Business research is the

application of the
scientific method in
searching for the truth
about business
phenomena.
The process includes:
 idea and theory
development
 problem definition
 searching for and
collecting information
 analyzing data

BUSINESS RESEARCH  communicating the findings

and their implications

DEFINED
BUSINESS RESEARCH DEFINED

This definition suggests that not intuitive or haphazardly gathered

accurate and objective
business research relevant to all aspects of the business
information is: limited by one’s definition of business

Not-for-profit organizations and governmental

agencies can use research in much the same was
as managers in for-profit organizations.
 Applied business
research
Example:
 Should McDonald’s add Italian
pasta dinners to its menu?
 Which health insurance plan
should a business provide for its
employees?

APPLIED AND BASIC

BUSINESS RESEARCH
APPLIED AND BASIC
BUSINESS RESEARCH
Basic business research (also called pure
research)
 conducted without a specific decision in mind that usually
does not address the needs of a specific organization.
 Attempts to expand the limits of knowledge in general.
 Not aimed at solving a pragmatic problem.
 Example:
 Do consumers experience cognitive dissonance in low-involvement
situations?
 Does employee tenure with a company influence productivity?
THE SCIENTIFIC METHOD
Scientific Method
 The way researchers go about using knowledge
and evidence to reach objective conclusions about
the real world.
 The analysis and interpretation of empirical
evidence (facts from observation or
experimentation) to confirm or disprove prior
conceptions
EXHIBIT 1.1 A SUMMARY OF THE SCIENTIFIC METHOD
MANAGERIAL
VALUE OF There are only a few business orientations:
 Product-oriented

BUSINESS  Production-oriented
 Marketing-oriented

RESEARCH
EXHIBIT 1.2 BUSINESS ORIENTATIONS
 The decision-making
process associated with
the development and
implementation of a
business strategy
involves four
interrelated stages:
1. Identifying
problems and
opportunities
2. Diagnosing and
assessing
problems or
opportunities
3. Selecting and
implementing a
course of action
MANAGERIAL VALUE OF 4. Evaluating the
course of action
BUSINESS RESEARCH
EVALUATING THE COURSE OF ACTIONS
Evaluation Research
 The formal, objective measurement and appraisal of the extent a given activity,
project, or program has achieved its objectives.

Performance Monitoring Research

 Research that regularly, sometimes routinely, provides feedback for evaluation and
control of business activity.
WHEN IS BUSINESS RESEARCH
NEEDED?
The determination of the need for research centers on:
1. Time constraints
2. The availability of data
3. The nature of the decision to be made
4. Benefits versus costs (the value of the research information
in relation to costs)
 Will the payoff or rate of return be worth the investment?
 Will the information improve the quality of the managerial decision
enough to warrant the expenditure?
 Is the expenditure the best use of the available funds?
EXHIBIT 1.3 DETERMINING WHEN TO CONDUCT BUSINESS RESEARCH
 Communication Technologies

• Always “connected”—time, place,

and distance are irrelevant.
• Decreases in information acquisition,
BUSINESS storage, access, and transmission
costs.

RESEARCH IN Global Business Research

THE 21ST • Business research is increasingly

CENTURY global.
• Must understand the nature of
particular markets.
• Cross-validation
• Verify that the empirical findings
from one culture also exist and
behave similarly in another culture.
 Business Research isn’t information gathering:
 Gathering information from resources such books or
magazines isn’t business research.
 No contribution to new knowledge.

Business Research isn’t the transportation of facts:

WHAT  Merely transporting facts from one resource to another

doesn’t constitute business research.

BUSINESS
 No contribution to new knowledge although this might make
existing knowledge more accessible.

RESEARCH
IS NOT
THE BUSINESS RESEARCH
PROCESS: AN OVERVIEW
INTRODUCTION
Key ways in which researchers contribute to decision
making:
1. Helping to better define the current situation
2. Defining the firm—determining how consumers, competitors,
and employees view the firm
3. Providing ideas for enhancing current business practices
4. Identifying new strategic directions
5. Testing ideas that will assist in implementing business
strategies for the firm
6. Examining how correct a certain business theory is in a
given situation
DECISION MAKING
TERMS
Business opportunity
 A situation that makes some potential competitive
advantage possible.

Business problem
 A situation that makes some significant negative
consequence more likely.

Symptoms
 Observable cues that serve as a signal of a
problem because they are caused by that problem.
DECISION
MAKING
Decision making defined
 The process of developing and
deciding among alternative
ways of resolving a problem or
choosing from among
alternative opportunities.

Research’s role in the decision

making process
 Recognizing the nature of the
problem or opportunity.
 Identifying how much
information is currently available
and how reliable it is.
 Determining what information is
needed to better deal with the
situation.
CONDITIONS AFFECTING DECISION
MAKING
The decision maker has all
Certainty information needed to make an
optimal decision.

The manager grasps the general

nature of desired objectives, but
Uncertainty the information about alternatives
is incomplete.

The nature of the problem itself is

unclear such that objectives are
Ambiguity vague and decision alternatives
are difficult to define.
EXHIBIT 4.1 DESCRIBING DECISION-MAKING SITUATIONS
EXHIBIT 4.8
DIFFERENT STAGES OF A RESEARCH PROCESS

A Question is Formulation of Research

Suggest Literature
raised Research Design
Hypotheses Review
Questions Formulation

Research Design Formulation

Report Writing Hypotheses Data

Data Analysis Acquire Data
& Presentation Support Interpretation
Consider the following list, and indicate and
explain whether each best fits the definition of a
problem, opportunity, or symptom:
a. A 12.5 percent decrease in store traffic for a
children’s shoe store in a medium-sized city mall.
b. Walmart’s stock price has decreased 25
percent between 2007 and 2009.
c. A furniture manufacturer and retailer in North
Carolina reads a research report indicating
consumer trends toward Australian Jarrah and
Karri wood. The export of these products is very
limited and very expensive.
d. Marlboro reads a research report written by
the U.S. FDA. It indicates that the number of
cigarette smokers in sub-Saharan Africa is
expected to increase dramatically over the next
decade.
a. A 12.5 percent decrease in store traffic for a
children’s shoe store in a medium-sized city mall.
This is an example of a symptom, which is an observable
cue that serves as a signal of a problem because it is
caused by that problem.
b. Walmart’s stock price
has decreased 25 percent
between 2007 and 2009.

This is an example of a
symptom, which is an
observable cue that serves as a
signal of a problem because it
is caused by that problem.
•.
c. A furniture manufacturer and retailer in North
Carolina reads a research report indicating consumer
trends toward Australian Jara and Kari wood. The export
of these products is very limited and very expensive.
This could be viewed as a business opportunity because it is
a situation that makes some potential competitive
advantage possible. That is, if this manufacturer can secure
these types of wood at a reasonable price, they could gain
a competitive advantage. However, the fact that the
export of these products is very limited and expensive
could represent a business problem.
d. Marlboro reads a research report written by the
U.S. FDA. It indicates that the number of cigarette smokers
in sub-Saharan Africa is expected to increase dramatically
over the next decade.
This represents a business opportunity for Marlboro
because it is a situation that makes some potential
completive advantage possible
 Exploratory
Descriptive
Causal

TYPES OF BUSINESS
RESEARCH
 Exploratory Research

EXPLORATORY  Conducted to clarify ambiguous situations or discover

ideas that may be potential business opportunities.

RESEARCH  Initial research conducted to clarify and define the

nature of a problem.
 Does not provide conclusive evidence
 Subsequent research expected
 Describes characteristics of
objects, people, groups,
organizations, or
environments.
 Addresses who, what,
when, where, why, and how
questions.
 Considerable
understanding of the
nature of the problem
exists.
 Does not provide direct
evidence of causality.
Diagnostic analysis
 Seeks to diagnose reasons
for market outcomes and
focuses specifically on the
beliefs and feelings
consumers have about and
toward competing
DESCRIPTIVE RESEARCH products.
DESCRIPTIVE RESEARCH (CONT’D)
Examples
 The average Weight Watchers’ customer
 Is a female about 40 years old
 Has a household income of about $50,000
 Has at least some college education
 Is trying to juggle children and a job

 Characteristics of leaders
 Empathetic
 Resourceful
 Ability to delegate
 Research conducted to identify cause and
effect relationships (inferences).

CAUSAL Evidence of causality:

 Temporal sequence—the appropriate causal order of
RESEARCH events.
 Concomitant variation—two phenomena vary together.
 Nonspurious association—an absence of alternative
plausible explanations.
 During summer in a beach town,
it’s been seen that lot of
drowning takes place . Some
people can’t help but notice that
this happens when there is a
spike in the sales of ice cream ,
THE FAMOUS there is a spike in drowning too.

PUZZLE
As the mayor of that beach town
, how are you going to respond
to the petition of banning the ice
cream on beach to control the
drowning in the sea

© 2016 CENGAGE LEARNING INDIA PVT. LTD. ALL RIGHTS RESERVED.

EXHIBIT 4.2 THE SPURIOUS EFFECT OF ICE CREAM
DEGREES OF
CAUSALITY
Absolute Causality
 The cause is necessary and
sufficient to bring about the
effect.

Conditional Causality
 A cause is necessary but not
sufficient to bring about an
effect.

Contributory Causality
 A cause need be neither
necessary nor sufficient to
bring about an effect.
 Weakest form of causality.
 Experiment
 A carefully controlled study in which the researcher
manipulates a proposed cause and observes any
corresponding change in the proposed effect.

Experimental variable
 Represents the proposed cause and is controlled by
EXPERIMENTS the researcher by manipulating it.

Manipulation
 The researcher alters the level of the variable in
specific increments.

Test-market
 An experiment that is conducted within actual market
conditions.
EXHIBIT 4.3 TESTING FOR CAUSES WITH AN EXPERIMENT
EXHIBIT 4.4 CHARACTERISTICS OF DIFFERENT TYPES OF BUSINESS RESEARCH

Uncertainty Influences the Type of Research Conducted

 QUESTION
What are the three types of business research?
Indicate which type each item in the list below
illustrates. Explain your answers.
a. Establishing the relationship between
advertising and sales in the beer industry
b. Ranking the key factors new college
graduates are seeking in their first career
position
c. Estimating the five-year sales potential for
CAT scan machines in the Ark-La-Tex (Arkansas,
Louisiana, and Texas) region of the United
States
d. Testing the effect of “casual day” on
employee job satisfaction
e. Discovering the ways that people who live in
apartments actually use vacuum cleaners, and
identifying cleaning tasks for which they do not
use a vacuum
a. Establishing the relationship between advertising
and sales in the beer industry.
Causal research. Establishing the functional relationship
between advertising and sales is the project’s goal. It
attempts to predict what would happen to sales if a change
in advertising occurred. After the causal variable is
manipulated, the researcher observes the effect on sales.
 b. Ranking the
key factors new college
graduates are seeking
in their first career
position.

QUESTION
Descriptive
Research. This
study identifies .
and prioritizes
these key factors.
c. Estimating the 5 year sales potential for Cat-
Scan machines in the Ark-La-Tex (Arkansas, Louisiana and
Texas) region of the United States.
Descriptive Research. This research attempts to describe a
market size.

QUESTION
d. Testing the effect of “casual day” on employee
job satisfaction.
Causal research. This research can “manipulate” the
employee dress code and compare job satisfaction for a
group that is given “causal day” privileges to that of a
group not given this privilege.

QUESTION
 e. Discovering the
ways that people who
live in apartments
actually use vacuum
cleaners, and identifying
cleaning tasks for which
they do not use a vacuum.

QUESTION
Exploratory research.
This research is
attempting to learn more
about how consumers use
these types of products
and perform cleaning
tasks
 Process stages:
1. Defining the research objectives
2. Planning a research design
STAGES IN 3.
4.
Planning a sample
Collecting the data
THE 5. Analyzing the data

RESEARCH
6. Formulating the conclusions and preparing
the report

PROCESS Forward linkage—earlier stages influence

later stages.
Backward linkage—later stages influence
earlier stages.
EXHIBIT 4.5 STAGES OF THE RESEARCH PROCESS
EXHIBIT 4.6
FLOWCHART OF THE
BUSINESS
RESEARCH PROCESS

Note: Diamond-shaped boxes indicate stages in the research process in which a choice of one or more
techniques must be made. The dotted line indicates an alternative path that skips exploratory research.
DEFINING THE RESEARCH OBJECTIVES

Research objectives Deliverables

The goals to be achieved by The consulting term used to describe
conducting research. research objectives to a research
client.
EXHIBIT 4.10
FORMULATION OF RESEARCH QUESTIONS

Tasks Involved

Discussions Interviews Secondary

Qualitative
with Decision with Industry Data
Research
Makers Experts Analysis

Environmental Context

Past Marketing &

Resources & Buyer Legal Economic
Information Objectives Technological
Constraints Behavior Environment Environment
& Forecasts Skills

Problem Definition

Management Decision Problem

Marketing Research Problem

Formulation of Research Questions

Broad Marketing Research Problem

Objective / Specific Marketing Research Problem

Theoretical
Framework
Research Questions
EXPLORATORY RESEARCH
TECHNIQUES
Previous Research
 Literature review
 A directed search of published works, including periodicals and books, that discusses
theory and presents empirical results that are relevant to the topic at hand.

 Pilot Studies
 A small-scale research project that collects data from respondents similar to those to be
used in the full study.
 Pretest
 A small-scale study in which the results are only preliminary and intended only to assist
in design of a subsequent study.
 Focus Group
 A small group discussion about some research topic led by a moderator who guides
discussion among the participants.
EXHIBIT 4.7 EXAMPLE DECISION STATEMENTS, RESEARCH OBJECTIVES, AND RESEARCH
HYPOTHESES
 Research Design
 A master plan that specifies the methods and
PLANNING THE procedures for collecting and analyzing the needed
information.

RESEARCH  Basic design techniques for descriptive and causal

research:

DESIGN  Surveys
 Experiments
 Secondary data
 Observation
RESEARCH DESIGN FORMULATION

Research Design Formulation

Decision Whether the Research is Exploratory or Conclusive

Situational Analysis

Estimation of the Value of the Information

Secondary Data
Collection
Selection of Data Collection Approach
Primary Data
Collection
Selection of the Measurement and Scaling Technique

Selection of the Sample and Sampling Process

Selection of the Model of Analysis

Evaluation of the Ethics of the Research

Estimation of Time and Financial Requirement

Preparation of Research Proposal

SELECTION OF THE BASIC
RESEARCH METHOD
Survey
 A research technique in which a sample is
interviewed in some form or the behavior of
respondents is observed and described.
 Telephone
 Mail
 Internet
 In person
Sampling
 Involves any procedure that draws conclusions based on
measurements of a portion of the population.
Sampling decisions
 Who to sample?—target population
 What size should the sample be?
 How to select the sampling units?
 Random sample
 Cluster-sample

SAMPLING
GATHERING DATA

Unobtrusive Methods
 Methods in which research
respondents do not have
to be disturbed for data
to be gathered.
ACQUIRE DATA

Selection of Field Workers

Training of Field Workers

Data Collection Method

Secondary Data Collection

Primary Data Collection

Journals , Articles , Literature,

In-Depth Interview Focus Group Discussions Questionnaire
etc

Gathered Data

Validation of Field Work

Evaluation of Field Workers

PROCESSING AND ANALYZING DATA

Editing Codes Data analysis

Involves checking the Rules for interpreting, The application of
data collection forms for categorizing, recording, reasoning to understand
omissions, legibility, and and transferring the the data that have been
consistency in data to the data storage gathered.
classification. media.
HYPOTHESES SUPPORT

Theoretical Framework/Analytical Model

Hypotheses

Data Collection

Findings Hypothesis Rejected

Hypothesis Confirmed Revise Analytical Model

Proceed for Report and Presentation Justify the Rejection

 Steps in communicating the
research findings:
• Interpreting the research results
• Describing the implications
DRAWING • Drawing the appropriate
conclusions for managerial
CONCLUSIONS decisions

AND Reporting requirements

PREPARING A • Conclusions fulfill the deliverables
promised in the research proposal
REPORT • Consider the varying abilities of
people to understand the research
results
• A clearly-written, understandable
summary of the research findings
THE RESEARCH PROGRAM STRATEGY

Research project Research program

• A single study that addresses • Numerous related studies that

one or a small number of come together to address
research objectives. multiple, related research
• Uses specific techniques for objectives.
solving one-dimensional • Because research is a
problems, such as identifying continuous process,
customer segments, selecting management should view
the most desirable employee business research at a
insurance plan, or strategic planning level.
determining an IPO stock
price.
 A business researcher gives a presentation
to a music industry executive. After
considering the results of a test-market
examining whether or not lowering the
price of in-store CDs will lower the number
of illicit downloads of the same music, the

QUESTION executive claims: “The test-market was

conducted in eight cities. In two of the
cities, lowering the price did not decrease
illicit downloading. Therefore, lowering the
price does not decrease this behavior, and
we should not decide to lower prices based
on this research.” Comment on the
executive’s conclusion. What type of
inference is being made? Will the decision
not to lower prices be a good one?

© 2016 CENGAGE LEARNING INDIA PVT. LTD. ALL RIGHTS RESERVED.

LET’S THINK
A causal inference is being
made. In this case, the
executive concluded that since
illegal downloads did not
decrease in two markets that
prices were lowered, that
lowering the price does not
cause a decrease in the
undesired behavior. Is the
decision not to lower price a
good one? Probably not,
because in 6 out of 8 markets
in which the price of CDs was
lowered, illicit downloads
decreased.
A CLOSER LOOK
One could argue that the three conditions
of causality support lowering CD prices to
decrease illicit downloads. That is,
temporal sequence (i.e., lowering price
caused reduced illicit downloads in 6 out
of 8 markets), concomitant variation
exists (i.e., the two events “covary”), and
nonspurious association (i.e., there is not
another underlying cause influencing the
price reduction and the reduction in illicit
downloads) all exist to support the
conclusion that lowering the price of CDs
lowers the incidence of illicit
downloading.