Research Methodologies

Objective
To equip managers of tomorrow with tools, techniques and also the knowledge to apply the correct tools & techniques to arrive at business decisions. Decisions should be structured, objective and reliable should be in the interest of your organization should resolve or alleviate the management problem
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What we have covered

Null & Alternate Hypothesis Research Hypothesis Sampling Distribution of Mean & Proportion Confidence Interval, Critical Values Type I & Type II Error One Sample, Two Sample, >2 Sample Tests ANOVA One Factor Correlation & Regression

Reference Books
Business
Cooper

Research Methods

& Schindler

Marketing
Naresh

Research an Applied Orientation Research Text & Cases

Malhotra

Marketing
Boyd,

Westfall & Stasch

Detailed Session Plan

Some Concepts
Research
Is

truth relative The Scientific Method Empiricism Bias & Objectivity Research in Physical & Social Sciences the nature of truth in either sphere Marketing Research Experimental Control
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Research Methodology
A system of models, procedures or techniques used to find the results of a research problem

Mathematical Tools for Analysis Statistical Techniques

Central

Tendency measures Measures of dispersion Forecasting methods Factorial design Sampling methods Tests of hypotheses Factor analysis Discriminant analysis Conjoint analysis
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Mathematical Tools for Analysis Operations research models

Linear programming Integer programming Distance related network techniques Project management PERT, CPM Inventory Control Dynamic programming

Queueing theory Replacement analysis Game theory Goal programming Simulation Production Scheduling Non-linear programming

What kinds of Research are undertaken

Marketing Research most frequently undertaken to measure

Market potential Characteristic of markets Share of markets

MR used to make short/long-range forecasts MR used to

evaluate new product opportunities and acceptance Test existing products relative to competitors products To make better advertising decisions
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Scope of MR

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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What is Business Research?

A systematic Inquiry whose objective is to provide information to solve managerial problems. Important management decision-making tool The systematic and objective process of gathering, recording and analyzing data for aid in making business decisions. Reduces uncertainty and risks (in decisions implemented) by providing information that improves decision making
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Business Research

Developing and implementing a business strategy has three stages:

1. 2. 3.

Identifying problems or opportunities Selecting and implementing a course of action Evaluating the course of action

Business Research may play an important role in each stage by reducing managerial uncertainty.

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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

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Why Study Research?

Research provides you with the knowledge and skills needed for the fast-paced decision-making environment

Why Managers need Better Information

Global and domestic competition is more vigorous Organizations are increasingly practicing data mining and data warehousing
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Purpose of MR

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 profitability

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Need for MR

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 MR Hence, MR is an important tool for managerial decision making

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MR & Marketing Decisions

For Production, Finance, Personnel information exists within the organization

Hence easy to collect & analyze Formal procedures are used to improve quality : Statistical 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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MR & Marketing Decisions

Other problems for collecting information required for marketing decisions are

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 fashion garments

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Marketing Research

Advantages of Marketing Research

Disadvantages 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

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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Deciding when to Conduct Business Research

Time Constraints Is sufficient time available before a decision must be made? N o Availability of Data Is the information on hand inadequate for making the decision? N o Nature of Decision Is the decision of considerable strategic or tactical importance? N o Benefits Vs Costs Does the value of the research information exceed the cost of conducting research? N o

Conduct Business Research

Do Not Conduct Business Research

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When Research Should be Avoided

When

information cannot be applied to a critical managerial decision When managerial decision involves little or no 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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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 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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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
Descriptive Relational:

types
Correlation & Causal

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Types of Hypothesis
Descriptive

Describes the existence, size, form or distribution of some variables 80% of shareholders of HLL favour increasing the companys cash dividend
Do shareholders of HLL favour an increased cash dividend?

Can also be stated as research question

Either form 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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Types of Hypothesis
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)

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Types of Relational Hypothesis

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

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Types of Relational Hypothesis

Causal
There

(or Explanatory)

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

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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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Sources of Knowledge
Empiricists

attempt to describe, explain, and make predictions through observation Rationalists believe all knowledge can be deduced from known laws or basic truths of nature Authorities serve as important sources of knowledge, but should be judged on integrity and willingness to present a balanced case
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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 continuous refinement
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The Scientific Method

Techniques or procedures used to analyze empirical evidence in an attempt to confirm or disprove prior conceptions.

The Scientific Method

The

scientific method is the process by which scientist, endeavour to construct an accurate (i.e. reliable, consistent and nonarbitrary) representation of the world. The scientific method attempts to minimize the influence of bias or prejudice in the experimenter when testing a hypothesis or a theory.

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The Scientific Method

1. Observe some aspect of the universe. 2. Invent a tentative description, called a hypothesis, that is consistent with what has been observed. 3. Use the hypothesis to make predictions. 4. Test those predictions by experiments or further observations and modify the hypothesis in the light of the results. 5. Repeat steps 3 and 4 until there are no discrepancies between hypothesis and experiment or observation Hypothesis becomes theory when experiment bears it out.
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The Scientific Method

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The Scientific Method

The scientific method: It is unprejudiced The results are repeatable A theory must be ``falsifiable''

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Scientific Method
Two

main characteristics of scientific method

Validity: The claim of measuring the identified variable Reliability or Repeatability: A repeat of the study should lead to the same outcome; like experiments of Physics or Chemistry
Very

few Marketing Research projects could qualify as experiments; much less reproducible experiments

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Reliability & Validity Simply stated, what are they?

Validity

= truth in measurement

Answers

the question: Did you measure what you intended to measure?

Reliability
Answers

= consistency in measurement

the question: Given that nothing else changes, will you get the same results if you repeat the measurement?

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Does reliability imply validity?

No! Something can be highly reliable, but invalid. Example: If someone consistently misspells a word there is high reliability, but it is invalid.

On the other hand to be valid, something must also be reliable.

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Validity-reliability bulls eye

(Babbie, 1998)

Both valid & reliable

Reliable, but invalid

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Necessary & sufficient conditions

In other words, reliability is a necessary but insufficient condition to produce validity. In addition to reliability, there are other necessary conditions for validity.

So dont proclaim validity based solely upon obtaining a good score on a statistical reliability test.

Valid Reliable
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MR & Scientific Method

It

is very difficult to measure identified variable: Example TV viewer ship Controlling variables
Highly

interactive; almost impossible to control in a market place Projects mostly carried out one time hence no way to test reliability MR projects are proprietary hence no way to check reproducibility

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Scientific Vs Non Scientific Methods

Major

differences between Scientific & Non Scientific Method that affect Validity & Reliability of the results are
Objectivity

of the investigator Accuracy of measurements Degree to which the investigation is continuing & exhaustive

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Scientific Vs Non Scientific Methods

Objectivity
A

of the investigator

researcher must base his judgment on facts & not on preconceived notion or intuition Two major factors that reduce the objectivity on the part of the investigator
Market Researchers report to a strong willed executive who thinks that he knows the market well Marketers often tend to exploit comfortable segments; They ignore segments that are different, unattractive or threatening

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Scientific Vs Non Scientific Methods

Accuracy of measurements

In experiments of Physics or Chemistry measuring devices of great accuracy are used In MR attitudes, intensions, behaviours etc. are measured so far no instruments can measure these accurately Such variables are dynamic checking reproducibility is not possible Even crude devices like Attitude Rating Scales are administered by different interviewers & interviews are conducted in different settings results not reproducible

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Scientific Vs Non Scientific Methods

Continuing
Scientists

& Exhaustive nature of investigation

are continuously & aggressively searching for additional evidence, they are not sure that ultimate truth has been found falsifiability Marketing Research tends to be less continuous than science Results of MR projects not published or shared no refinement done
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Difficulties in Applying Scientific Method to Marketing Research

Investigator (sponsor) involved in use of results Imprecise measuring devices Influence of measurement process on the results Time pressure for results Difficulty in using experiments to Test Hypothesis Great complexity / subjectivity of the subject

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Difficulties in Applying Scientific Method to Marketing Research

Investigator

(sponsor) involved in use of

results
Marketing

Researchers involved in sales of their results directly or indirectly e.g. commercial research firm, or MR Department of a manufacturing company Hence researchers are anxious to see that their results are accepted. Often seen desirable to have results support the views of the client or superior This pressure leads to lack of objectivity
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Difficulties in Applying Scientific Method to Marketing Research

Imprecise
Accuracy

measuring devices

of measurement attitudinal questionnaire based Lack of precision; subjectivity Selection of questions Differing abilities of the interviewers Resultant lack of reliability Reliability is very high in scientific measurement instruments are more sophisticated and precise
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Difficulties in Applying Scientific Method to Marketing Research

Influence

of measurement process on the

results
Chemist

weighing a precipitate, or physicist measuring the speed of sound neither is concerned with the effect the measurement process has on the results Marketing Research when humans realize they are being measured, they frequently change Leads to lack of lack of reliability and validity
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Difficulties in Applying Scientific Method to Marketing Research

Time

pressure for results

Demands

of competition Though most MR has an immediate short-range objective, there is gradual improvement in methods & understanding over time Gradual development of approach that tends to the scientific method

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Difficulties in Applying Scientific Method to Marketing Research

Difficulty

in using experiments to Test Hypothesis

Generally

impractical or infeasible to use experimentation to identify cause-effect relations Impossible to control all factors affecting the product sales e.g. consumer attitudes, weather, competitive sales strategies Therefore impossible to reproduce the same experiment - lack of reliability
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Difficulties in Applying Scientific Method to Marketing Research

Great
MR

complexity / subjectivity of the subject

is concerned with individuals who in themselves and in their activities are more complex and unpredictable than the subjects of the physical scientist This makes it difficult to achieve a reasonably high level of validity & reliability in MR

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Two Types of Measurement Error

Bias
Random

error

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Three Places Measurement Error Can Occur

Observer/Scorer Participant Person

administering the measure

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Two Types of Observer Error

Observer

bias (Scorer bias) Random observer error

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Minimizing Observer Errors

Why

it is more important to reduce observer bias than random error Techniques for reducing observer bias

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Techniques for Reducing Observer Bias

Eliminating

human observer errors by eliminating the human observer Limiting human observer errors by limiting the human observers role Reducing observer bias by making observers blind Conclusions about reducing observer bias

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Reliability: The (Relative) Absence of Random Error

The

importance of being reliable: Reliability as a prerequisite to validity Using test-retest reliability to assess overall reliability: To what degree is a measure random error free?

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Two Solutions to Problems Caused by Random Participant Error

Add

questions to let random participant error balance out Ask better questions to reduce random participant error

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Conclusions About Reliability

Reliability

is a prerequisite for validity If test-retest reliability is low, try to find out where reliability problem is and fix it. Reliability does not guarantee validity

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The Management-Research Question Hierarchy

4 3 2
1

Conduct an employee survey for outcomes of change in compensation structure If compensation scheme is changed, will good sales persons leave?

Management Decision

Introduce individual incentive? Quota based incentive? Advertise more? How can we improve sales in south?

Why are sales declining in south while sales are booming in all other regions?

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Research Process

Seven inter-related steps

1. 2. 3. 4. 5. 6. 7.

Specifying research objectives Preparing a list of needed information Designing the data collection project Selecting a sample type Determining sample size Organizing & carrying out the field work Analyzing the collected data & report the findings

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Research Process & Problems in Achieving Scientific Method

To achieve Validity & Reliability, Marketing Research should be conducted as a proper Scientific Method At each of the seven steps let us analyze
A. B.

Problems in achieving Scientific Method Steps to minimize the potential sources of errors

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1. Specifying Research Objectives

A.
B.

Problems in achieving Scientific Method

a.

Managers Expectations of research results

Minimizing potential sources of errors

a.
b.

Write research objectives Manager & researcher must discuss the objective statements & if necessary modify

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2. Preparing a list of needed information

Problems in achieving Scientific Method

a.

b.

Due to busy schedule manager may not get adequately involved May think researcher knows what to do

Minimizing potential sources of errors

Manager & researcher should develop List of needed information together & evaluate usefulness Research is not needed if manager is forced to select a particular course of action irrespective of research findings
a.

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3. Designing data collection project

Problems in achieving Scientific Method

a. b. c. d.

e.

Using inappropriate research design Wrong selection of respondents Asking unclear or ambiguous questions Using large scale study instead of small scale & vice versa Using poor experimental design

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3. Designing data collection project

Minimizing potential sources of errors

Five important issues that must be addressed: Should the research be exploratory or conclusive? Who should be interviewed & how? Should only few cases be studied or large samples? How well experiments be incorporated? How should data collection form be designed?

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4. Selecting a sample type

Why samples? Probability Vs. Non Probability Problems in achieving Scientific Method
a.

Sample not representative of the population Define sampling frame carefully Select proper sampling method Simple Random

Minimizing potential sources of errors

a. b.

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5. Determining Sample size

a.
i. ii. iii.

Problems in achieving Scientific Method

Sample size depends upon
Nature of the problem Budget Accuracy needed

b.

Small sample Lower reliability Large sample Likely to give higher reliability

a.

Minimizing potential sources of errors

Use Sampling Statistics to calculate sample size for a given accuracy (Confidence Interval) Care exercised in determining sample size & sample type will minimize errors
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b.

6. Organizing & Carrying out field work

Field work: Selecting, Training, Controlling & Evaluating field force Involves substantial portion of budget Potential source of errors through lack of Validity & Reliability

Problems
a.

in achieving Scientific Method

Varying skills of field workers b. Forms filled without interview c. May not follow instruction d. Investigators bias e. Respondents bias
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6. Organizing & Carrying out field work

Minimizing
a.

potential sources of errors

Follow good practices in selection, training, controlling & evaluating field workers b. Incorporate Back Checks & Spot Checks c. Motivate supervisors d. Deploy adequate field force release time pressure

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7. Analyzing Data & Report Preparation

Problems in achieving Scientific Method

a.

b.
c.

Care & precaution not taken during editing, coding & data entry List of needed information not prepared properly Research objectives not established correctly

Minimizing potential sources of errors

a. b. c.

Editing & Coding done carefully Incorporate extensive validity checks Inferences to be drawn based on factual data & not based upon researchers personal understanding

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