or Research
Methodology?
The connection between BR and managerial
decision making.

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Some Important AspectsContd.
Is BR applicable in all situation?
Def of BR.
Scope of BR
Scientific & Non-scientific Research:
Distinction between these
Validity & Reliability
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Some Important AspectsContd.
Six difficulties in applying scientific method to
business
Investigator involved in the use of result
Imprecise measuring devices: How to
measure attitudes? Intentions? Opinions?
Influence of measurement process on the
result
Time pressure for the result
Difficulty in using experiments to test
hypothesis
Great complexity of subjects

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Some Important AspectsContd.
Research Process: How to conduct a
research? Which steps in which
sequence?
How many types of research
Qualitative: Exploratory
Quantitative: Descriptive and Experimental
What is Research Design
Sampling Design
Scaling: Attitude Measurement
Questionnaire Construction


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What is Business Research?
A systematic Inquiry whose
objective is to provide information
to solve managerial problems.
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Why Study Research?
Research provides you with the
knowledge and skills needed for
the fast-paced decision-making
environment
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Different Styles of Research
Applied Research
Emphasis on solving practical (specific) problems
It could be exploring opportunities also
Rectifying an inventory system that is resulting into
lost sales
Opportunity to increase stockholder wealth by
acquiring another firm
Pure Research/Basic Research
Emphasis on problem solving but of a general nature
(not specific)
Effect of coupon as against rebate to stimulate demand

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What is Good Research?
Following the standards of the scientific
method
Purpose clearly defined
Research process detailed
Research design thoroughly planned
Limitations frankly revealed
High ethical standards applied
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What is Good Research? (cont.)
Following the standards of the
scientific method (cont.)
Adequate analysis for decision-
makers needs
Findings presented unambiguously
Conclusions justified
Researchers experience reflected

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The Manager-Researcher
Relationship
Managers obligations
Specify problems
Provide adequate background information
Access to company information gatekeepers
Researchers obligations
Develop a creative research design
Provide answers to important business
questions
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Manager-Researcher Conflicts
Managements limited exposure to
research
Manager sees researcher as threat to
personal status
Researcher has to consider corporate
culture and political situations
Researchers isolation from managers
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When Research Should be Avoided
When information cannot be applied to
a critical managerial decision
When managerial decision involves little
risk
When management has insufficient
resources to conduct a study
When the cost of the study outweighs
the level of risk of the decision

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Need for BR
A manager takes decisions
His responsibility is to reduce risk of failure in
decision making
Risk arises due to lack of relevant information
A manager always seeks information to
improve quality of decision making
Information can be collected through BR
Hence, BR is an important tool for managerial
decision making


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BR & Business Decisions
For Production, Finance, Personnel
Most of the required info are available within the
organization; Hence easy to collect & analyze
Formal procedures are used to improve quality :
Stats Methods for QC, PERT & CPM, Queuing Theory,
Optimization Techniques etc
For Marketing information mostly exist
outside the organization
In consumer behaviour, perception, minds
In competitive moves
In new government rules & regulations
In social & political changes

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BR & Business Decisions
Other problems for collecting
information
Being external collection is cumbersome &
expensive
Variables are often qualitative & dynamic
making measurements difficult & inaccurate
Variables are complex & interact with each
other


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Risk of using wrong information
Choice of wrong information may lead
to
Excessive expenditure
Decision going astray
Becoming uncompetitive & losing out
Market may vanish all of a sudden

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Scientific Method: The Essential
Tenets of Science
Direct observation of phenomena
Clearly defined variables, methods, and
procedures
Empirically testable hypotheses
Ability to rule out rival hypotheses
Statistical justification of conclusions
Self-correcting process

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Ways to Communicate
Exposition
descriptive statements that merely
state and do not give reason
Argument
allows us to explain, interpret,
defend, challenge, and explore
meaning
Two types: Deduction & Induction
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Important Arguments in
Research
Deduction is a form of inference
that purports to be conclusive
Induction draws conclusions from
one or more particular facts
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The Building Blocks of Theory
Concepts
Constructs
Definitions
Variables
Propositions and Hypotheses
Theories
Models
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Understanding Concepts
A concept is a bundle of meanings
or characteristics associated with
certain events, objects, conditions,
situations, and behaviors
Concepts have been developed
over time through shared usage
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Understanding Concepts
The success of research hinges on:
how clearly we conceptualize
how well others understand the
concepts we use
For customer loyalty use questions that
tap faithfully the Attitude of participants
Attitudes are abstract, try to measure
them using carefully selected concepts
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What is a Construct?
A construct is an image or idea
specifically invented for a given
research and/or theory-building
purpose.
Constructs are required for more
abstract concepts Personality,
Satisfied Customer
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Types of Variables
Independent
Dependent
Moderating
Extraneous
Intervening
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Independent & Dependent
Leadership style & Employee performance
or Job satisfaction
Price of a product & Demand
Independent
Cause, Stimulus, Predictor, Antecedent
Dependent
Effect, Response, Criterion, Consequence

Types of Variables
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Moderating
In each relationship there is one
Independent Variable (IV) & one Dependent
Variable (DV)
Four day work week (IV) will lead to higher
productivity (DV)
Moderating variable is a second
independent variable that has significant
effect on the originally stated IVDV
relationship
Four day work week (IV) will lead to higher
productivity (DV), especially among young
workers (MV)

Types of Variables
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Extraneous
Infinite number of extraneous variables
(EV) exist that might effect the relationship
Most of such variables have little or no
effect on the given situation and these may
be ignored
Others may have highly random occurrence
as to have little impact
For productivity example: election of a new
mayor, rainy days, bird flu, strike etc

Types of Variables
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Intervening
Intervening variable (IVV) is defined
as a factor which theoretically effects
the observed phenomenon but can
not be seen measured or manipulated
Its effect can be inferred from the
effects on the observed phenomenon
Four day work week (IV) will lead to
higher productivity (DV) by increasing
job satisfaction (IVV)



Types of Variables
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Propositions & Hypotheses
Proposition
A statement about concepts that may
be judged as TRUE or FALSE if it
refers to observable phenomenon
Proposition formulated for empirical
testing is Hypothesis
Example
Infosys employees have higher than
average achievement motivation


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The Role of the Hypothesis
Guides the direction of the study
Identifies facts that are relevant
Suggests which form of research
design is appropriate
Provides a framework for
organizing the conclusions that
result
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Characteristics & Types of a Good
Hypothesis
A good hypothesis should fulfill
three conditions:
Must be adequate for its purpose
Must be testable
Must be better than its rivals
Hypothesis types
Descriptive
Relational: Correlation & Causal

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Types of Hypothesis
Descriptive
Describes the existence, size, form or distribution of
some variables
Eighty percent of shareholders of HLL favour
increasing the companys cash dividend
It can also be stated as research question
Do shareholders of HLL favour an increased cash
dividend?
Either form is acceptable, but descriptive
hypothesis format has advantages
Encourages researcher to crystallize thinking
Encourages to think about implications of either an
accepted or rejected finding
Useful for testing statistical significance
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Relational
Statements that describe the
relationship between two variables
with respect to some case
Foreign (variable) refrigerators are
perceived to be of better quality
(variable) by Indian consumers
(case)
Types of Hypothesis
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Two types: Correlation & Causal
Correlation
Merely states that variables occur
together without implying that one
causes the other
People in Kerela give more importance to
education than people in Punjab
In an office old employees are more
responsive than young employees
Types of Relational Hypothesis
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Causal (or Explanatory)
There is an implication that existence
of (or a change in) one causes or
leads to a change in the other
Causal variable is called Independent
variable and the other Dependent
variable
Advertisement causes higher sales
Increase in income leads to higher
savings
Types of Relational Hypothesis
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The Value of a Theory
Narrows the range of facts we need to
study
Suggests which research approaches
will yield the greatest meaning
Suggests a data classification system
Summarizes what is known about an
object of study
Predicts further facts that should be
found
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Definition of Marketing Research
American Marketing Association
MR is the systematic gathering, recording and
analyzing of data about problems related to
the marketing of goods & services
Philip Kotler
MR is the systematic design, collection,
analysis & reporting of data & findings
relevant to a specific marketing situation
facing the company

It may be relevant to add the word continuous to the
above definitions
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Purpose of BR
To improve quality of decision making
process by providing information
To help reduce the risk associated with
managerial decision making
Risk due to two types of uncertainties:
About the expected outcome
About the future environment

To discover opportunity & exploit
profitably
For example : Frooti, Velvette, Mother Dairy,
Dhara, Pan Parag


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Scope of BR
Consumers of products & services
Buyer behaviour, Influencers, Buying habits, Incentives
Product & product design
Pricing, Sourcing, Physical attributes
Distribution Channels
Performance, Dealer Satisfaction, Own vs Multi-brand
Advertising Impact
Image, Positioning, Media Planning, Message Content &
Prioritizing
Macro Level Phenomenon
Govt spending. Mood of the Industry, State of
Economy

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BR Procedure
Seven inter-related steps
1.Specifying research objectives
2.Preparing a list of needed information
3.Designing the data collection project
4.Selecting a sample type
5.Determining sample size
6.Organizing & carrying out the field work
7.Analyzing the collected data & report the
findings


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The Management-Research
Question Hierarchy
1
Management Dilemma
Measurement Questions
Investigative Questions
Research Questions
Management Questions
Management Decision
2
3
4
5
6
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The Management-Research
Question Hierarchy
1
Why are sales declining in south
while sales are booming in all other
regions?
Conduct an employee survey for
outcomes of change in compensation
structure
If compensation scheme is changed,
will good sales persons leave?
How can we improve sales in
south?
Introduce individual incentive? Quota
based incentive? Advertise more?
Management Decision
2
3
4
5
6
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Working with the Hierarchy
Management Dilemma
The symptom of an actual problem
Not difficult to identify a dilemma,
however choosing one to focus on
may be difficult
Needs proper prioritizing



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Working with the Hierarchy
Management Question Categories
Choice of purposes or objective
Generation and evaluation of
solutions
Troubleshooting or control
situation

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Working with the Hierarchy
Fine tune the research question
Examine concepts and constructs
Break research questions into specific
second-and-third-level questions
Verify hypotheses with quality tests
Determine what evidence answers
the various questions and hypothesis
Set the scope of your study

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Working with the Hierarchy
Investigative Questions
Questions the researcher must
answer to satisfactorily arrive at
a conclusion about the research
question
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Working with the Hierarchy
Measurement Questions
The questions we actually ask to
extract information from
respondents
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Other Processes in the Hierarchy
Exploration
Recent developments
Predictions by informed figures about
the prospects of the technology
Identification of those involved in the
area
Accounts of successful ventures and
failures by others in the field
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Research Process Problems
The Favored Technique Syndrome
Company Database Strip-Mining
Unresearchable Questions
Ill-Defined Management Problems
Politically Motivated Research

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BR Procedure
Seven inter-related steps
1.Specifying research objectives (Problem
Definition)
2.Preparing a list of needed information
3.Designing the data collection project
4.Selecting a sample type
5.Determining sample size
6.Organizing & carrying out the field work
7.Analyzing the collected data & report the
findings
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Problem Definition
Any situation requiring further investigation is
a problem
Not all problems require fresh MR to be carried
out. Many can be decided upon based on past
data, trend, experience
Distributor Credit
Manufacturing out put
Stocking level
Problem Definition should be
Specific neither too broad nor too narrow
Target outcome should be precise
Should be manageable within time & resource
available


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Problem Definition an example
Incomplete
Problem Definition
Better Problem Definition
1. Product Refrigerator Refrigerator Ordinary & Frost free
2. Market West Zone West Zone with spl ref to Mumbai, Nashik,
Pune & Nagpur
3. Market
Segment
---- Office & Institutional Sector & NOT
Households
4. Current Mkt
Share
Not available 12% over all
3% in Office & Inst
5. Problem Sales not picking
up at the rate at
which they should
Last year our growth 5%
Industry grew by 25%
6. MR Problem To find out the
reason
To find out the reasons for shortfall in our
growth rate in office & inst segments &
suggest specific strategies followed by Brands
A & B
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Research Design
It spells out how to achieve stated
BR objectives
Consists of
Data Collection Method
Specific Research Instruments
Sampling Plan
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Research Design
Data Collection Method
Secondary Data
Primary Data
Observation
Survey (Most widely used)
Experimentation
Specific Research Instruments
Camera, Tape, People Meter, Tally Sheet, Questionnaire
Sampling Plan
Who is to be surveyed? Sampling unit
How many? Sample size
How are they to be selected? Sampling Procedure
How are they to be reached? Sampling Media

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Field Work
Involves planning, execution,
supervision & checking for errors
MR must be planned & executed well so
as to complete within resource & time
limits
Progress to be closely monitored to
avoid time & cost overrun
Extensive back checks & spot checks
will improve the quality of MR output


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Data Analysis
Done in two phases
Classification of raw data
Quantitative vs Qualitative
Chronological, Geographical,
Demographic
Summarizing the data
Frequency distribution, Mean, Median,
Mode, Range, Variance, Standard
Deviation
Data Analysis Methods Four classes
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Data Analysis.Contd.
Analytical Methods Four classes:
Tests of Significance :Sampling Statistics,
Chi Square Analysis & Analysis of Variance
Explaining Observed difference I: Cross
Tabulation, Correlation & Regression
Explaining Observed difference II: Linear
Discriminant Analysis & Automatic
Interaction Detector
Identifying Interdependencies: Cluster,
Factor & Conjoint Analysis


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Report Presentation
Report must have following sections
Executive Summary
Objectives & Methodology
Summary, Conclusion, Recommendation
Sample Characteristics & Basis of selection
Detailed findings
Questionnaires & other supporting
documents

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Business Research
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Secondary Research
Secondary Data
Inexpensive
May not be relevant
May be old
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Internal Sources
Company Accounts
Internal Reports and Analysis
Stock Analysis
Retail data - loyalty cards, till data, etc.
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External Sources
Government Statistics
Trade publications
Commercial Data IMRB, Gallup, Mintel, etc.
Household Expenditure Survey
Magazine surveys
Other firms research
Research documents publications, journals,
etc.

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Business Research
Advantages of Marketing Research
Helps focus attention on objectives
Aids forecasting, planning and strategic
development
May help to reduce risk of new product
development
Communicates image, vision, etc.
Globalisation makes market information
valuable (HSBC adverts!!)

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Business Research
Disadvantages of Marketing
Research
Information only as good as the
methodology used
Can be inaccurate or unreliable
Results may not be what the business
wants to hear!
May stifle initiative and gut feeling
Always a problem that we may never know
enough to be sure!

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