CHAPTER 1

CONCEPT OF RESEARCH

1.0 INTRODUCTION

Research can be called as a purposive investigation. The objectives of

the research could be gaining familiarity with research objectives
(exploratory research), to describe the characteristics of a market or
many markets as well as of consumers, to decide the frequency with
which some phenomenon (say stock-out situation for essential goods
distributed as ration-card), to test hypothesis, etc. The significance /
importance of the research can be understood from the fact that it
provides the basis for all policies and strategies may be for any marketer
or even to government. There are many types of research like
descriptive, analytical, applied, basic, quantitative and qualitative, etc.

1.1 DEFINITIONS OF RESEARCH

(1) It is the activity which extends, corrects and verifies the

knowledge.
(2) It is the activity of finding new ways of looking at known / familiar
data in order to explore new ways to change it as expected /
intended.
(3) Research is the process which involves the steps like defining
the problem, identifying research objectives, formulating
hypothesis, collecting and interpretation of data, deriving
findings, conclusions and then identifying the action plan.
(4) Research is the well planned activity which is designed and
implemented to provide the data for solving important genuine
and recurrent problems.
(5) Research is the activity which involves manipulation of things,
concepts or symbols for the purpose of generalizing to extend,
correct or verify knowledge, whether that knowledge aids in
construction of theory or in the practice of an art.
(6) Research can also be said as a movement from the known to
unknown facts
(7) It is the systematized efforts to gain new knowledge.

1
1.2 DEFINITIONS OF METHODOLOGY AND RESEARCH
METHODOLOGY

“Methodology is a term which should not be misused for “method” or

“technique”. Methodology has got an important meaning. It becomes
first an approach towards inquiry and or research then later evolves into
particular methods or techniques. In the applied use it is concerned with
selecting specific technical tools and techniques for collecting data and
analyzing it. In the theoretical use, it is concerned with the philosophical
fields of inquiry that can be used to conceptualize the problem under
study. There are two different methodological stances. Discipline
research is oriented towards enriching knowledge in a scientific discipline
whereas policy research denotes to another methodology that is
philosophically committed and serve as a guide to social action. Quite
often methodology is used in the applied sense undermining its
theoretical perspectives, though both are the two sides of a coin. Some
of the definitions are as follows:

(1) Methodology in the applied sense refers to various methods used

by the researcher right from data collection and various techniques
used for the same for interpretation and inference. Methods and
techniques are often used synonymously in research literature.
Research methodology is what must be done, how it will be done,
what data will be needed, what data gathering will be employed,
how sources of data will be selected and how the data will be
analyzed and conclusions reached. When we talk of research
methodology we not only talk of the research methods but also
consider the logic behind the methods we use in the context of our
research study and explain why we are using a particular method
or technique and why we are not using others so that research
results are capable of being evaluated either by the researcher
himself or by others.
(2) Research methodology is “a procedure designed to the extent to
which it is planned and evaluated before conducting the inquiry and
the extent to which the method for making decisions is evaluated”.
The word methodology is used freely in different context.
(3) Methodology is not merely description of methods / set of methods
or techniques. Techniques are aids to research like are aids to
research like regression and correlation. Methodology provides
2
 arguments, perhaps relationships, which support various
preferences entertained by the scientific community for certain
rules of intellectual procedure, including those for forming
concepts, building models, formulating hypotheses and testing
theories. Methodology is neither a study of ‘good’ methods nor a
study of ‘methods’ used but rather a study of reasons behind
principles on the basis of which various types of propositions are
accepted or rejected as part of the body of ordered knowledge in
general or of any discipline. In short, we may define methodology
as the science of procedure to build, verify or extend scientific
knowledge.

A thorough understanding of a scientific methodology alone will

contribute an appreciable research piece. Scientific piece of
investigation will provide an argument which is as true for each
individual mind as of the researcher’s own mind. Therefore, the
most important step in a research design is the selection of an
appropriate methodology.

The significance of the use of the term ‘methodology’ is that it

requires an argument to connect the choice and practice of
particular methods to the way that the problem is conceived and
the utility and limitations of the outcome. It is in this sense of the
term, as requiring a critical justification for the adoption and
practice of particular research methods that we claim that our
concern is with ‘methodology’ rather than with methods alone. ..
Only rarely do books on research methods discuss situations in
which particular methods should not be used, or situations within
which the methods chosen may cause distortion or precipitate
changes are the not captured by the methods themselves.
(4) Methodologically designed research can be considered as a piece
of scientific work though approximation to fool proof methodology is
a continuous and never ending price. Thorough knowledge about
the latest development in the concerned branch is absolutely
necessary for designing a scientific methodology. Research is a
fact finding process through systematic and in-depth study through
the various research process including collection compilation,
presentation and interpretation of derails or data. The only way to

3
 find truth and gain knowledge is the scientific method of
investigation.

The researcher must be able to give clear scientific explanation and the
logic behind them for a host of the following questions:

1. Why the particular research study is undertaken?

2. How the research problem is stated?
3. What are approaches towards the inquiry?
4. What are the tools and techniques that will be used for data
collection? Why this method is adopted? Is the sampling
design appropriate?
5. How the hypotheses have been framed?
6. How the hypotheses will be tested?
7. How the various statistical tools and techniques are selected.
What is the method of data processing? How it will be
calculated?
8. Which techniques are used to evaluate the accuracy of results?

The framing of a good research methodology is compared to that of an

architect who designs a building, i.e., “he has to evaluate why and on
what basis he selects particular size, number and location of doors,
windows and ventilators, uses particular materials and others and the
like”. Literature review and interactions with experts will help one to
sharpen the methodology. The external examiners, who evaluate the
thesis, approve one which is conceptually, methodologically and factually
correct and to the best of his knowledge it is free from errors and
plagiarism (copying) and sufficiently of good standard. The research
quality that equates to international excellence or national excellence in
all areas or in majority of the areas of a thesis to a great extent depends
on the formulation of a good and scientific research methodology.

Finally, the methodology adopted should be open to pubic so that others

can know how one reached the conclusions about a study. The means
of method of enquiry is opened for public evaluation and criticism.

1.3 OBJECTIVES OF THE RESEARCH

4
The basic purpose of the research is to identify the action plan to answer
to questions through the application of scientific procedures. The key
objectives of the research could be as follows:

(1) To become familiar with a certain mechanism or phenomenon or to

gain new insights into it. This type of research is normally called as
exploratory research design. For example, before parliamentary
elections all political parties conduct research on priorities of the
voters so as to prepare election promotion plan.

(2) To describe accurately the characteristics of a particular consumer-

group / segment, market situation or an industry. For example in
Indian Tourism marketing per capita spending power of domestic
tourists in Rest. 3500 per annum whereas spending power of
inbound and outbound tourist is Rest. 58000 p.a. As regards to
market situation is concerned, we can describe Indian Software
industry revolving around only financial solutions for banking
sector. We can also describe Indian home Appliances Industry as
a market worth Rs. 48000 crores, growth rates 7.10% and having
intense completion, but main dominant players are MNCs like LG,
Samsung and home grown Videocon international.

(3) To identify the frequency with which some phenomenon, say stock-
out, occurs or the causes associated with the particular
phenomenon.

For example in a thick populated area, there could be frequent

stock-out of most essential goods like LPG-cylinders, kerosene,
food grains, etc. State Govt. may be wanted to know frequency of
stock out and causes like distribution bottlenecks, etc. The leading
retailers of India like Food world, Shoppers Stop, etc. conduct
stock taking and or implement latest SCM software to avoid the
situations of stock out. Similarly many industries in India and in
globe, conduct research to study business-recession cycle
frequency. For example the global recession during 1991 and
1997 was well predicted before occurrence. In similarly way the
recession to Indian Telecom Industry during 2000-2002 was also
predicted. Current predictions about some of the industries are
management education, especially MBA and MCA is booming and
5
 will appreciate for another 10 years. There is great demand for
MBAs having engineering background.

(4) To formulate and test a hypothesis may be to establish the

relationship between say sales and market share or sales and
customer satisfaction, level, etc. For example, Gujarat Cooperative
Milk Marketing Federation (GCMMF) was under impression that it
has 20% market share for liquid milk (Amul-Taza) at Nagpur during
2004. It conducted research for which hypothesis was formulated
and tested. The reality was, Amul’s market share formulated and
tested. The reality was Amul’s market share was only 11.5% at
Nagpur during 2004. Exactly reverse happened incase of
Cadbury’s Dairy milk chocolates. It thought that its market share
during 2004 is 70% whereas it was 72% across four metros and
nine mini metros. After 1999, Videocon’s market share in CTV
market was on decline. It wanted to know the cause. The
research indicated that Videocon needed rectification in brand-
image. Videocon immediately responded and appointed Shahrukh
Khan as a brand-ambassador.

1.4 MOTIVATIONS IN RESEARCH

Why to conduct the research? The motivations could be as follows:

(1) Aspiration to derive the consequential benefits due to the

research.
For example, till 2004, the brand image of Lux soap was ‘The soap
of the stars’. This positioning worked for 50 years. However
during 2005, the brand lost the magic. The research was done by
HLL, which indicated that (a) positioning should be changed to
glamour and luxury and (b) it should come out from the image
product for female. HLL repositioned Lux like Luxurious product
that make her feel beautiful and special’ with punch line, ‘Brings out
stars in you’ HLL also changed celebrity from female actress to
male actor Shahrukh Khan. Both things are now working to bring
out Lux from red to black and white.

Lifebuoy soap was also suffering from image, like ‘Tandurasti Ki

Raksha Karta hai Lifebuoy’. The research said that repositioning
and brand extension is must. HLL repositioned Lifebuoy from
6
 Tough Soap and Tandurasti to Germicidal perfume and extended
to lifebuoy Gold and Lifebuoy Plus. The obvious benefit of rising
sales is the contribution of the research.

During 2000 AD, HLL’s all tea brands were suffering from
competition due to which growth in sales became stagnant. India’s
tea market size is Rs. 6000 crores, in which branded tea market
occupies Rs. 2500 cr and unbranded or loose tea occupies Rs.
3500 cr. Research indicated that growth would be only in loose tea
market. HLL successfully launched ‘A1’ brand tea to snatch the
customers from loose tea market, with punch line ‘strong cup of
tea’ and market segments focused are housewife and journalists.
The philosophy used, ‘due to strong cup of tea, ordinary man like
housewife and or a journalist get courage to face difficult situations
in the life.

(2) Intention to face the challenges in overcoming the

competition.
During 2005, P&G reduced the prices of the detergent Tide
considerably. For example its price was Rs. 40 for 500 gm. HLL
quickly responded to the change and launched the brand extension
of Surf ‘Surf Excel Blue’ for price of Rs. 50 for 750 gm. To sustain
the competition from band ambassador Shekhar Suman, HLL
opted comparably unknown faces with the statements and counter
statements like Jayga-------- Nahi Jayyega. The well thought
research by HLL for surf Excel Blue is clear winner. Tide is in big
problem.

(3) Intention to apply research for successful creativity.

During 21st century, washing machine almost became house-hold
item. However, due to heavy traffics, habits towards consuming
fast food at road side restaurants became very common. The
result was the “dust” and “blackened cloths”. Marketers identified
the priority of the consumer -------- she wanted to get rid of ‘daag’.
HLL P&G successful developed the ad-campaigns, ‘Dundate Raha
Jayoge’, Kuch Pane ke Liye Kuch Dhona Padata hai’, ‘Daag Acche
Hai’, etc.

(4) Intention to integrate societal marketing (social welfare) with

main strategic marketing.
7
 Consumer perception about the company and company products is
very crucial to understand from marketing point of view. If social
welfare is integrated with marketing strategy then it could have
cutting edge. History proved that due to social welfare, the image
of the company could be changed. For example, Tisco says
manufacturing steel is our second priority. Our first; priority is
society welfare. Hence Tisco say we also manufacture steel. The
result ------------- in last 90 years there are no strikes and no
production losses in spite of the location of factory on the border of
Bihar and Orissa where labour and labour union problems are
dominant.

P&G also designed ‘Project Dhrusti’ for ‘Whisper’ and ‘Mr. Gold’ for
all products under umbrella brand.

HLL ‘Shakti Amma’, ‘Mobile hospital’ are winner society welfare

projects, which helped to project favourable image.

(5) Intention to get respectability within the country and out of the
country.
India’s most successful IT trio is Infosys, Wipro and TCS. India
and Indians are respected in globe due to the powerful brain of
Narayan Moorthy, Azim Premjee and Mr. S. Ramadorai, CEO,
TCS. The respectability is the result of lot of hard work to deliver
the value to the stakeholders. For shareholders the respect is due
to very attractive dividend and stock price. For country, the respect
is due to forex earning ability and employment generation. For
global countries the respect is due to its intelligence, price, service-
delivery and out sourcing ability. I always admire the skill of the trio
and hence would like to describe, ‘Real Gold of Indian IT’. (Per
employee profit after tax for Infosys during 04-05 was Rs. 5,00,000
for TCS Rs. 4,40,000 and for Wipro Rs. 3,70,000). Please read
article 1.35 India’s most Admired Companies.

1.5 IMPORTANCE OF THE RESEARCH

8
 Significance of research and research leads to invention.
Following facts highlight the importance of the research
(1) Research facilitates logical or scientific thinking process
which leads towards flow less strategy formulation.
(2) It facilitates identification of ‘trends’ which ultimately
responsible in marketing opportunities.
(3) Decision making becomes easier for well researched
phenomenon.
(4) Research is important in solving various
(5) operational and planning problems of business and industry.
(6) It helps understanding perception of the society about the
marketer and accordingly designs the marketing strategy.

1.6 TYPES OF RESEARCH

There are many types of the research like descriptive, analytical, basic,
applied, qualitative,quantitative, conceptual, etc. Let us discuss some of
the research.

I (a) Descriptive Research: Researcher has to report what has

happened or happening like say frequency of shopping, preference for
specific brands, etc. In this research, normally market data is collected
through observations, mail method and or personal interviews. For
example buying habits can be studied through observations. Consider
that consume prefer to shop for small pack sizes of 15 gm tube, say per
week / fortnight rather than bigger pack sizes like 200 gm / 250 gm, etc.
Similarly Indian housewife prefers to shop daily or alternate day for
vegetables to ensure freshness. Brand preferences also can be studied
through observations.

1.35: India’s most admired companies – Methodology

Issues covered: Most admired corporation – Ranked Attributes

• Management Quality
• Financial Performance
• Returns to shareholders
• Growth Prospects
• Company Ethics
9
Data collection Method: Quantitative, personal interviews with 200
respondents using a structure questionnaire.

Target Respondent: Officer / Executive:

- with 2-5 years work experience, ‘or’
- with 5+ years with work experience, ‘or’
- with 5+ years of experience and is a CEO/MD/VP
Sampling: Purposive sampling – 100 face-to-face interviews done at
home / office.

Overall Index – Calculation

• The respondents were asked to divide 100 points, amongst

these attributes according to the importance they attach to each
of the attributes
• The average importance for that attribute was then calculated.
This average importance was then used as a weight to arrive at
the overall ranking of each company
• The top 5 ranks were taken. For each attribute 5 marks were
given to the company which was ranked as 1 on that attribute.
Similarly, 4 marks were given for rank 2, 3 marks for rank 3 and
so on. 1 mark was given for rank 5.
• Average marks for each company were calculated and weights
were then attached to them at the company level.
• Thus the overall composite index for the companies was arrived
at.

Company Weights

Weights used to arrive at overall index for companies

* Management Quality 32.0
* Financial Performance 24.1
* Growth Prospects 16.6
* Returns to Shareholders 15.6
* Ethics 11.7
100.0

10
 120

100

80

60

40

20

0
1

Ethics 13
Growth Prospects 17
Returns to shareholders 17
Financial performance 25
Management quality 29

30

25

20

15

10

0 Hindust Relianc Infosys

Hero Bharti Tata
HDFC Maruti TCS an e Wipro Technol
Honda Telecom Motors
Lever Indsutrie ogies
Series1 9 10 10 12 13 13 15 20 26 30

(b) Analytical Research: The researcher has to use secondary data

(information which is already available) and analyze it to make a
critical evaluation of the situation. It may even aim testing
hypothesis, specifying and interpreting relationships. In this
research correlation technique is used to analyze the data.
11
 Example: (i) after union Budget is presented in Lokasabha
during February of each year, analytical research is conducted
by leading news channels to enlighten the viewer’s impact of
budget on various commodities, industries and stock markets.
(ii) During month of May every year i.e. after financial year
ending, Economic Times conducts analytical research on
performance of various industry sectors in total exports from
India. One major finding is Agri Export’s share in total exports is
declining every year.

II (a) Basic or Pure Research: The research which is done for

knowledge enhancement, the research which does not have immediate
commercial potential, the research which is done for human welfare,
animal welfare and plant kingdom welfare is the basic or pure research.

Government of India, through Census, does research on population

count to identify total population of India, no. of male, female, no. of
families, no. of voters, etc. One of the major findings of census is, some
rural areas, proportion of female is 10% less as compared to male. In
some metros and mini metros, female count is marginally less than male.
This situation might create problems in future. Govt. responded quickly
to this trend and have implemented ad-campaign having punch line ‘a
world without women’.

Discovery TV channel highlights the basic research done by Australia

and US Governments towards animal welfare and plant kingdom welfare.
Some of the documentaries on animal rescue operations are quite
remarkable.

(b) Applied Research: The research which has immediate

commercial potential is called applied research. Applied research can
further be classified as problem oriented and problem solving research.

Problem Oriented Research – This type of research is done by Industry

Apex Body for sorting out problems faced by all the companies. For
example NASSCOM regularly conducts problem oriented research for
the benefit of all software companies. Similarly CII does the research for
all types of companies. At global level, WTO does problem oriented
research for developing countries. In India, APEDA (Agriculture and

12
Processed Food Export Development Authority) conducts regular
research for the benefit of agri industry.

Problem solving Research – This type of research is done by an

individual company for the problem faced by it. For example if Videocon
International conducts research to study customer satisfaction level, it
will be problem solving research. The findings of problem solving
research are unique and only true for that company which does the
research and cannot be generalized. Whereas findings of the problem
oriented research could be generalized.

Market Research and Marketing Research are the applied research.

III (a) Quantitative Research: It aims to measure the quantity or amount

and compares it with past records and tries to project for future period.
For example, total sales of soap industry in terms of rupee crores and or
quantity in terms of lacs tones for a particular year, say 2005 could be
researched, compared with past 5 years and then projections for 2006
could be made.

(b) Qualitative Research: It is mostly useful in consumer behavioural

science. The research undertaken to collect qualitative data (subjective
data) in form of (i) word association (ii) sentence completion
(iii) story completion (iv) picture (v) Thematic apperception test
(TAT) is called qualitative research.

(i) Word Association – Words are presented, one at a time for a

particular product category or service category and the
respondents are asked to mention the first word that comes to
their mind.

For example (a) which first word comes to your mind when you hear
(Sahara) Air line services?
(i) Timely departure and arrival of flights (ii) Safety (iii) consumer
friendly

(b) Which first brand comes to your mid when you think of anteceptic
liquid (i) Dettol (ii) Savlon
(c) Which first brand comes to your mind when you think of luxury of
smoking (i) Gold Flake (ii) Wills (iii) Four-square
13
(ii) Sentence completion : Respondents are asked to complete an
incomplete sentence.
For example (a) when I choose flying by air, the most important
consideration in my decision is ________________________
(b) When any graduate student thinks of post graduate management
education, the most important parameters which influence the
decision are _____________

(iii) Story completion: Respondents are asked to complete the

incomplete story. Incomplete story could be as follows: ‘Three years
back, when I used to fly with Indian Airlines, I never used to reach the
destination in time due to the flights not taking off on time. Moreover the
interiors of the plane were shabby and food quality was also not good. I
never used to get the baggage in time. These facts compelled me
thinking on _____________’. Now complete the story.

(iv) Picture: A picture of two characters (say two airline passengers) is

presented, with one character making a statement. Respondents are
asked to complete the reaction of other passenger / character.

Indian (Air Line) flight No. 4200 Indian Waiting

Room

Well, here It’s Flight time.

is the food We are still in
waiting room
☺☺ ☺ ☺

Passenger 1 Passenger 2 Passenger 2

Passenger 1

(v) Thematic Apperception Test (TAT) – A picture is presented

and respondents are asked to make a story about what they
think is happening or may happen.

Flight time Time now

 

14
(IV) (a) Conceptual Research : It relates itself to abstract ideas,
concepts or theory. It results in development of new concepts or re-
interpretation of existing one.

Example: Idea or concept about new brand launching could be,

‘Consumers will never buy new brand unless it offers more benefits with
reasonable quality’.

P&G while launching new shampoo brand Rejoice worked on above

concept. While maintaining reasonable quality, it offered price benefit
(Rejoice 100 ml bottle cost Rs. 38 as against Rs. 50 for clinic all clear
and Rs. 55 for Sun Silk).

P&G also identified that if one common theme is used for brand
promotion, consumer respond favourably. For launching and thereafter
promotion, P&G used the platform of R.D. Burman’s Bollywood songs
like Ek Ladki Ko Dekha to Aisa Lag, Rim Zim Rim Zim, O Haseena
Zulpho Wali Jane Jaha. Example : Abstract idea or myth could be,
‘consumer do not buy product but buy brand’.

It is seen that this fact is half true. For low value products, consumer
may buy product, whereas for high value things may not work
sometimes. For example, US based marketer Metal, when launched
Barbie Doll in Japan, suffered huge set back only because the doll did
not look like Japanese Girl / Women.

(b) Empirical Research: It relies on experience, observation. It

develops hypothesis and proves that the hypothesis may be through
observation or experiment.

Example: After organized retailing accelerated Indian trail industry, the

marketers believed that it is the manufacturers’ brands which mot6ivate
trail marketing. Hypothesis was formulated with assumption that
manufacturers’ brands dominate Indian retailing. Research disproved,
revealing penetration of private brands to the extent of 65%. The

15
hypothesis was disproved through observations as well as through
experiments.

V (a) One Time Research: The research for the product/brand is done
only once in a year or once in few years because the market is steady
and consumer tastes, preferences do not change so rapidly. For
example, engineering products, industrial goods like boilers, dg sets,
compressors, etc. do not require frequent changes. In such cases, it is
better to buy the research from specialized research organization.

(b) Longitudinal Research: If research needs to be undertaken

several times in a year (2 to 3 times in a year) because of the volatility of
the market, it is called longitudinal research. For consumer electronics
goods and non-durables, the tastes and preferences of the consumer go
on changing very soon and hence the frequent research is compulsory.
In such cases, the marketer should have his own research department
rather than outsourcing the research.

VI (a) Field Research: The experiment done at the market place is

called field research.
Example : Hutch launched ‘chhota re-charge’ to increase its market
share in pre-paid cards.

Most of the sales promotion schemes aim at temporary acceleration of

sales are the classic examples of field research.

(b) Laboratory Research: The research done in-house or in the

laboratory is known as laboratory research. For example, recall and
recognition tests for the advertisements are done in-house. Similarly,
pre-testing of the questionnaire is done in-house.

VII. Clinical Research or Diagnostic Research: It is similar to

descriptive research but with the difference that more emphasis is on
what is happening, why it is happening, what course of action can be
designed to prevent/augment the phenomenon etc. It aims at identifying
cause of the problem and the possible solution. It tries to seek
association between two or more variables. The technique used for data
collection and analysis is Case Study, In-depth Interviews to discover
causal relationship.

16
Case Study:

Mr.B.C.Sharma was business development management with Oberoi

Group of Hotels to mange package tour programmes for domestic high
net worth tourists and in-bound tourist. The Company was unable to
meet tourist’s expectations on the attributes like food products, preferred
hotel reservations, preferred week’s utilization, etc. Mr.B.C.Sharma left
the job and conducted in-depth interviews with target customer and then
launched a concept ‘Apartment on wheel’ i.e. moving apartment having
cabin and beds for cook, driver, cabin for w.c., bath and kitchen and big
cabin for living room containing 6 beds with A.C., mini-bar, mini-library,
etc. Mr.Sharma constructed these cabins on truck chassis Tata
LP42/1210. The concept succeeded for holiday locations at 8-10 hours
journey.

1.7 SOCIAL RESEARCH

(1) Social research can be defined as ‘a scientific undertaking, which

by using logical and system techniques, which aims at (i)
discovering new facts and or verifying old facts, (ii) analyzing their
sequences, inter relationships and casual explanations which could
be derived within the appropriate theoretical frame of reference (iii)
developing new scientific tools, concepts and theories which would
facilitate reliable and valid study of human behaviour.
(2) Social research is a systematic method of exploring, analyzing and
conceptualizing human life in order to extend, correct or verify
knowledge of human behaviour and social life. In other words,
social research seeks to find explanations to unexplained social
phenomenon, to clarify the doubt and correct the misconceived
facts of social life.

1.71 Objectives of social research

(i) To study human behaviour and its interaction with the

environment and the social institutions.
(ii) To identify casual connection between human activities and
natural laws governing them.

17
 (iii) To develop new scientific tools, concepts and theories which
would facilitate reliable and valid study of human behaviour
and social life.
1.72 Scope of social research

Every group of social phenomenon, every phase of human life and every
stage of past and present developments are the materials for the social
scientists.

Broadly it covers the areas like biological, psychological, socio-cultural,

temporal and environmental factors associated with behaviour of human-
beings.

1.73 Functions of social research

(i) Contribute to human understanding of social reality

(ii) Diagnosis of social problems and their analysis like poverty
and crime, unemployment and poverty, economic imbalance,
social tensions (e.g. security of call centres for girls working
in night shift), low productivity, technological backwardness,
etc.
(iii) To equip human beings with first hand knowledge about the
organizing and working of the society and its institutions.
(iv) To identify the causes of social evils and problems and then
formulate social welfare action plan.

1.74 Limitations of Social Research

(i) The social research is done by the scientist, who also is a

human beings and part of human society and hence may
have bias in research study.
(ii) Social science or human behaviour is too complex, varied
and every changing. Hence experimentation cannot be
standardized for longer durations.
(iii) Human behaviour can be studied by other human beings only
and not by robotics. This always distorts fundamental facts

18
 being studied so that there can be no objective procedure for
achieving the truth.
(iv) Common problems faced by researchers are refusal of
sample, improper understanding of questions, loss of
memory of the samples, etc.
(v) The quality of research findings and conclusions depends
upon the soundness of decisions made by the social
investigators on research process as correct definition of
research problem, correct sample selection, appropriate
statistical techniques for data processing. Any mistake in any
of these decision areas will challenge the validity of research
findings.

1.8 SCIENTIFIC METHOD

The Scientific method is theorizing based on experimentation and is thus

very close to Empiricism It also needs quite a bit of logical deduction and
so appears closer to the top of the graph. The essential tenets of the
scientific method are (1) direct observation of phenomena; (2) clearly
defined variables, methods, and procedures; (3) empirically testable
hypotheses; (4) the ability to rule out rival hypotheses; (5) statistical
rather than linguistic alternative justification of conclusions; and (6) the
self-correcting process.' This is the most commonly used style of thinking
in research methodology.

In this style of thinking hypotheses are proposed based on some proven

theories and then they are practically tested. They require a considerable
amount of logical deduction, but not as much as in Postulational theories.
Nevertheless, the use of logical deduction is considerable. We shall
discuss logical' deduction further in the following section.

The Thought Process

Reasoning forms the basis of the scientific inquiry. The thought process
of a scientist may be based on deduction, induction or a combination of
both. Let us understand in detail each of these processes of thinking
needed for conducting and drawing conclusions from marketing
research.

19
Deduction

Deduction is a form of inference where conclusion necessarily follows

from the given premises, i.e. neither can the conclusion contradict the
premises nor can it assume new premises. A deduction is correct if it is
both true and valid.

A deduction is true if the premises on which it is based are true, i.e., they
agree with the real world. For example, premise like "world is flat" is a
false premise. Deduction based on such premise will also be false.
Deduction is valid if it is impossible for the conclusions to be false, and if
the premises it is based on is true. That means the method of drawing
conclusion should be logical and valid. Truth and validity of a deduction
together mean that conclusion is not logically justified (even if true) if
either one or more of the premises is false or if the method of deduction
is incorrect. The conclusion may still be correct due to some other
premises not considered. Let us look at an example.

Premise 1: Pavan is a good boy.

Premise 2: Prathap and Pavan are friends.
Conclusion: Pratap is a good boy.

Here both the premises are true, but the argument that led to the
conclusion is not valid and so the deduction is not valid. The conclusion
may be due to some other reasons but not as a result of the given
premises. Let us look at an example where the deduction is not true.

Premise 1: Reading too much dulls one's mind

Premise 2: Prathap reads too much
Conclusion: Prathap must be dull-headed.

Here the conclusion logically follows the premises, but premise 1 is a

dubious statement. If premise 1 is false then the conclusion is also false.
Let us look at an example in which there is a logical flaw.

Premise 1: Dogs do not hate water

Premise 2: Rabid dogs hate water
Conclusion: Rabid dogs are not dogs.

20
Here premise 1 is correct and true in general. But, the rabid dogs are
also dogs. If we consider this, then the first premise is not correct. One
has to correct the first statement, based on the second. This leads to the
invalid conclusion.

Premise I: Rain is a probability if the sky is cloudy.

Premise 2: The sky is cloudy today.
Conclusion: Rain is a probability today.

This deduction is true and valid. Such deductions are made every
moment by one and all and look obvious.

Induction

Induction is the conclusion drawn from one or more facts, bat not
necessarily from facts alone. The conclusion explains the facts, but the
facts just given are not sufficient to lead to the conclusion. There is a
need for additional facts from the previously learnt knowledge. To
illustrate, suppose Kiran approaches his boss Pavan with a routine
problem, but, to his shock, receives rude treatment for no mistake of his.
Then Kiran can based on his previous experience conclude any of the
following:

• Another colleague of his might have just annoyed Pavan.

• May be, just then, his boss, Sudba, gave him a piece of her
mind.
• May be a personal problem is bothering Pavan
• May be he was annoyed by a traffic jam on his way to office.

Any of these conclusions can explain the fact that Pavan treated Kiran
rudely. However, at the same time, the given fact cannot lead directly to
any of these conclusions. These conclusions are based on some
previous experience, i.e. on some other facts also. And conclusions are
in reality only hypotheses and need further verification to ascertain the
correctness.

Combination Of Induction And Deduction

21
To explain an observed phenomena a researcher formulates some
hypotheses that needs to be verified by the use of induction. The
researchers then use deduction to check whether each of the
hypotheses can explain the given facts completely by itself. Once this is
done, it is necessary to perform empirical tests with all these hypotheses
and then select a hypothesis that passes these tests. This method is
described as the double movement of reflective thinking by Dewey and is
adapted by Cooper and Schindler. The process the researcher should
follow is as outlined below. The researcher

• Encounters a curiosity, doubt, barrier, suspicion, or obstacle,

generally termed as a problem.
• Struggles to state the problem: asks questions, contemplates
the existing knowledge, gathers facts, and moves from an
emotional to an intellectual confrontation with the problem
• Proposes hypotheses to explain the facts that are believed to be
logically related to the problem
• Deduces outcomes or consequences of the hypotheses:
attempts to discover what happens if the results are in the
opposite direction of that predicted, or if the results support the
expectations.
• Formulates several rival hypotheses
• Devises and conducts a crucial empirical test with various
possible outcomes, each of which selectively excludes one or
more hypotheses.
• Draws a conclusion, an inductive inference, based on
acceptance or rejection of the hypotheses
• Feeds information buck into the original problem modifying it
according to the strength of the evidence.

These steps are interdependent. They are also not sequentially fixed.
Based on the nature of the study some of the above steps may be
eliminated or new steps may be added.

Scientific Method And Its Major Characteristics

22
Two major characteristics of the scientific method are validity and
reliability. Validity is a measure of the match between what the research
claims to measure and what it actually measures. In other words it
measures the effectiveness of measurement in research. For example, a
people meter on a TV set is supposed to be measuring the viewership of
a particular program, while in reality it only measures the number of
occasions the TV was tuned to that particular channel when the program
was relayed. The Television may be on but there may be no one
watching it. Moreover even if there are viewers, the people-meter cannot
count how many. Thus the assumption that the people-meter measures
viewership validity is wrong. Hence a research which assumes it is
measuring the viewership with people meter is not valid. Validity seems
easily achievable, but as in the above example, there may be minor
deviations that can easily go unnoticed. Hence, to ensure validity one
should carefully and purposefully probe into every detail of the research.

Reliability is a measure of repeatability of the research. It is also a

measure of the investigator's independence of the research. In other
words, if a research is reliable, then any other investigator repeating it
will obtain the same results. This characteristic is also known as
objectivity. Achieving this is very difficult even in the hard sciences. Apart
from validity and reliability, the scientific method has many other
characteristics. Some of the important ones are:

• Logical: Logic is necessary in designing and following up a

research process, and arriving at conclusions.
• Systematic: The process of research is marked by thoroughness
and regularity, and so it is considered to be systematic.
• Empiricism: Research is done through observations that are
based on direct sense experience. Thus it is empirical in nature.

Research should be carried out in a scientific manner to reduce the

uncertainty in a situation and to ensure accuracy of the results the
research yields. This needs the use of scientific method.

23
 Box 1.7 :Steps that make up the scientific method

Observation:

A good scientist is observant and notices thing in the world around him / her. (S)he sees, hears,
or in some other way notices what is gaining on in the world, becomes curious about what’s
happenings and raises a questions about it.

Hypothesis:

This is a tentative answer to the question: an explanation for what was observed. The scientist
tries to explain what caused what was observed (huy7po=under, beneath; thesis = an arranging)

• Hypotheses are possible causes. A generalization based on inductive reasoning is to

a hypothesis. A hypothesis not an observation, rather, a tentative explanation for the
observation.
• Hypotheses reflect past experience with similar questions (“educated propositions”
about cause)
• Multiple hypotheses should be proposed whenever possible. One should think of
alternative causes that could the observations (the correct one may not even be one
that was though of)
• Hypotheses should be testable by experimentation and deductive reasoning.
• Hypotheses can be proven wrong / incorrect, but can never be proven or confirmed
with absolute certainty.
• Someone in the future with more knowledge may find a case where the hypothesis is
not true.

Prediction:

Next, the experimenter uses deductive reasoning to test the hypothesis.

• Inductive reasoning goes from a set of specific observations to general conclusions: I

observed cells in x, y and organisms, therefore all animals have cells.
• Deductive reasoning flows from general to specific. From general premises, a
scientist would extrapolate to results: if all organisms have cells and humans are
organisms, then humans should have cells. This about a specific case based on the
general premises.
• Generally in the scientific method, if a particular hypothesis / premise are true, then
one should expect (prediction) a result. This involves the use of if then logic.

Testing:

Then, the scientist performs the experiment to see if the predicted results are obtained. If the
expected results are, that supports the hypothesis.

24
Scientific Method-In Marketing As Compare Dot Physical Sciences

Scientific method, as the name suggest, is more applicable to the

sciences than to the arts. I Marketing Research, the decision-maker
applies the methods of science to the art of marketing. Thus the
reliability and validity of the method are lower when it applied to
marketing research. The following are the major differences between the
physical sciences and marketing research that affect the reliability and
validity of research process.

Research conditions

In physical sciences, an experiment is conducted under a controlled

environment. For example, in a chemical experiment, temperature,
pressure, etc. are controlled to the required extent. In marketing
research, it is almost impossible to achieve such perfect control of all the
variables. Unlike physical sciences, marketing research does not involve
inanimate, controllable factors, but involves people their behaviour, their
perceptions and their attitudes, which change with time, place, presence
of others at that instance, etc. These factors, being complex, adversely
affect the reliability of research in marketing.
Very low Low Probable High Very high

Figure 1.7 : Five Point scale to measure the likelihood of purchase

Measuring Instruments

25
Measuring instruments in physical sciences provide very high accuracy;
For instance, physicists can measure up to a 10-15 of a meter, which is a
millionth of a billionth of a meter. However, in marketing it is difficult to
arrive at such accuracy. For example many questionnaires use a five-
point scale to measure the likelihood of purchase. The scale is shown in
Figure 1.7. Such a scale gives only a crude measure: moreover the
meaning of the words in the given scale may mean different things to
different people. This affects both the validity and reliability of the
research.

Personal Interests

Ideally, the personal interests of the researcher should not affect

research results. But it happens both in physical and social sciences.
The extent to which the results affect the researcher is more in marketing
compared to the physical sciences. In physical sciences, research
results affect only the fame of the researcher whereas in marketing
research, they affect their work and thus their life in marketing research,
it often happens that strong willed marketing managers may need
research to support their decision, while researchers themselves may be
anxious to see their organization, and thus their careers, prosper. This
forces the researchers to push their research so that it is acceptable to
their clients. If the researcher is associated in the decision-making
process as well, the personal interests of the researcher in the result
increase further.

Influence Of Measurement

Sometimes the process of measurement may itself affect the result, i.e.
the process researchers undertake for making the measurement may
result in a change in the outcome. In science, the affect of measurement
on the result is not very pronounced except in fields like quantum
mechanics. But in marketing research the influence of measurement on
the result is very appreciable. For example, when a family has a "people
meter" on its television set, it may modify their viewing habits because
they know that all their viewing is recorded. Similarly, people participating
in focus groups know that they are being observed and so they may
come up with socially acceptable answers.

26
Re-questioning a group of respondents may also affect the results. If a
group of respondents are questioned a second or third time, they may
give different answers from what they would have given if they were
questioned for the first time. For example, if a company has quizzed a
group of respondents about its brand before an advertisement campaign,
then after this the group will start noticing the advertisements with more
interest than it would have done without us quizzing. This would change
their responses in the questioning from what the responses would have
been had they not been questioned before.

The person who administers questionnaires or conducts an interview can

also influence the result by his communication skills and his knowledge
of the project. When the respondents approach him for clarifications the
knowledge or lack of it will affect his reply. This, in turn will affect the
result. Some times the mere presence of an interviewer may affect the
result. This is more clearly explained in the chapter "Instruments of
Respondent Communication". Respondents themselves often change
opinions with time. These factors affect the validity and reliability of
marketing research.

Time Pressure

In managerial decisions, timeliness becomes more important than the

aptness of the decisions, per se. In any given situation, there is no
perfectly right decision, but only the most appropriate decision that can
be taken in the available time. This exerts time pressure on marketing
research and may reduce validity and reliability of the research results.

Short-Term Goals

Marketing research generally aims at reaching short-term goals, i.e.

helping in solving an immediate managerial problem Management does
not aim at preserving and propagating the acquired knowledge. In
comparison, science aims at the accumulation of a knowledge pool and
uses this knowledge pool to arrive at some general theories. Once
established, these theories remove the need for reinventing the wheel
and allow the researchers to concentrate on more advanced areas of
research. But in marketing research, the knowledge once learnt is
neither preserved, nor propagated. Even if the results are preserved by a
27
company or a marketing research firm, the results are not shared with
other firms due to competition.

This internal data may not be sufficient to give rise to stand-alone

theories. Moreover, the firm would not spare resources to go into such
'theoretical' research. This results in unnecessary repetition of the
research. But increasingly, researchers are recording what was known in
a project and are using it as a base the future projects. They are using
more efficient methods like knowledge management for organizing and
reusing internal knowledge. This is leading to a gradual understanding of
the theoretical behavior of many issues, like consumer behavior, with
respect to particular products.

Difficulty In Experimentation

In the physical sciences, cause and effect relationships can be easily

identified with the help of experimentation. But experimentation with
complete control of all the factors is impossible in marketing research.
For example, to test the effect of a new design on the sale of umbrellas,
it is not possible to hold factors like weather constant. Similarly, when
one is testing the effect of a new design on the sale of jeans, one cannot
control factors like changing fashions. Thus experimentation, to its fullest
extent is not possible in marketing research.

Terminology In The Scientific Method

Scientific method, since it is founded in science, derives its terminology

from science. The basic terminology required for understanding the
scientific method is given below.

Facts And Observations

Facts are phenomena that we believe are true. These facts do not
change with the person who reports them. Original documents and fact-
gathering agencies are important sources of facts in marketing research.

Observation is the process by which we recognize or note facts. These

are experiential in nature (they are the expressions of our perception of
reality) and tend to change from person to person. For example, during a
sales promotion, it may be a fact that the sales volume has not changed,
28
but the sales staff at an outlet may give higher sales estimates based on
their perception. The perception of increased sales may be due to the
increased work pressure on the reduced staff. Or it may be due to an
actual increase in the number of non-buying customers visiting the outlet.
Thus observations are the perceptions of the individuals based on 'their
experience of reality,' and hence may vary from the facts.

Variables And Definitions

A variable is a physical or non-physical quantity that can take anyone of

a predefined set of values, numerical or otherwise. It can be defined as a
formal representation of a property of entities. An entity is something that
exists as or perceived as separate object. For a table, chair, a human
etc. are entities. Every entity has a multitude of properties. For example,
a table has legs, wood type, feel, height, width, length, etc. Similarly we
can consider two properties of human beings 'blood group and 'height.' It
is usually represented by a symbol. The variables can be classified either
based on their measurability or on their relationship with each other. On
the basis of measurability the variables are of two types.

Continuous: The variable that takes an infinite number of continuous

values is called as continuous variable. For example, if satisfaction is
represented as a variable, it can actually take any value from zero to
infinity. Mathematically a continuous variable is such that, if we take any
two values of a continuous variable we can find at least one more value
between these values.

Discrete: This type of variable takes only a fixed number of values. For
example, the variable ‘occurrence of sale' can take any of the two values'
1 for sale and '0' for no sale, and so can be called a dichotomous
variable. Similarly, 'degree of liking' is referred to as a polytomy because
it takes multiple values. It can take the value '-1' for dislike, '0' for neither
like nor dislike, and '1' for' like.'

Dependence: The researcher tries to establish a relationship between

two variables in his research. For sample, when he is conducting an
experiment, the researcher manipulates a variable and measures the
effects on some other variable. The variable manipulated is called the
independent variable (IV), and the variable measured is called the
dependent variable (DV). To illustrate further, suppose a researcher is
29
trying to find the relationship between the length of an advertisement and
the recall. The recall percentage is the dependent variable and the length
of the advertisement is the independent variable. Table 1.7 lists some
terms that are used as synonyms for the dependent and independent
variables.

The above two types of variables are different from each other in terms
of their relationship. The other types of variables, based on their
relationship with other variables are the following. Moderating variable
(MY): The moderating variable is the second independent variable
included in the study since it is believed to have a significant effect on
the relationship between the main independent and dependent variables.
For instance, let us state a hypothesis - the introduction of a dating
allowance (IV) will lead to higher productivity (DV), especially among
younger (age is MY) workers. Here the younger workers have a
moderating effect on the original relationship.

Extraneous variables: These are variables outside the immediate

relationship between independent variables and Dependent variable.
There are many extraneous variables that have some impact on the
original relationship between the IV and DV, but the effects are either not
significant or so random that they are not measurable.

Intervening variable: Sometimes one finds that the IV-DV relationship

stated is not direct and that the independent variable actually affects
some other variable (the intervening variable or IIV), which in turn affects
the dependent variable. In the hypothesis stated above, we can see that
the dating allowance (IV) does not directly affect the productivity (II V),
but affects the satisfaction in the personal life (IIV), which in turn affects
the productivity (DV).

Definition: Definitions are of two major types, constitutive and

operational definitions. In constitutive definitions concepts are defined
with the help of other concepts and constructs. In other words, they are
theoretical definitions. Operational definitions are those which define
concepts in terms of the process of measurement or manipulation.
Definitions are required in research to provide an understanding and
measure of concepts.

Table 1.8 : Synonyms for dependent and independent variables

30
 Independent variables Dependent Variables
Cause Effect
Stimulus Response
Predicted from ………. Predicted to ……..
Antecedent Consequence
Manipulated Measured outcome

Concepts and constructs

Concepts are abstract ideas generalized from particular facts. They are
characteristics associated with certain events, objects, conditions,
situations and the like. They are used to classify, explain and
communicate a particular set of observations. Concepts are developed
out of personal or group experiences over time. The concepts
developed are shared between the users and thus they form the basis
for the development of new concepts. Concepts are also borrowed
across fields. For example, the concept of distance is borrowed from
physical is used in attitude measurement to refer to the degree of
difference between the attitudes of two people. Further, we keep adding
new meanings to the existing concepts, that is we broaden them as we
acquire more knowledge about it. But people teed to differ in the
meanings they attribute to a concept, and this may cause problems in
communication. For example, concepts like personality, leadership,
motivation, social class, etc. have a variety of meaning and so people
may to perfectly understand each other when they use these words.

Constructs are highly abstract concepts. These are not directly tied with
reality but are derived on the basis of other concepts. These are
normally ideas or images specifically invented for a specific research or
theory building purpose.

The difference between concepts ad constructs can be best explained

through an example. A magazine wants to check the quality of the news
reports it receives on various parameters. The job has been given to
Vivek, the quality consultant. Vivek finds that various attributes like news
coverage, grimmer, lucidity are important. These concepts are
qualitatively measurable. Now he finds that these concepts can be
classified under some related groups. These groups can be labeled and

31
they represent some idea or image to describe the qualitative
requirements of a news report.

Problems

There are two major types of problems in marketing research managerial

problems and research problems. Managerial problems are defined as
questions raised in a business setting. Every managerial problem may
not require research. Where there is a need for research, one needs to
define research problem. Research problems are the restatements of
managerial problems so that the researcher understands the problem the
decision-maker is facing. The objective of marketing research thus
becomes solving the managerial problems by finding a solution to the
respective research problems.

DrinkIt, a soft drink company with a strong trendy image, now intends to
target the older generation in order to expand its market. They have
several alternatives before them. They can either shift the brand image
and project it as a soft drink for all ages or they can introduce
promotional campaigns with the message that the older generation can
project themselves younger by consuming DrinkIt. Or they can introduce
a new product for the older generation, with different packaging and a
different brand name. This is the managerial problem.

Now the research problem can be stated as, "Will the older generation
like to project themselves younger? How will the younger generation
react to each of these alternatives? Will too many brands create
confusion? "

The research problems are questions about the interaction between two
or three variables or concepts. To further analyze these problems, a
hypothesis is prepared.

Hypothesis

Hypotheses are conjectural statements of the relationship between two

or more variables that carry clear implications for testing the stated
32
relations. They further classify research problems into statements which
can be tested. These can be considered as probable answers to the
research problem. In the above example, the hypothesis statements can
be as follows:

• The older generation feels that projecting themselves as young

means accepting that they are old.
• The older generation feels that they should be accepted as they
are.
• The younger generation will lose interest in a drink that is meant
for all ages.
• People who consider themselves as neither young nor old may
get confused with two brands.

Types of Hypotheses

Descriptive Hypotheses: These are propositions that describe the state

of a variable. For instance, one can hypothesize that the market share of
Maruti is more than 50%.

Relational Hypotheses: Relational hypotheses describe a relationship

between two variables with respect to each other. The dating allowance
example used earlier is of this type. Similarly, an increase in market
share (DV) due to improved features (IV) is an example of a relational
hypothesis. There are two types of relational hypotheses, Correlational
and Explanatory hypotheses. Correlational Relationships state that two
variables occur together without implying that one is the cause for the
other. In such cases, the two variables occur together, but we do not
know of any other variables that might cause both of them. Also, we
have not developed enough evidence to make a strong claim. For
example, we have a hypothesis stating that monsoon and demand for
coffee are directly proportional to each other. These two occur together,
but we do not have any evidence to prove that one of them causes the
other. The explanatory or causal hypothesis have two variables
interrelated to each other such that one implies the other.

Laws

33
Once a hypothesis is verified by numerous researchers, in different
situations, the relationship between the variables may be considered a
law. A law can be defined as a well-verified statement of relationship
about an invariable association among variables. In business, we do not
have many well-established laws, as the relationships are not fully
invariable. We only have tentative laws that are the only to some extent.
This is because of the presence of a number of IIVs and MVs in real
situations.
Theories And Models

A theory is a set of statements that explains or predicts a phenomenon of

interest. These statements may be facts, concepts, constructs,
hypothesis or laws. Theories are always grounded in reality. An
imaginative statement can at the most be called a hypothesis, but not a
theory. These theoretical statements guide marketing researchers in
conducting future research, and they also guide managers in decision-
making. Theories narrow down the range of facts that researchers need
to study. They also suggest methods for tackling a problem that are likely
to yield the most accurate results. Such theories may also provide or
suggest a system in which researchers can fit in the data, classify and
analyze it. Theories are also useful for predicting facts that need to be
found.

If a system is represented in terms of symbols or physical analysis with

the purpose of simplifying the understanding, testing and analysis of it, it
is known as a model. They represent phenomena through the use of
analogy and can thus explain theory better. There are three major
functions of a model description, explication and simulation.

Descriptive models seek to describe the behaviour of elements in a

system where the theory is inadequate or non-existent. Explicative
models are used to extend the application of well-developed theories or
improve our understanding of their key concepts. Simulation models go
beyond the goal of clarifying the structural relations of concepts and
attempt to reveal the process relations among them.

34
1.9 STEPS IN THE RESEARCH PROCESS

The steps in marketing research process are given in Figure1.81. These

steps are interdependent and simultaneous, though they are treated here
as if they were sequential. For example, data collection methods are
often dependent on the choice of sample and the analytical approach to
be used. At the same time, the analytical approach itself is dependent on
the data collection method. Thus the interdependency of these two steps
requires them to be simultaneous. Thus the steps given here are only
indicative of the possible major steps that can be taken in a marketing
research project and do not represent the exact sequence of the steps
that are taken. This sequence varies for one problem to another.

Fig. 1,81: The steps involved in the Research Process

Defining the Research Problem and identifying research

objectives
35

Cost/Value Analysis of the Information, Formulation and

Step 1: Defining The Research Problem and identifying research
objectives

Problem identification in a research project is like choosing the

destination a journey. A research project without identifying the right
problem is as meaningless as a journey without a destination. A problem
as presented to the researcher is only a tentative problem, and it is just a
statement of the problem as perceived by the decision-maker. It may not
be the real problem in most cases, and it is the duty of the researcher to
identify it correctly. But the researcher cannot identify the problem on his
own because he does not have all the information that the decision-
maker has, and hence he needs the active participation of the decision-
maker in problem identification.

But in most cases the decision-makers may not be willing to give the
complete details of the problem to researchers, either because they do
not see the need to do so or because they would like to maintain
36
secrecy. Further, some of the decision-makers perceive problem
identification as the duty of the researchers and do not see any role for
themselves in it.

The reluctance of the management to discuss the problem and the lack
of initiative on the part of a researcher often leads to either incorrect or
partial problem identification. Obviously, if the research process is
continued with such a defective problem identification and statement the
results will not be of any use. This financial human and temporal
resources used in that research would have been wasted. To avoid such
wastage, the researcher should identify the problem in the first instance
itself. Thus one can consider that in marketing research, problem
identification is one of the most important steps. We can even say that
right problem identification is equal to research half done.

To identify the right problem and understand all its dimensions, the
researcher should ideally know the following.

• The complete situation faced by the decision- maker

• The alternatives he can choose from
• The expected outcome of the alternatives
• The objectives of the decision-maker.

But as we have already seen, the researcher is not provided with all this
information. So, it is up to the researcher to use appropriate techniques
to collected the needed information For example, a researcher can
analyze the problem statement given by the client word by word. This
will bring out the real objectives of the client.

37
 P

r1
r2

P = Perifery of circle as market data

r1, r2 = radius of circle as research objectives
F = Focus of circle as research problem

The researcher needs to understand not only the problem but also the
objectives of the management. Then alone the researchers can align the
research objectives with that of the managerial objectives. Towards this
end the most important requirement in research process is the
communication between the researcher ad the decision-maker. Better
the communication between them, closer the problem statement will be
to the actual problem. The problem will be further clarified, if the
researcher develops a situation model. A situation model is a description
of variables and their relationships to the outcomes.

Specification of information requirements

Information requirements can be derived once the research objectives

are clearly established. Even at this stage, the management and the
researcher need a good amount of communication between them so as
to avoid collecting irritant data or missing out the requirement data.
38
Researcher should consider the data availability, data collection
technique, and ability of sample to yield the required data and the
techniques of analysis to be used to decide on the requirement of the
data. A common temptation is to collect “all” the possible data. In
aiming to collect all the possible data there are chances of missing some
important data elements and including some irrelevant data elements.
Moreover, the data elements collected with such an unclear objective as
all the possible data will not be focused and so will not serve any
purpose.

The researchers can ensure that the data collected is indeed relevant by
asking questions concerning the possible findings, due to each of the
data elements. They should then trace the implications of each of these
findings on the decision. If the findings do to affect the decision then the
data element that lead to the finding, should be dropped.

Step 2: Cost / Value Analysis of the information formulation and

testing of hypothesis

The major cost constraints in marketing research are time and money.
These costs are justified only by the value of information which is the
result of the research. The decision-maker depends on research for
some additional information that can reduce the uncertainty about the
situation. But the additional data does not have any value if it is not
supplied in time. So the time factor is important in research. Thus time
can be considered major resources for marketing research.

At this stage of research, only a rough estimate can be made of financial

d time costs. Larger the sample to be taken, the larger the costs in
observational of experimental studies, because per day costs are going
to remain the same. However, if one tries to reduce the time period in
questionnaires and interviews, the costs will increase, often
exponentially. Also, the quality of the output may come down
exponentially again.

There are two methods to estimate the value of research. Intuitive

method, the first of the two, relies entirely on the judgment of the
decision-maker. The second approach, known as the expected value
approach, uses Bayesian statistics to qualify the judgment probabilities.
39
In both these methods, certain considerations should be taken into
account to estimate the probable value of the research. The following
are the essential considerations for every problem. Apart from these
there may be some considerations specific to the problem.

The possible outcomes and their pay off: When a problem is being
considered, if the payoffs in each of the possible outcomes are not very
different from each other, then it does not matter which one is chosen. In
such cases, the value of the research is very low. The higher the
difference in pay off of various outcomes, the more valuable the
information becomes.

The degree of uncertainty in the situation: Research is done basically to

reduce the uncertainty connected with a decision. If the decision-maker
does not perceive much uncertainty in a situation, then the research
does not have much importance. Thus the research is more valuable in
a situation where the uncertainty is greater.

The ability of research to reduce the uncertainty: From the above

discussion it is cleared that higher the ability of research to reduce the
uncertainty, the greater is its value.

The risk presences of the decision-maker: Different firms and different

individuals have different risk preferences. If an organizational culture is
such that it prefers more risk, it will not value the research greatly.
Individuals who are more risk averse value the research more than
individuals who are risk takers. Thereafter appropriate hypothesis may
be framed and tested.

SIGNS OF POOR PROBLEM DEFINTION

Poor problem formulation will come to light during the marketing research exercise. Three main
signals indicate poor performance in this task.

Extensive Iteration

One early manifestation of inadequate problem definition in a research exercise is extensive

iteration and reviewing of study proposals. With a growing uncertainty and lack of confidence in
progress, mangers retreat to the exploratory research and to repetitive desk research. They begin
to reread the study proposal in an attempt to regain the conviction that their particular line of
inquiry is correct.

Difficulties in drafting research Instruments 40

Another induction that all is not clear problem statement terms is when considerable difficulties are
experienced in drafting suitable questionnaires or other research instruments. The right questions
are not asked and this is not noticed until after the survey. Lack of purpose and focus causes
time-wasting and frustration.
Step 3: Selection of the data collection method

A researcher can use two types of data: primary data, data exclusively
collected for the current problem; secondary data, data collected for
some other purpose and which is useful in the present research. In an
exploratory survey, secondary data is used more regularly because of its
cost and time advantages, whereas in conclusive research the usage
depends upon the case.

The data can also be classified into survey data and experimental data
depending on the method of collection used to collect it. These methods,
i.e. the survey method and the experimental method, can be sources of
primary and secondary data.

Table 1.9 : Major Data Collection methods

41
I. Secondary Research Utilization of data that were developed
for some purposes other than for
solving the problem at hand.
a) Internal secondary data Data generated within the organization
itself, such as sales person call
reports, sales invoices and accounting
records
b) External secondary data Data generated by sources outside the
organization, such as government
reports, trade association data and
data collected by syndicated services
II. Survey Research Systematic collection of information
directly respondents
a) Telephone interviews Collection of information from
respondents via telephone
b) Mail interviews Collection of information from
respondents via mail or similar
techniques
c) Personal interviews Collection of information in a face-to-
face situation.
• Home interviews Personal interviews in the
• Intercept respondent’s home or office
interviews Personal interviews in a central
location, generally a shopping mall
d) Computer interviews Respondents enter data directly into a
computer in response to questions
presented on the monitor
Projective techniques and Designed to gather information that
depth interview respondents are either unable or
unwilling to provide in response to
direct questioning.
Experimental Research Researcher manipulation of
independent variables in such a way
that its effect on one or more other
variable can be measured.
Laboratory experiments Manipulation of the independent
variable (s) in an artificial situation.
Field experiments Manipulation of the independent
variable(s) in a natural situation.

42
Step 4: Selection of the sample

Marketing Research, as discussed in the chapter “Introduction to

marketing research” has come into existence basically because of the
vast size of the market. Due to this size, it has become impossible to
collect information from the entire population of a target market.
Sampling is used to overcome this problem. The other reasons for the
use of sampling are given in the chapter “Sampling”. There are various
decisions a manager should take to arrive at a sampling plan. They are
as follows:
Population – determines what forms the population that provides the
information.

Sampling Unit – determines the individual sampling unit. (Persons,

households, companies and city blocks, etc.). This is treated as an
individual unit in the process of sampling.

Sampling method – determines the method of sampling.

Probability – sampling units are selected at random and there is a known

probability of each unit being selected.

Non probability – sampling units are selected on the basis of

convenience or judgment, or by some other means, and so one cannot
allocate to a unit a particular probability of being selected.

Sample size – determines the size of the sample to be used. This is

based o the time, cost and necessary precision.

Step 5: Selection of the Method of Analysis

A given method of analysis requires a particular data element in a

particular format. Since each analytical method request different data
elements, in different forms, it is necessary to determine the analytical
method before venturing into data collection. Again, the method of
analysis depends on the nature of the sampling process and the data
collection method. So, decisions about the data collection method and
the method of analysis should be taken simultaneously.

43
Once the analytical methods have been selected and proposal approved,
the researcher should design the response instruments and generate
dummy data. Dummy data is the hypothetical data generated
imaginatively by the researcher to check whether the analysis techniques
are working as they should. This imaginative data has all the
characteristics of original data. The dummy data should then be fed into
the analysis tables and checked for completeness. The analysis will also
expose any redundant data-elements in the original plan, and it will also
reveal any missing essential data-elements.

Step 6: Estimate the Resources Needed

The resources needed for research are time, finance and personnel.
Time and financial requirements are inversely dependent on each other
i.e. if one likes to reduce financial expenses then the research may take
a longer time period, and if one tries to conduct the same research in
lesser time period the financial expenses may increase. Researchers
need to strike a balance between the use of these two resources.

Financial costs include direct and indirect costs like manpower,

materials, overheads, etc. Many organizations have a rule of thumb for
estimating the cost. For example, they can have Rs. X as fixed cost and
Rs. Y as variable cost for each interview. Such formulae help in faster
estimation of the resources needed.

Box 1.82 : ELEMENTS OF THE RESEARCH PROPOSAL

Executive Summary – a brief statement of the major points from each of the other sections.
The objective is to allow an executive to develop a basic understanding the proposal without
reading the entire proposal.

Background – A statement of the management problem and the factors that influence it.

Objectives – a description of the types of data the research project will generate and how
these data are relevant to the management problem. A statement of the value of the
information should generally be included in this section.

Research Approach – a non-technical description of the data-collection method, measurement

instrument, sample ad analytical techniques.

Time and cost requirements – an explanation of the time and costs required by the planned
methodology accompanied by a PERT chart.

Technical Appendixes – any statistical or detailed information in which only one or a few of the
potential readers may be interested.

44
Step 7: Prepare the Research Proposal

A written research proposal puts down on paper the management

problem, the research objectives, the research methodology and the
resource requirements. This will help the researcher and the decision-
maker to be in perfect agreement with each other to the extent that they
derive the meaning from the same words. This will ensure that the
research is on the right track. Box 1.82 gives a complete description of
the various elements of the research proposal.

Step 8 : Data Collection

Data collection requires trained people for ensuring the validity of the
research. If a firm’s requirement does not warrant a permanent team, it
can outsource personnel from data collector suppliers. When the firm
hires data collectors, it should take care that these hires are well trained.
Moreover, data collectors, whether external or internal should be given a
complete picture of the research before they are assigned a task. This
will reduce errors as the data collector’s interpretation will be in tune with
that of the researcher. Research training and evaluation of field workers
can also help standardize data collection methods and reduce errors.

Step 9 : Data Analysis.

Before the data is collected is analyzed, it needs to be edited, coded and

tabulated. Once it is tabulated the data is analyzed using statistical
analysis. The results obtained from analysis are interpreted to some
extent by the researcher. The rest of the interpretation is done by the
decision-maker himself, as he understands the problem situation more
clearly than the researcher. The reliability of the analysis is estimated by
error estimation methods. Once the analysis is done and the
interpretation is made, the researcher needs to report the research to the
decision-maker.

45
Step 10: Reporting

Reporting is the culmination of a research effort. Since it involves

communication, one should take care of the factors affecting
communication. This means that the report should contain both
technical detail and managerial implications. It should consist of an
executive summary that mentions the managerial implications. This
should be then supplemented by the technical details, so that the
decision-maker can refer to them as and when needed. The report
should also cover the methodology used in the research.

However, one should remember that a written report might not really
invite action unless the management is very interested in it. Such an
interest can be generated only if the manager is involved in the research
from the beginning of the project. Also, many managers do not respond
to the written word. Some managers may respond, but may
misunderstand the written material. Hence the written report must be
supplemented with an oral report. This oral report, depending upon the
situation, can range from a briefing to a full-fledged audio-visual
presentation to an executive body.

1.10 REPORT WRITING

Steps in writing report

(a) Logical analysis of the research objectives
(b) Preparation of the final outline on findings
(c) Preparation of rough draft
(d) Preparation of final / corrected draft

1.101 Layout of Research Report

(a) Preliminary pages Title

Acknowledgement
Preface / Foreword
Content
List of tables, figures
Abbreviations used

Company
(b) Main Text Introduction Product / Service
46
 Statement of findings, conclusions and
recommendations

Summary / Synopsis

(c) End Matter Index

Bibliography
Sample questionnaire
List of sample

1.102

Type of report Emphasis on

(a) Technical (i) Methods and research
Report (ii) Assumptions
(iii) Analysis of findings
(b) Popular Report Objectives, findings and
recommendations (mathematical
part is avoided)

1.103 Essential qualities of research report

(1) It should have adequate length to cover the research

subject.
(2) It should maintain interest of the reader. For this big paras
as part of discussions to be avoided.
(3) Abbreviations to be avoided.
(4) Readers are interested in quick knowledge. Hence in the
beginning of report, the findings should be highlighted in
executive summary
(5) Layout must be as per research objectives.
(6) No grammatical mistakes
(7) All figures must be named, analysis must be in structured
manner
(8) It must show originality.
47
 (9) Implications of the findings to be discussed
(10) Report must be attractive i.e. clean, neat in appearance

Above format is used mostly by western corporates. The type of

the format Indian Corporate use is given in last chapter.
CHAPTER 2
TYPES OF RESEARCH-DESIGNS

2.0 INTRODUCTION

In the previous chapter we examined the various steps in the marketing

research process. We also discussed the benefits of the research
design. In this chapter we will analyse two types of research designs viz.
exploratory and conclusive. Marketing research projects can be
classified into two major categories. Exploratory research and conclusive
research. Exploratory research helps in discovering new relationships
while conclusive research helps such situations. Decision-makers use
exploratory research for a preliminary investigation of the situation. Thus
the purpose of an exploratory study is to provide new insights into a
confusing issue in choosing the best from various possible courses of
action.
This chapter makes a detailed study of the above mentioned research
techniques.

2.1 USE OF EXPLORATORY RESEARCH

Exploratory research emphasizes the discovery of new ideas. Through

exploration researches develop concepts more clearly, establish
priorities develop operational definitions and improve the final research
design.

Quite often managers face situations that are vague in nature. They may
not be able to understand whether a situation present an opportunity or
poses a problem for them.

Exploratory research is ideal in dealing with such situations. Decision-

makers use exploratory research for a preliminary investigation of the
situation. Thus the purpose of an exploratory study is to provide new
insights into a confusing issue.

48
Usually the researcher studies the situation and identifies the main
factors contributing to that particular situation. As the number of the
factors affecting the bottomline of an organization may be large, the
researcher then converts these factors into specific hypotheses relative
to possible actions. These hypotheses are then tested by conclusive
research .For instance, a television company may notice a change in the
sales figures. But they may not be able to pinpoint the factors that affect
the sales. These factors may be technological changes poor marketing
efforts, changing consumer preferences etc. In this case, the researcher
may identify two factors and then convert them into a hypotheses that is
subsequently tested by conclusive research .The process can be
illustrated through the following figure

2.11 Design Of Exploratory Studies

Exploratory studies are characterized by their flexibility and ingenuity.

Researcher use their imaginative skill in exploratory research to develop
new ideas. Their research will be based on certain hypothesis. But as
they proceed ,they may redefine their approach or they may proceed
with a new set of hypothesis. So the researcher’s expertise is of
paramount importance in exploratory studies The researcher can take
three approaches to arrive at a meaningful hypothesis.

1 Study of secondary sources

2 Survey of individual who are expert in the subject
3 Case analysis
Vague problem

Exploratory Research

Hypothesis

New Idea Conclusive Research

49
Decision
 Fig. 2.1
Source: Marketing Research, Harper W. Boyd, Jr., Ralph Westfall and
Stanley F. Stasch.

2.12 Study of Secondary Data

Researcher can utilize the data compiled by other organizations to

formulate the hypothesis. Research reports prepared by consultancies
and marketing research organizations, sales data brought out by trade
associates, survey reports of governmental and nongovernmental
organizations are generally used for this purpose .Secondary data has
proved to be quickest and most economical source for researcher.

The information technology boom has made the search for data very
easy .The internet is one of the largest repositions of secondary data,
available at minimal or at no cost at all. Several Information Technology
techniques such as datamining help researcher collect the right data
and also aid them in establishing connections. At times researcher may
be confused by the information glut.

In such cases, the researcher should be prudent enough to select the

relevant data and discard the rest. A detailed discussion regarding
secondary data is given in the chapter Secondary Data.

2.13 Survey of Individuals with Ideas

Researchers usually interview individuals who have a general idea about

the subject and are also imaginative .They provide the necessary
direction for researcher to focus on .Sales managers, sales
representative and dealers can be interviewed for eliciting information.
Even the consumers are approached directly by different organizations
for new ideas. For instance, companies like GM has used this technique
in the past. While approaching consumers care should be taken to
interview a heterogeneous group.

50
It is absolutely important for the researcher to find new ideas. Hence
research is usually conducted by interviewing people who are
cooperative and have an interest in the subject being researched.
Respondents should be given the freedom to express their ideas
however radical they may be.

Qualitative research technique are used to collect exploratory data from

individuals.These involve interviews with individuals and groups .Depth
interviews or projectives techniques are used to elicit information from
individuals, while focus group interviews are employed to elicit
information from groups.
2.14 Depth Interviews

Depth interviews are conducted to elicit information (from consumers)

that is difficult to obtain through direct interviews. Factors such as
consumer attitudes and motivation are understood mainly through depth
interviews. In such interviews the researcher approaches the consumer
with only an outline in mind. Formal questionnaires are not used in this
technique.

The interviewer may probe deeply to prompt the respondent to elaborate

on new ideas. This is necessary because a direct question regarding the
motivating factors behind a purchase may fail to elicit the appropriate
answer. For instance, a consumer may avail of five star hotel services,
because he perceives such behavior as a statement of his social status
.But he may not admit the factor that actually mot6ivates him. The
researcher has to probe deep into the consumer’s mind by asking
several indirect questions. Procter & Gamble conducts depth interviews
to identify ambiguity in consumers’ answers and to understand the true
meaning of their responses. If a consumer says she uses a certain
brand of shampoo because it does best job of getting her hair clean,
researchers ask her, what does she mean by “clean”? Does “clean”
mean the way it feels or the way it looks? Does “clean” mean free of dirt
or nongreasy or free of dandruff or a less itchy scalp? Is “clean” hair
squeaky, slippery, lively, bouncy, fluffy, shiny, easy-to-comb, or
manageable? Only researchers with extensive experience and training
will be successful in eliciting the information needed without any bias.

51
One major disadvantage of depth interviews is that their results cannot
be compared as interviewers have different interview styles. Another
major disadvantage is the difficulty in analysing the data. The data
available is highly subjective and varies from one analyst to another.

2.15 Projective Techniques

Projective techniques are used to provide extremely useful data

regarding the attitudes and values of the respondent. These techniques
are based on the theory that the interpretation of any vague object or
picture will reflect the individual’s background, attitudes and values.

There are four categories of projective techniques. They are association,

completion, construction and expression.

Association Techniques

In this technique the respondent is required to respond to the

presentation of a stimulus with the first thing that comes into his mind.
The respondents should give the first word that comes to their mind in a
free word association technique while they should give a series of words
or thoughts in a successive word association technique. This technique
is normally used for testing potential brand names. It is also used for
measuring customer attitude about products or product attributes.

Completion Techniques

In this technique, the respondent is required to complete an incomplete

stimulus.
Researchers use two types of completion techniques : sentence
completion and story completion.

This has proved to be an effective technique to understand more about a

respondent’s attitudes and values. Normally, if a question is posed to
respondents, they come up with an answer. But if they are asked to
complete a sentence or a story, they will express a more revealing
answer. For instance, an incomplete sentence like, “People who like
white rum are .........” will induce the respondents to come up with an
answer that they genuinely feel is true.

52
The story completion method is similar to the sentence completion
technique. Here the respondents are asked to complete a story told to
him. Usually, a specific situation, like a couple visiting a shopping mall
and having a disagreement over the purchase of a product, is presented
to the respondent for completion. It has been found that the respondents
will build the story using their own experience and attitudes.

Construction Techniques

Construction techniques are quite similar to completion techniques.

These techniques require the respondent to construct a story, dialogue
or description.

In the cartoon technique the respondent may be asked to fill in the

dialogues in a cartoon. In the picture response technique, a picture will
be shown to the respondents and they will be asked to interpret it. The
picture will be vague so that the respondent has to use his imagination to
interpret the picture.

2.16 Focus group interviews

Researchers conduct focus group interviews by bringing together

consumers who have a common interest. The group will be interviewed
by a researcher (who acts as the moderator). A large number of
organizations now employ focus group interviews to gain more insights
into customer preferences and expectations. Focus group interviews
provide qualitative inputs and normally do not measure the subject
qualitatively. For instance, Procter & Gamble uses this technique “to
develop hypotheses for further exploration” or “to help design” a
quantitative study. It uses a lot of focus groups to gain insights - such as
to explore whether using any fabric softener has any perceived
connection with being a good mom or what kinds of reactions consumers
might have to a new way of demonstrating Bounty paper towel’s
absorbency. But, it doesn’t make road generalizations and major
decisions based on three or four focus groups*. Of late, research
organizations have started recording the proceedings in order to do a
detailed analysis later.

In a focus group interview, the moderator normally briefs the group about
the topic to be discussed. Then the moderator throws out some
53
questions to the group. These questions will usually be simple, often
aimed at breaking the ice. For instance, they may ask questions like,
‘what do you think about the product?’ Such questions are easy to
answer. This will slowly help generate a discussion among the group.
Once the atmosphere is relaxed, the moderator may bring up more
specific issues and carefully watch the proceedings so as to check
whether the group is coming up with new ideas. Towards the end of the
discussion the moderator may give the group a task. The moderator
then leaves the room and watches the proceedings through a television
(or a one way window) to see if the discussion has caused the client to
think of any more questions to ask.

Normally the researcher will ask around nine to twelve questions. The
moderator also informs the group that the proceedings are being
watched by another group (clients/researchers). Usually, the discussion
is watched by the organization’s staff through a one way window.

Special care has to be taken to see that the moderator blends with the
group. If the moderator is of the same age group and sex, the group
members will express themselves freely. Normally a group consists of 6
to 12 people. However, groups can range from one to a dozen. This
depends on the size of study being conducted. Members for the group
are selected on the basis of their familiarity with the product. And if they
are also articulate they will contribute more effectively to study. The
sample should be dominated by the segment important for the project. It
has been found out that different forms of group for different segments
yield good results.

1 Synergism : The combined effect of the group will produce a wider

range of information, insight, and ideas than will the cumulation of
the responses of a number of individuals when these replies re
secured privately.

2 Snowballing : A bandwagon effect often operates in a group

interview situation in that a comment by one individual often
triggers chain of responses from the other participants.

3 Stimulation : Usually after a brief introductory period the

respondents get “turned on” in that they want to express their ideas
and expose their feelings as the general level or excitement over
54
 the topic increases in the group.

4 Security : The participants can usually find comfort in the group in

that their feelings are not greatly different from other participants
and they are more willing to express their ideas and feelings.

5 Spontaneity : Since individuals aren’t required to answer any

given question in a group interview, their responses can be more
spontaneous and less conventional, and should provide a more
accurate picture of their position on some issues.

6 Serendipity : It is more often the case in a group rather than

individual interview that some idea will “drop out of the blue”.

7 Specialisation : The group interview allows the use of more highly

trained, but more expensive, interviewer since a number of
individuals are being “interviewed” simultaneously.

8 Scientific scrutiny : The group interview allows closer scrutiny of

the data collection process in that several observers can witness
the session and it can be recorded for later playback and analysis.

9 Structure : The group interview affords more flexibility than the

individual interview with regard to the topics covered and the depth
with which they are treated.

10 Speed : Since a number of individuals are being interviewed at the

same time, the group
11 interviews speeds up the data collection and analysis process.

2.17 Case Analysis

The case method involves examining a single or multiple situations when

an organization is addressing a problem. The situation may involve
factors that are interrelated. The organization may find the case method
to be of absolute value sine it involves an in-depth examination of the
55
problem. For instance, an organization which has noticed some variation
in the quality of the product manufactured may feel that this variation is
primarily due to several factors that may include proper design, testing,
manufacturing processes, labor constraints, etc. In order to deal with the
problem, they may take up a case that is similar to the situation at hand.
The situation is analyzed thoroughly, thus helping them to arrive t a
hypothesis.

2.171 Case Method Design

Researchers use analogy as a method of analysis in cases. Through

cases, researchers attempt to find

Common features to all cases in a general group

Features which are not common to all groups, but common to
some subgroups
Features unique to a specific case

Features that are common and those that are uncommon are analysed
thoroughly to formulate hypothesis. Researchers should be careful in
selecting the cases for analysis.

Advantages of Case Method

Advantages
• Cases are studied comprehensively, taking into consideration all
aspects.

• Unlike statistical studies which involve abstracts from real situation,

case study describes a real-time situation.

Box 2.16: KEYS TO SUCCESSFUL FOCUS GROUPS

Focus groups can be an effective marketing research tool. But like tools they need to be used
properly in order to provide meaningful results. The most successful focus groups include the
following characteristics.

Appropriate research objectives : Robert Bohle, President of Focus on Issues, at a St. Louis-
based marketing, consulting and research company, says the primary purpose of focus groups is
to test and develop hypothesis. “Focus groups help define various customer population
segments. They help companies make better judgements”, says Bohle.

56
William Newbold ,supervisor of marketing research at Detroit Edison adds, “Focus groups
are ideal for concept testing ,copy testing and preliminary advertising testing. ”The focus
group format allows the moderator to change things on the fly and retest it. " When you
need a real fast turnaround and fast input, "focus groups are appropriate", Newbold says.
Bohle points out, however, that focus groups have a major limitation - they only provide
directional information.

The central figure in focus groups is the moderator, who guides and leads the discussion.
This role is crucial to the overall success of the groups. However, a good moderator must
walk a tightrope between asking questions and eliciting feedback from all the respondents.
"The moderator has to be able to manage without leading (the respondents) and has to be
able to control strong personalities in the group", Newbold says. "A moderator is 70 percent
of what you get from a focus group. The moderator has to make everyone feel important,
so they will talk."

"You need a good moderator who knows the issues but isn't defensive - a moderator can't
be too close to the issues. It should be a third party", says Robert Sitkauskas, director of
communications technology for Detroit Edison's VRU system. Bohle agrees. "The
discussion guide and the moderator are key. The most important part is the ability of the
moderator to listen and probe without passing judgement."

Good recruiting: Another key to good focus groups is proper recruiting. Good
representation is crucial for achieving meaningful results. "The recruiting should be really
representative of he customer base", says Newbold. Representative and balanced focus
groups were one reason Detroit Edison's VRU groups were so successful. Sitauskas says
focus groups are ideal for eliciting customer response from a variety of demographic groups
relatively quickly and easily.

Well planned discussions guide : While Detroit Edison's focus groups had a clear
agenda, Detroit Edison was careful to build flexibility and fluidity into the groups. "You
should have an genda, Sitauskas explains, "but not a rule -based agenda." Bohle adds that
a discussion guider should be just that - a guide. Part of the success will depend upon the
ability of the moderator and the respondents to go beyond the original guide and delve into
the important underlying issues. Indeed, the accessibility issue was never a part of the
original focus groups moderator’s guide. The utility thought power outages were the
problem. However, the moderator uncovered inaccessibility as an underlying problem.

Proper environment : Creating the proper environment is another key to the overall
success of focus groups. To be truly effective, the research sponsors must establish the
proper setting. "The setting has to provide the kind of environment where you can
communicate not what you want to hear." To be truly effective, the research sponsors must
establish the proper groups. " The setting hs to provide the kind of environment where you
can communicate not what you want to hear, but what you ought to hear," Bohle says.

Interpretation : Focus groups are meaningless if the findings are not interpreted correctly.
You need someone insightful to draw the conclusion from the groups. Newbold says
"People can jump to conclusions based on focus groups and can be misled by one strong
personality. We advocate holding multiple groups."

Since the researchers will be in association with the respondent for a longer period, they will
develop an informal relationship. This relationship will help in collecting more data.
Moreover, the data available will be accurate.

57
Some of the disadvantages of case study are :

Case analysis is very subjective.

It is difficult to have a formal research method.

Researchers tend to generalize the situations, though the case may not
call for such generalizations.

2.2 CONCLUSIVE RESEARCH (DESCRIPTIVE RESEARCH OR

EXPERIMENTAL RESEARCH)

Conclusive research provides information that helps the manager to

evaluate and select a course of action. The decision-maker will have to
choose one course of action from different alternatives. Conclusive
research provides the relevant information to help the manager arrive at
a decision. Conclusive research design is characterized by formal
research procedure. Research Objectives are clearly stated and
information needs are explicitly stated in this type of research. A formal
study procedure achieves a variety of research objectives : description of
phenomena or characteristics associated with a subject population,
estimation of the proportion of a population that have these
characteristics, discovery of association among different variables and
discovery and measurement of cause-and-effect relationship among
variables. Conclusive research ca be classified as either descriptive or
experimental. We will start the discussion with descriptive studies.

2.21 Descriptive Research

Unlike exploratory studies, descriptive studies are characterized by a

formal design and an accurate description of the problem. This helps in
identifying the information required and ensures that it covers all the
areas required. It is imperative that the design of descriptive studies be
such that it specifies the source of information and the data to be
58
collected from those sources. This is done mainly to ensure the
accuracy and the appropriateness of the information collected. It is
equally necessary to prevent the collection of any unnecessary data
associated with such research.

There are basically two types of descriptive studies.

1. Case method
2. Statistical method

Case Method

This method is not often used in descriptive research. It is more widely

used in exploratory research. The procedure is the same as in
exploratory research. The only difference between the two lies in the
fact that while exploratory research offers flexibility, descriptive research
is more structured, clearly defining the research problem and the points
to be investigated.

Statistical Method

This is the most widely used method in Marketing Research. It makes

use of techniques that vary from simple means and percentages to very
sophisticated techniques. In this method, a limited number of factors
from a large number of cases are studied in-depth.

Use of statistical method

Statistical tools are used by most marketing research professionals to

understand the dynamics of the market. Data is usually collected
through observation or through interviewing.

Surveys to find the consumption patterns of children ad generate profiles

of the people using the internet to make purchases are examples of the
statistical method. Let us see how Forrester research, the leading global
marketing research agency, has studied online purchases. They have
discovered that the average online buyer reports purchases in two
product categories : books and software.

59
The following are some of the observations made by Forrester on line
purchases.

• Media and technology lead net shopping. More than 50% of online
shoppers buy software and more than 40% buy books. Buyers
spend an average of more than $100 over three- month period.

• More than 250,000 North Americans bought cars and computers

online.

• Three percent of online consumers report online securities trades.

Advantages of Statistical Method

Statistical study involves a large number of interviews or observation.

Statistical techniques are used specifically for mass data. Two different
researchers conducting statistical research will arrive at the same
results, while two people using the case study method may not arrive at
the same results. This is mainly because of the subjectivity of the case
study method. Statistical study helps the researcher to make more
accurate generalizations. If the sampling is properly done, the
generalization will be universally true.

Disadvantages

• Fails to prove cause-and-effect relationship

• Direction of causal effect is not clear in statistical studies.
Causal Research

Causal research is also a technique used to perform conclusive

research. It attempts to specify the nature of the functional relationship
between two or more variables in the problem model. Managers analyze
the impact of advertising etc. through causal research. For instance,
once they give an advertisement they study how the advertising has
caused the sales to change. Usually conclusions are drawn from three
types of evidence.

• Concomitant variations
• Sequence of concurrence

60
 • Absence of other potential casual factors.

Concomitant Variations

Advertising expenditures for an organization vary across geographic

regions. An organization may notice the variations of sales across the
region. It may also notice that sales revenue is high in those regions
where the advertising expenditures are high and is low in those regions
where advertisement expenditures are low. So it may infer that sales
revenue is directly proportional to advertisement expenditure. But this
has only been inferred, not proved.

Sequence of Occurrence

This is another type of evidence that can be used to make inferences

about causation. Some events that happen first, cause the next event to
occur. In such cases, researchers can infer that the first event has
caused the second event.

Absence of Other Potential Factors

If the causative factors are identified the researcher will be able to

eliminate all the factors except the one that he believes is the real
causative factor. Then he can establish the same as the real causative
factor. Quite often it is difficult to eliminate all the possible causative
factors.

2.22 Experimentation

Experimentation is another method used for conclusive research. It can

be used to find the cause and effect relationship between two or more
variables. This is usually done by manipulating one or more variables
(known as the dependent variable). Unlike observational studies, the
researcher systematically alters the variables of interest and observes
the changes that follow.

There are two types of experimentation, laboratory and field

experiments. Laboratory experiments are more controlled but are
conducted in an artificial environment. The environment is totally man-

61
made. Field experiments are done in a natural environment and so are
less controlled, but yield more realistic results.

Advantages

The degree to which the certainty of the causal relationship between two
variables can be established is highest in experimental studies. This is
mainly because the experimenter can manipulate the independent
variable and directly observe the effects of this manipulation on the
dependent variable. At least in theory, the ability to manipulate is
unlimited and the relationship can be established with complete certainty.
The use of a control group is useful to assess the existence and potency
of manipulation.

In experimental designs, one can isolate the experimental variables and

thus avoid the effect of the extraneous variables on the results. The
presence of control group assists further, due to the possible
comparisons and the exclusion of the effects of the extraneous variables.

Experimentation is a highly convenient method compared to others since

the experimenter can adjust variables so as to achieve the extremes
which are not observable under routine conditions, i.e. the manipulative
control on the independent variable is high. Moreover, the researcher
need not wait for the fortuitous occurrence of a particular incident to
measure its effect, but can manipulate the variables to achieve the same.

The experiments if repeated with various groups and various conditions

can give rise to generalized theories about the relationship between the
given variables. Once a theory is established, the need for many similar
experiments is reduced.

Researchers can use field experiments, to minimize distortions due to

the intervention of the researcher on the results. Such experimentation
also generally needs less financial resources than other methods.

Disadvantages

In laboratory experiments, artificiality is the main disadvantage. There

are many internal and external validity problems unique to each
experimental design. These are discussed in the following sections.
62
Experimentation is not possible of the past and predictions based on
experimentation are not possible for the distant future. So, it is
applicable only to current problems or problems of the near future. The
most important disadvantage is that the marketing research concerns
itself with people and their behaviour, and so does not yield itself for
thorough manipulation and ethical considerations limit these further.

Experimentation is a familiar technique used by one and all in their daily

lives. But it has been structured, theorized and systematically practiced
by the scientific community to develop scientific knowledge and use it for
social benefits. In this technique, one identifies the change that takes
place in a variable because of changes in other variables under
controlled conditions.

Though ancient physical scientists like Archimedes used scientific

methods, the behavioural sciences did not take to experimentation in its
systematic form until recently. This is due to the fact that it is not possible
for behavioral scientists to control all the variables of the experimental
environment to the extent it can be done in the physical sciences.
However this technique has recently gained popularity particularly due to
the success of the technique in theorizing the learning theories.

In chemistry, for example, the scientist adds two chemicals, under

controlled temperature, pressure and other variables, to find the effect of
these on the reaction. In marketing research, the researcher observes
the purchase behavior of a customer, while controlling the variables like
the amount of exposure to the promotion, store layouts, etc. The
difficulties in applying the experimentation in marketing research lies in
the fact that experimentation needs control of variables, and it is not easy
to control variables in markets. The difficulties in doing so have been
explained in the chapter “Scientific Method”.

In the chapter “Types of Research”, we read about the various

advantages and disadvantages of experimentation in comparison with
other techniques. This chapter deals with various types of experiments
based on the settings namely, the laboratory and field settings. To make
the discussion easier, it also defines the terminology and symbols used
in the latter section. Further, the potential threats to the validity of an
experiment are discussed and various designs of experiments are also
discussed in detail with their advantages and disadvantages.
63
2.3 TYPES OF EXPERIMENTS ON THE BASIS OF EXPERIMENTAL
SETTINGS

Experimentation can be done under two settings – laboratory and field.

There is a huge difference between these two settings and the effects of
the two settings can be seen in their results.

Laboratory Experiment

Laboratory experiments are performed in an artificial environment. Here

the respondents know that they are a part of an experiment. The
investigator can control almost all the variables and thus avoid changes
in any other variable other than the defined one. Thus, the internal
validity is high in a laboratory setting whereas the external validity is
relatively low due to the artificial setting of a laboratory experiment.

Field Experiment

Field experiments are conducted in natural settings and hence the

results obtained are closer to the real values. But all the variables
cannot be controlled and hence the experimenter should design
experiments that filter the effects of the uncontrolled variables.

The time involved here is higher than in the laboratory as the observers
have to wait for a natural process to occur. Natural processes are often
slow compared to a laboratory experimental situation. The cost of the
experimentation could also be high as the number of variables, the time
and the amount of control necessary are all equally high. The
experimentation cost could also be high because the necessary number
of variables, the time and the amount of control are equally high.

2.4 IMPORTANT TERMS

The theory of experimentation uses a few technical terms. Hence it is

important to know these terms to completely understand the
experimentation completely. We will discuss here a few terms that are
64
used in this chapter. To understand the te4rms more clearly let us
discuss a hypothetical example. Let us assume that Soundrya Naturals
manufactures a product – name “Newhair”, positioned as a natural hair
care. They would like to evaluate a new promotional campaign with
respect to the old one. For this, they plan to measure the change in
average consumption of “Newhair” by a family during the campaign. The
researchers have divided the families investigated into two groups. One
group continues to be exposed to the old campaign while the other one
is exposed to the new campaign.

Test Unit : A test unit represents an individual respondent, a group of

respondents, a shop, a store, a chain of stores or any other unit
considered as a single unit for the purpose of study. In the “Newhair”
example, a family forms a test unit.

Experimental Treatment or Treatment : The experimental treatment,

commonly referred to as treatment, is a manipulative instance of a set of
independent variables to observe the results on the dependent variable.
In the above example, the new promotion campaign is the treatment
given to the group of families participating in the test.

Experimental group : The experimental group is a group of test units on

which treatment is performed to observe the result of the treatment and
draw conclusions. In the “Newhair” example, the group exposed to the
new campaign is called as the experimental group.

Control group : The control group acts as a reference level for

observation made on the experimental group. This group does not
undergo any treatment. In the above example, the group in which the
campaign is not changed is the control group.

Treatment levels : Treatment levels are different levels arrived at based

on a characteristic of independent variables. For instance, in the above
research let us assume that there are more than one new advertisement
campaign has been designed and that the best one has to be selected.
Now the advertisement becomes the independent variable, and this
variable can be divided into three different levels based on the
characteristic known as length – long, medium and short.

65
Blind and Double Blind - If the test units do not know that they are a
part of an experiment, the experiment is said to be blind. If the
experimenters (as differentiated from the researchers) also do not know
that they are part of an experiment, then the experiment is known as
double blind.

Factor : Factor is a word used to denote an independent variable. A

factor can be divided into various treatment levels. For example, a
factor can have levels like large, medium and small. In the above
experiment the advertisement becomes a factor. Factors are classified
into two types – active factors and blocking factors – based on the ability
of the experimenters to cause a subject to be in a particular treatment
level.

The experimenter cannot change a blocking factor; he can only identify

and classify the units based on pre-existing levels. He can even select
units belonging to some desired levels. For instance, he can divide the
respondents in the above experiment on the basis of level of income,
average age, size of the family, etc. whereas an experimenter can
manipulate active factors, to cause a unit to be a part of one level or
another. For example, treatment levels like untrained, brief trained and
extensively trained can be manipulated by the use of training, i.e. by
training the treatment level untrained can be changed to extensively
trained.

Symbolic Representation

The process of an experiment can be represented using symbols. The

symbols used are more or less standardized. Usage of these symbols
will make communication faster, easier and clearer. The following are
the symbols generally used with their most common meanings.

R O X O

Time

O X O O

X O O

66
O : O represents an observational instance, i.e., one complete set of
measurements made as a part of one observation. For example, pretest
is an observational instance.

X : X represents an instance of experimental treatment, i.e., changes

introduced in one or more independent variables.
O X O O
X O O X
R : R indicates that a few of respondents were assigned at random to a
group.

A diagram with X’s and O’s is read from left to right in a temporal order
i.e., as we move from left to right in the diagram time moves forward.

X’s and O’s vertical to each other indicate that these two instances occur
simultaneously in different groups.

Parallel rows separated by a dotted line indicate that the groups were not
equalized by randomization process.

Parallel rows not separated by a line indicate that the groups have been
equalized by a randomized process.

2.5 FACTORS AFFECTING VALIDITY IN EXPERIMENTATION

We have already noted in the chapter “Scientific Method and Scientific

Thinking” that validity is a measure of the difference between what a
research is

O X O O

X O O X

Supposed to measure and what it actually measures. But validity has

many other meanings to it depending on the context. In experimentation,
we consider two types of validity: Internal validity measures the extent, to
which the cause and effect relationship identified in an experiment is
true; External validity measures the extent to which the cause and effect
relationship found to be true in an experiment is true across all

67
environments and time periods. Let us see some factors that affect each
of these types of validity.

History

Uncontrollable events that occur during experiments interfere with the

results. For example, “Penguin”, an air-conditioner manufacturing
company, intends to introduce new features to its existing models of
aircondit6ioners. Test marketing was launched and the results were not
found to be encouraging. But the experiment did not take into account
some external variables like changes in climate, aggressive sales
promotion by the competition and negative publicity of the product by
environmentalists that affected the sales of the product.

Maturation

Maturation is the distortion in the results due to gradual changes in the

test unit over a time. For example, if we consider a day as the time
period of an experiment, by the end of the day the respondent may get
tired or bored. If we consider the time period as two to three weeks, the
respondent may change his purchase behavior or change his patronage
of the dealer etc. These changes gradually distort the results of the
experiment.

Selection Bias

When there is more than one group involved in an experiment, it is

possible that the groups are not equivalent. This may result in a bias.
This inequality occurs when there is a self-selected (or volunteered)
group. Such group of volunteers is obviously more interested in the
research than those who did not volunteer. Thus, we have a group that
is more enthusiastic about the experiment than randomly selected
group, and this enthusiasm may distort the results. Random selection
can remove the distortion to a large extent, but sometimes it may also be
necessary to match members between groups, on various important
characteristics, to equalize the groups.

Statistical Regression

68
This is an unusual bias that occurs if the groups were selected on the
basis of their extreme characteristics. For instance, let us assume that an
observation (O1) was made on the frequency of purchase of an item. A
team was then selected consisting of the top 20% and the bottom 20% of
the buyers. After some time a second observation (O2) was made.
Irrespective of whatever happens between O1 and O2, it is found that
the observations tend to each more average values from their initial
extremes, i.e., the high values at O1 reduce by O2, while the low values
at O1 increase by O2. This is because the units tend to move closer to
their long-run averages in the second observation. To avoid this, a
researcher should not choose a team based on such criteria of extremes.

Other factors affecting validity

Diffusion of imitation of treatment : If the experimental and the control

groups communicate, the difference between the two groups may
disappear as the control group learns more about the treatment.

Compensatory rivalry : If the participants of a control group know that

they are part of an experiment, competitive pressures may build up as
the control group members may try hard to get into the experimental
group.

Compensatory equalization : Sometimes experimental treatment is

desirable to the respondents because the treatment may be beneficial to
the respondents. An extreme example of such an experiment is drug
testing in medical research. Since it is desirable that all the patients
irrespective of the group they belong receive the treatment, the
administration may not be ready to deprive the control group of the
treatment. In marketing research, in such instances, the administration
may act to compensate the control group for being deprived of the
treatment, it will result in distorted results.

Reverted demoralization of the disadvantages : If the control group

knows that it is being deprived of an experimental treatment that is
desirable, it may become resentful and less co-operative.

External validity

69
The sample selected from a population may not be representative due to
many reasons. In such a case, results obtained by using that group
cannot be extrapolated to the population. Moreover, the artificial setting
of an experiment may affect the results.

2.6 DESIGNS OF EXPERIMENTS

There are many designs of experiments. The most widely accepted

designs are :

a) Pre-experimental designs.
b) True experiments.
c) Extensions of true experimental designs.
d) Field experiments.

Pre-experimental Designs

Pre-experimental designs are designs that do not control the variables

affecting the study. The treatment is given and observations re made,
and there is o way of removing the effect of the extraneous variables.
Even if there is a control group in one of the designs, the control group is
not considered properly equalized with the test group. There are three
pre-experimental designs. All the three designs are weak considering
the fact that they cannot control internal validity adequately.

One Shot Case Study

The diagrammatic representation is

X O

Here a single treatment is given and the observation is made. But there
are no previous observations to compare the results of these
observations with. For example, if an advertisement is released and
then the brand awareness is measured, one cannot gauge the effect of
the campaign without first assessing the pre-campaign awareness levels.

Though this is a weak design, it is needed in the case of new products

where the ‘before’ observations are not possible. In such cases, the
’after’ measurement are compared with planned estimates.
70
One Group Pretest-Post test Design

This is a better design than the previous one. The diagram can be given
as

O1 X O2

An observation is made to start with and then a treatment is given. This

is followed by another observation. In this design, history can affect the
group considerably, but the design does not provide a method to reduce
the effect of history. If the time period between the measurement is long
enough, it

X O2

O4

may result in maturation. The testing effect, instrumentation and

mortality also affect the results in this design.

Static Group Design

The diagrammatic representation of this design is

X O2

O4

In this design there are two groups – control and experimental. The
experimental group is first subjected to a treatment. After the treatment,
observations are made on both the groups. This design is useful in
situations where prior observations are not possible due to the sudden
and natural occurrence of the treatment. For instance, let us consider a
treatment like a natural disaster, say, the cyclone in Orissa. It is possible
to measure the psychological trauma of the people who underwent it.
Now another group of people who did not undergo this can be used as
the control group.

71
This design is better than the previous designs, but it suffers from a
major weakness : there is no way by which one can estimate whether
both these groups are equivalent. If they are not equivalent, equalizing
them is extremely difficult.

True experimental Design

In pre-experimental designs we did not have proper comparative groups.

Thus, we cannot compare the results with a group which did not undergo
treatment. If we do not have a comparison we will not be able to
conclude the experimental observations. True experimental designs
remove this deficiency from the experimentation. In these experimental
designs we have randomly selected groups that can be compared to
each other.

Pretest-Posttest Control Group Design

The diagram for this design is

R O1 X O2

R O3 O4

In this design two randomly selected groups are pre-tested, and then the
experimental group alone is administered the treatment. After that both
groups are post tested. The history, maturation and regression, which
occur in the experimental group, occur in the control group as well. One
can account for these effects by using the difference in the control group
observations, that is, O4-O3. The final result is expressed as

(O2 – O1) – (O4 – O3)

But problems like instrumentation, selection and mortality can affect the
results. Moreover, testing interaction with external environment is high in
this design. Other factors also can influence the internal validity. Also,
there is no guard against external validity in this design.

Posttest only Control Group Design

72
The previous design is expensive due to the pre and posttest
requirements. Alternatively, we can have a Posttest only design, i.e., the
control and experimental groups are observed only after the treatment.
The groups are selected at random and the experimental group is
subjected to the treatment straight away. Then observations are made
on both the groups. The diagrammatic representation is as follows.

R X O1

R O2

The result can be represented mathematically as (O2 – O1). The design

is very simple and less expensive. The history, maturity and statistical
regression can occur only between the treatment and the observations.
By reducing the time gap between these two events these errors can be
reduced. Reducing the time period can even reduce mortality rates. The
testing interaction and interaction with the external environment also
decreases.
Extensions of True Experimental Design

Researchers do not use the true experimental designs as they re. They
are too simplistic as such. They are often extended to further complex
designs in order to

 Consider a number of external stimuli simultaneously;

 Increase precision by using assignment procedures to a large
extent.

Completely Randomized Design

Randomized Design is used to test more than one alternative state of an

independent variable. Let us take an example. A toothpaste company
wishes to repackage its neem-based brand, ‘Nimba’. The company
needs to know the ideal packaging out of the three varieties they have
designed. To test this they have selected 27 outlets all over the country.
They divided the 27 stores randomly into three groups of 9 stores each.
They introduced different designs in each of the groups and different
package in each of the groups. Now the design can be

R O1 X1 O2
73
 R O3 X2 O4

R O5 X3 O6

Here O1, O3 and O5 represent observations before the introduction of

new packages. X1, X2 and X3 represent the three different packages
and O2, O4 and O6 represent the observations after the introduction of
new packages.

In this design it is assured that the randomization has equalized the

groups of stores. If there is a reason to doubt the validity of this
assumption, one must try out more advanced designs.

Randomized Block Designs

In the above example, if there is any reason to believe that the groups
are not equal and factors such as the type of the city6 in which the store
is located influence the results, then a block design, is needed.

Let us assume that there are three types of cities, class A, class B and
class C. On the basis of these classes, the cities can be divided into
three blocks, say, A, B, C. Now each city in each block is assigned to a
different group at random. Here the size of the city is known as the
blocking factor.
This design can measure both main effects ad interaction effects. The
main effect is only the effect that due to the treatment it is not influenced
by any other factors. In the above example, the main effect is the effect
of various package designs on sales.

BlockIng
Active
Factors Class A Class B Class C

Design 1R X1 X1 X1

Design 2R X2 X2 X2

Design 3R X3 X3 X3

74
This effect is measured by averaging the sales of each treatment over
the three blocks. The interaction effect is the effect of one factor over
others. Here the effect of the size of the city on the choice of the
package design is the interaction effect. The interaction effect may or
may not be significant. The design serves its purpose only if there is a
significant difference across the blocks.

Latin Square Design

When there are two major factors whose influence should be measured,
the Latin Square Design is used. Let us continue with the Nimba
example. Let us consider two major factors in this example; the size of
the city and the size of the store. Each of the factors is divided into
various levels.. A matrix is built with these two blocking factors, with
levels of one blocking factor forming the rows and the levels of the other
forming the columns. Each cell represents a unique combination of
these two factors. Each of these combinations is then assigned a
separate treatment such that each treatment appears only once in a row
and once in a column. This assignment method places a severe
restriction on the method that the number of levels in each of the
blocking factors should be equal to the number of treatment levels.

Size of the City

Size of the

Class A Class B Class C

Stores

Large X1 X2 X3
Medium X3 X1 X2
Small X2 X3 X1

Table 1 : Example illustrating the Latin Square Design

In the example the stores are divided into three levels on the basis of
their size – Large, Medium and Small, and again into three levels on the
basis of the class of the city – Class A, Class B and Class C. The
number of levels of the blocking factors is equal to the number of
treatments, that is the package designs – X1, X2 and X3. Now these
treatments are assigned in such a way that there is no repetition of a
75
design in a row or in a column. The best design for these combinations
is then evaluated from the sales figures.

But this design does not consider the interrelationship of the variables,
the size of the store, the size of the city and design. To do so, we need a
three-dimensional matrix with echo if the three-dimensional matrix with
each of the three variables forming an axis. Thus the matrix will contain
twenty-seven combinations. . Though this becomes a limitation, one can
repeat the Latin Square Design to get these interrelations, but it
becomes more time consuming and expensive. If one is not interested
in these interrelationships, then the Latin Square will yield the required
results.

Factorial Design

This method is used to manipulate more than one variable. Continuing

with the example of the Nimba toothpaste, if the manufacturer also wants
to find the effect of the price at the same time, then a factorial design can
be used to obtain the results. Let us say that there are three levels of
price – Rs.1.00 (Y1), Rs.2.00 (Y2) and Rs.3.00 (Y3). We also have three
levels of package designs – X1, X2 ad X3. In this method, combinations
of these levels are used to obtain various treatments.

Package Designs

Price differences X1 X2 X3

Rs.1.00 (Y1) X1Y1 X1Y2

X1Y3

Rs.2.00 (Y2) X2Y1 X2Y2

X2Y3

Rs.3.00 (Y3) X3Y1 X3Y2

X3Y3

Table 2.2 : Various treatment levels in the example for Factorial

Design

76
Once the treatments are obtained, any of the previous methods like
completely randomized design, randomized block design or Latin Square
analysis can be used for obtaining observations. Table 10.2 represents
various treatments thus obtained. These treatments are then assigned
randomly to various stores if we use a completely randomized design for
further analysis.

Covariance Analysis

We can statistically block various extraneous variables by using analysis

of covariance (ANCOVA). We will discuss this further in the chapter
“Analysis of the experiments”. This technique is useful if we used a
completely randomized design, but later found that there was some
effect of by other factors. It is statistically possible to block these factors
and the technique used is known as Analysis of Covariance. Also, if
there is any difference in average knowledge levels in control and
experimental groups before the experiment, with the help of this
technique one can adjust the difference statistically.

Field experiments : Semi or Quasi Experiment

Semi or Quasi experiments are experimental studies conducted under

natural conditions, with less control on the variables than in a true
experiment. It is difficult to achieve a perfectly controlled environment
and hence it is necessary sometimes for such quasi experiments.
Though this design is inferior to the true experimental designs, it is
superior to the pre-experimental designs.

Nonequivalent Control Group Design

This method is used quite widely and is different from the pretest-
posttest control group design. In this design the groups re not randomly
assigned.

O1 X O2

O3 O4

77
The design can be diagrammatically represented as follows.

The design is of two types – intact equivalent design and self-selected

experimental group design. In intact equivalent design the assignment to
various groups is done naturally. For example, various members in
similar clubs, citizens in similar towns or townships or students of classes
in a school etc. can be assigned to the groups. In a self-selected
experimental group design, volunteers are assigned to the experimental
group and non-volunteers to the control group. This assignment makes
it a weak design because the average interest in the experimental group
in the experiment is higher than that in the control group and may affect
the results. The internal validity for both can be verified by comparing
the pretest observations. If the observations O1 and O3 are similar then
possibly the internal validity is high, and vice-versa.

Separate Sample Pretest-Posttest Design

Here two different samples are involved. While pretest is done on one
sample, posttest is done on the other. This is applicable when we know
when and whom to measure, but do not know when and with whom to
introduce treatment. It is also used in instances where there is no way to
restrict the treatment to a particular group. It is even used in instances
where the pretest is highly reactive and can influence the results. For
example, if a company plans to have an intense campaign on time
management for its employees, a pretest is likely to increase the interest
of the first group and will result in more attention to the campaign. So
the posttest is done on a different group. The test can be
diagrammatically represented as follows.

It has high external validity as it is a field experiment where the

conditions are realistic. But it has a very high threat to its internal
validity, particularly from history.

R O1 (X)

R X O2

Group Time Series Design

78
A time series design is any of the above designs with repeated
observations both before and after treatment. It is highly useful in cases
where the treatment is by the environment and is not in the hands of the
experimenter. In such cases neither the treatment nor its time is known
before the treatment occurs. For example, the effect of the changes in
government policies can be measured, if the data before and after the
changes were collected. Moreover, when a particular study needs a long
observation period, this type of repeated observations are essential.

History can be a major internal validity hindrance. This can be overcome

by keeping track of all the possible extraneous factors. Later one can
attempt to adjust the results to reflect their influence.

2.7 SOME ADDITIONAL TYPES OF EXPERIMENTAL RESEARCH

DESIGNS

A) After only design : This design consists of measuring dependent

variable after exposing independent variable at Test units.
B)
Input Test Output
Units
Explanatory Variables Samples Dependent Variables
and
Independent variables Territories These are Sales, ad-
like recall, attitude,
Product, Price, Place market
and share etc.
Promotion

Extraneous Variables

Un-Controllable
Variables
Like competition

Examples :

a) Marketer distributes discount coupon to the consumers to buy the

brand. The study measures the extent of coupons redeemed by
the sample covered. Britania’s campaign, ‘britania khao, world
79
 cup jao’, involved scratch coupon to be surrendered to the retailer
for matching the number.

b) Reliance Industry Ltd.,, in the month of June-July every year

disdtributes dividend warrants, along with which it also sends to
shareholders 20% discount coupons for buying Vimal Fabric. In
the month of February it conducts research to study number of
coupons redeemed by the shareholders.

c) Before-After Design : In this design the dependent variables are

measured across test units with specific independent variable,
once before the independent variable is exposed to test units and
again after exposure. The difference between the two measures is
treated as the effect of experimental variable.

Example : Pepsi Co. measured the sales before launch of ‘Oya babli’
campaign and after the ad campaign. It noticed healthy growth in the
sales due to classic picturisation and content of the ad.

C) Before-After with Control Group : In this design the research study

includes a control group in the experiment, but the control group is not
subjected to the experimentation.

Suppose the marketer wants to study the movement of market share

with reference to price reduction, then the impact of experimentation is
studied as follows :

Measurements Experimental Control

Group Group
Market Share Market Share

Before E1 C1
Experiment
E2 C2
After Experiment

Mathematically, impact of experimentation = {(E2 – E1) – (C2 – C1)}

Example : Most of the telecom companies reduce the tariffs, initially only
for say one circle, study the impact of reduction in tariff on sales and
80
market share and then repeat same strategy at other circles too. In such
cases, the circle where benefit is offered is called Experimental Group,
whereas the consumer outside the circle is called Control Group. They
do not participate in experiment, but hope to get the benefit at later stage
and hence buy the pre-paid or post-paid of same company which offered
benefit at other circle.

2.71 Experimental Research Design Case Study

Case Study : Experimental Research Design

Sr. Name of Brand Details of Time period of Impact

No. Company Experiment experimentation
1. AT&T Idea Life long 1st Jan. 2006 to Three lacs
recharge 31st Jan. 2006 new
Rs.995, local consumers
calls added
Rs.1.99, STD
calls
Rs.2.99. In
case of Post-
paid all calls
At Rs.0.99
2. Reliance Reliance (1) Buy 1st Dec. to31st Ten lacs
India Reliance hand- Dec.2005 new
Mobile set at Rs.2500 consumers
and get added.
equivalent free (Total
talk time. Consumers
170 lacs
as on
1.1.2006.
st st
(2) Recharge 1 Jan. to31 Five lacs
forever Jan. 2006 new
@Rs.1,000, call consumers
any-Where in added
India. Re.1SMS
within the state
At Re.0.01
81
3. BHARATI Airtel Life-time 1st Jan to31st Three lacs
TELECOM recharge Jan. 2006 sixty
Rs.999 thousand
new
consumers
added
4. HLL Liril a) Change of November2005 No change
ad-agency in brand
from Lowe sales
India to Mc
Cann Erickson.
from freshness,
youth &
exuberance to
a young
couple in a
naughty
mood with a
slow humming
jingle ‘l-ee-ra-
ee-ra’,
exhibiting
husband
wanting to
catch the wife
nearby
bathroom.

82
 CHAPTER 3
SOURCES OF SECONDARY DATA

3.0 INTRODUCTION

Once the research process starts, the researcher charts out the research
objectives. Then the researcher turns his attention to the research
design and determines the sources of marketing data. At times,
researchers make the mistake of conducting primary research for
collecting data while data is available from secondary sources at a lower
cost. Moreover, the secondary data sources provide information that
may not be obtained by other external agencies. However, the
researcher should evaluate the secondary data for its reliability and
accuracy. The researcher should also check whether the available data
will fulfill the requirements.

In this chapter we will discuss the nature of secondary data and its
advantages and disadvantages. We shall also survey the sources of
secondary data.

3.1 THE NATURE OF SECONDARY DATA

Secondary data is available from publications, in-house databases,

research agencies etc. It constitutes readymade information that can be
used for research purpose with minimal analysis. However, the
researcher should bear in mind that secondary data is published for
purposes other than the current research.

Collecting primary data involves field work and further analysis on the
data collected to arrive at a conclusion. For instance, a marketer who
wants to launch a particular product may be interested in collecting data
regarding the buying habits of consumers in that particular region. The
marketer can conduct field surveys to collect the relevant data, which, in
turn, can be analyzed to arrive at a proper conclusion. But at the same
time, he can refer to any published material that has already done an
analysis. While the first method is tedious, time consuming, and
expensive, the second method, which is collecting secondary data, is
fast and inexpensive.

3.2 ADVANTAGES OF SECONDARY DATA

83
One of the main advantages of secondary data is that it is quite
inexpensive. A small start-up company study the market to launch a
product may not be able to afford to do primary research. By getting
hold of good reports and articles, such small organizations will be able to
do the study cost effectively.

Secondary data helps researchers save time. While primary research

takes a considerable amount of time in the form of collecting and
analyzing the data, secondary data offers readymade solutions.

If the demographics of a particular region have to be studied, the

researcher has to collect the statistics of the population. It is impossible
for any organization to conduct such a census study. Here too,
secondary data published by a government organization will be of
considerable use. Moreover, data collected and published by the
government will be less biased.

3.3 DISADVANTAGES OF SECONDARY DATA

The major disadvantages of secondary data are

• Relevance
• Accuracy
• Sufficiency
• Availability

Relevance

Relevance refers to the extent to which the data fit the information needs
of the research problem. While secondary data is available from many
sources, it may not be relevant to the current research. This is mainly
because the secondary data is collected from sources that are not
directly related to the problems at hand. For instance, data may be
available about the lifestyle pattern of a particular society. The study
may have been conducted with respect to different age groups with an
interval of 20 years. But this data would not be relevant for a marketer
who is interested in introducing a particular product for the age group 20-
25.

84
Another major problem is relevance with regard to time. While
secondary data may be available, it need not be relevant to the current
time period. The marketing environment is dynamic and needs up-to-
date information. For instance, in India, census is conducted once in ten
years. So, the data becomes less and less relevant over a period of
time.

Accuracy

Accuracy poses a great challenge to the researcher who depends on

secondary data. First, since the secondary data is prepared by the
research team for the problem at hand, it may fail to give an accurate
picture about the area in which research is being conducted. Second,
since the research process involves different steps, errors may creep
into the data at any of these stages. And third, which are published by
private organizations, for purposes best known to them, may be biased.
Under these conditions, it becomes imperative for the researcher to
assess the accuracy of the data. This can be done by checking the
reliability of the source, the purpose of publication and the evidence
regarding quality.

It is always advisable to collect data from an original source rather than

an acquired source. While the original source may be publications of
state departments, developmental agencies, etc. the acquired source,
which procured data from an original source, may be a newspaper report
on the original data.

Published data has to be examined to check if it is promoting the case of

any group or carrying out any sort of propaganda. For instance, political
parties may publish data that is often incomplete to drive home their
point of view. To do so, they may conceal many factors that are vital for
arriving at the right conclusion.

Evidence regarding quality should be assured. This can be done by

evaluating the sampling plan, the data collection procedure and the data
analysis procedure. If details of the research are not being supplied, the
validity of the data becomes suspect.

Sufficiency

85
Even if the secondary data available is relevant and accurate it may not
be sufficient to meet all the data requirements of the problem being
researched. Though the data may provide relevant material for the
research, it need not contain data regarding the problem being
researched.

Availability

Secondary sources may not be able to provide all the data relevant for
some marketing problems. Thus, the researcher should check whether
the secondary data is available or not before a decision regarding the
selection of appropriate data source is taken.

3.4 EVALUATING SECONDARY DATA

Secondary data can be collected from various sources. But before using
the data it must be evaluated properly. Let us discuss some parameters
against which the data should be evaluated.

Pertinence

Units of measurement in the data and project t hand should be the same
and should be relevant to the pe4riod of time. For instance, in India, all
measurements are done in the SI (Systems International) system while
in the UK and the US measurements are done in the Imperial system. A
marketer may need information regarding the characteristics of people
within a certain region, say, for instance, coastal Andhra Pradesh.
However, demographic statistics may not be available for the regions
specified by the marketer. Most probably, information will be available
only for cities, states or countries. There is a measurement mismatch
between the available information and the required information. So while
collecting data from an external source, the researcher should take care
to ensure that the source follows the same measurement systems.

Publisher’s Credibility

86
The publisher’s credibility should be evaluated before collecting the data.
Who published the data? Why they chose to publish the data, are the
clients using the data satisfied with the project? Etc. are the questions to
be raised before using secondary data. For instance, political
organizations may publish statistical data through their own
mouthpieces. These data may be incomplete and may conceal some
factors are necessary for drawing proper conclusion. On the other hand,
an organization whose business is collecting, analyzing and selling data
will provide accurate and unbiased data. Some organizations have the
authority to collect and publish certain data. Data published by such
organizations will certainly be more credible. For instance, the revenue
department will be able to publish data regarding the income distribution
in the country.

The capabilities and motivation of the individual preparing the data

should also be evaluated before sourcing the data. This is mainly
because some sources cheat by providing false data. Also some
researchers will try to drive home their point of view and thereby end up
making biased interpretations. And finally, the purpose of publishing the
data should be checked for its validity and reliability.

Data Collection Methods

The data collection methods of the source should be studied before

sourcing the data. If an organization fails to provide the methodology,
the researcher should think twice before using the data. This is because
data collected using wrong methods or without adequate research will
lead to false information.

3.5 TYPES OF SECONDARY DATA

Internal and External Data

The data available within the organization, which may be published for
purposes other than the problem at hand, is called the internal data.
87
Internal Data may be sales reports, accounting records, inventory
reports, budgets, profit and loss statement, etc. External data is the data
available outside the organization. This can be data made available to
the organization by external research organizations. Syndicated sources
publish and sell data periodically and library sources include information
from a wide array of publications.

Census Data

In the US, the Bureau of Census publishes census data. Data published
by the Bureau of Census is known for its quality and credibility. In India,
the census report is published by Registrar General of India. The survey
is usually done once in ten years. Census data contains demographic
information. The report contains information on different aspects such as
age, sex, education and occupation. But one of the main disadvantages
of census data is that it has a time lag of three to four years. Yet this is
the only demographic data recognized by users as authentic.

Commercial Information

Organizations periodically provide information. This is also referred to as

syndicated research. This service is mainly aimed at meeting the
requirements of their clients. Information may be provided on a
daily/weekly/yearly basis. Usually organizations providing such
information conduct primary research to collect the data. Some
organizations collect data from a sample growth over a period of time.
This is called panel research. It helps track changes in customer
preferences over a period of time.

Marketing Research organizations like ACNeilsen, Forrester Research,

Gallup MBA, ORG, MARG, IMRB, etc. sell information for a price. They
usually study the client’s needs and customize their reports to suit those
needs. In India, quasi-governmental institutions like the National Council
of Applied Economic Research (NCAER) and Indira Gandhi Institute of
Development and Research (IGIDR) sells market information and is
considered to be highly qualitative.

Consumer Purchase Data

88
Consumer purchase data is extremely useful for devising marketing
strategies. It provides information which can be used for understanding
the market share, market segments, competitors, effects of advertising,
etc. Syndicated Research agencies provide such information on a
continual basis.

Retail and Wholesale Sales Data

Agencies like ORG-MARG, Francis Kanoi and ACNeilsen conduct

studies and provide information on sales data for a number of items.
These studies are mainly on packaged foods, toiletries, cosmetics and
over-the-counter drugs. Different agencies collect data at different
intervals. They usually collect data from stores located in different
towns.

Advertising Data

Organizations spend a huge amount of money on advertising every year.

Obviously, they will be interested in knowing the readership of various
newspapers and magazines. They will also be interested in
understanding the television viewing patterns. The National Readership
Survey (NRS) is conducted in India to assess the consumer profile of
newspapers and magazines. NRS is conducted by the National
Readership Studies Council. It is constituted of the Advertising
Association of India, the Audit Bureau of Cir5cultion and the Indian
Newspaper Society (INS). The actual fieldwork is carried out by
ACNeilsen, IMRB, and Taylor Nelson Sofres Mode. In India, IMRB
conducts studies and publishes data on television viewing patterns. All
this information is used by or4ganisations for media planning.

Test Marketing

Some marketing research agencies provide test-marketing services. A

new product, before it is launched in the market, is introduced in a test
market and its availability is ensured. Then the sales data is collected on
a periodical basis and reported to the client.

3.6 ADDITIONAL SOURCES OF SECONDARY DATA

3.61 Government Sources

89
 Name of the Source
1) Directorate General of Supplies
& Disposal (DGS&D)
2) Directorate General of Trade &
Disposal
3) Reserve Bank of India (RBI)
Information provided
Installed manufacturing
capacities & actual utilized
capacities for all manufacturers
Availability of foreign currencies.

4) Directorate General of Import-Export statistics

Commercial Intelligence &
Statistics
5) Centre for monitoring Indian Economic Growth, GDP
Economy (CMIE)
6) Census Population, no. of families, no.of
voters
7) Geographic Survey of India Regionwise production of agri-
produce
8) Horticulture Board of India Value-added fruits, vegetables &
flowers and markets

90
 Name of the Source Information provided
9) Directorate General of Foreign Import Export Regulations
Trade (DGFT)
10) Exim Bank Creditworthiness of importers and
countries.
11) Export Credit Guarantee Insurance covers and financial
Corporation of India (ECGC) guarantees available to
exporters.
12) Agriculture & Processed Food High Tech Agri Farming,
Export Development technology tie-ups, seed capital,
Authority(APEDA) inspection, etc.
13) Central Statistical Organisation Industry Economics
(CSO)
14) National Sample Survey (NSS) Per Capita consumption &
monthly per capita income,
literacy per state, employment
across male & female
etc.

3.62 Non-Government Sources

1) Org Marg TRP ratings, Retail Store Audit

2) INSDOC (private Library) Any publication after 1970

3) Path Finder Household disposable income &

consumer behaviour.
4) University Public Relation Various courses, fees, duration
Offices and eligibility.
5) Yellow Pages & Ask Me Classified information
6) Internet Sites Classified information
7) Indian Association of No.of Retailers, their
Retailers classification, types, etc.
8) J.D.Power Asia Pacific Customer satisfaction

91
 CHAPTER 4
HYPOTHESIS

4.0 INTRODUCTION

In the chapter on preparation and tabulation of data we discussed the

appropriate procedures for collection and tabulation. Once we tabulate
the data we need to analyze it, i.e. is we should verify the hypothesis
stated in the problem. To do so we need to learn hypothesis-testing
methods. If the manager of a shopping mall wants to find out if customer
satisfaction is at least 90 percent, we can test the validity of this
hypothetical parameter by the use of hypothesis testing. Hypotheses
test, also known as tests of significance, enable us to decide on the
basis of the sample results if the deviation between the observed sample
statistic and the hypothetical parameter value (or) statistic is significant
(or) might be attributed to chance (or) the fluctuations of sampling.

4.1 METHOD OF HYPOTHESIS TESTING

Definitions of Hypothesis

(i) Hypothesis – It is a statement or assertion about the statistical

distributor or parameter of statistical distribution. Alternatively
hypothesis is a claim to be tested.
(ii) Null hypothesis – A hypothesis of ‘no difference’ is called null
hypothesis
(iii) Alternative Hypothesis – It is a hypothesis to be accepted in
case null hypothesis is rejected. In other words, a
complementary hypothesis to null hypothesis is called
alternative hypothesis.

4.11 Statistical Significance

Every sample will vary from population to population to some extent. To

accept that a population parameter to be equivalent to the sample
statistic, we should be sure that the difference between these two is only
due to random fluctuations. The difference has statistical significance
only if there is good reason to believe that the difference does not

92
represent random sampling fluctuations. A test of significance is to verify
if the deviation of a statistic is statistically significant or not.

Let us take an example. A retail store is concerned about the possible

slowdown in the average purchase per purchase per week. The
previous average purchase per person per week was Rs. 1500. With the
sample size of one hundred, the average purchase was found to be Rs.
1470 per week. The sample standard deviation was found to be Rs.
150. Let us assume that the true mean is Rs. 1500 i.e. we assume that
there is no drop the average purchase rate. This assumption is
considered a hypothesis. Given this population mean and standard
deviation, is it reasonable to observe this sample mean? If so, what is
the probability of observing such a mean? If it is too low, then we have
to reject the hypothesis that the population mean is Rs.1500.

Let us calculate the probability of obtaining this sample mean.

Standard Error

Now we find that the number of standard errors in the sample mean
differs from the hypothesized population mean.

We find this to be two standard errors.

σ 150
σ x = ------ = ---- = 15
√n 10

x – u 1470 – 1500
z = -------- = -------------- = 2
σ x 15

From normal distribution tables, we find that the probability of the sample
differing from the populating mean by 2 standard errors is 4.5%. This is
too low a chance for the sample to be from a population of the given
mean. We conclude that the hypothesis that the population mean is Rs.
1500 is wrong. Thus we prove that there is a drop in average purchases
per customer per week from Rs. 1500.

4.12 Steps In Formulating And Testing

93
Testing for statistical significance follows a well-defined pattern. Though
one may not be able to understand all the terms in these steps at this
stage, we are mentioning them here. They will be discussed in
subsequent chapters. The steps are as follows:

State the null hypothesis: The null hypothesis must be stated.

Choose the statistical test: The choice of the statistical test is dependent
on the power and efficiency of the test, the nature of the population, the
method of drawing the sample and the type of measurement scale.

Select the desired level of significance: The exact level of choice

depends on how much Alpha risk one is willing to take in comparison
with beta risk (Alpha risk and Beta risk are explained later in this
chapter).

Compute the calculated difference value: After the data is collected, the
formula for the appropriate significance test should be used to obtain the
calculated value.

Obtain critical test value: The critical value for the calculated value
should be looked up in the appropriate tables. The critical value is the
criterion that defines the region of rejection from the region of
acceptance of the null hypothesis.

Make the decision: For most tests, if the calculated value is larger than
the critical value, we reject the null hypothesis rejected and it is conclude
that the alternate hypothesis is accepted. If the critical value is larger,
we conclude we have failed to reject the null.

95% of area
2.5% of area
2.5% of area
Rejection Acceptance
region region
Rejection region
94
4.13 Formulating A Hypothesis

The first in hypothesis testing is stating the hypothesis itself. A

hypothesis to a problem can be basically stated in two ways – Null
hypothesis and Alternative Hypothesis.

Null Hypothesis: In tests of hypothesis we always begin with the

assumption (or) hypothesis called Null Hypothesis. The Null hypothesis
asserts that there is no significant difference between the statistics and
the population parameters; and whatever observed difference is there is
merely due to population. It is denoted by the symbol H0. The null
hypothesis is often the reverse of what the experimenter actually
believes; it is put forward to allow the data bring out the contradiction.

In the above example, the null hypothesis is that the average purchase
has not changed from Rs. 1500. it is represented by

H0 : µ (mu) = Rs. 1500

Alternative Hypothesis: Alternative hypothesis is complementary to the

Null hypothesis and is denoted by the symbol H1.

In the above example, the alternative hypothesis is that there has been a
change in the average purchases per week from Rs. 1500. We can have
three different alternative hypotheses about this change. These are
indicated below as:

HA : µ (mu) ≠ Rs 1500

HA: µ (mu) > Rs 1500

HA : µ (mu)< Rs 1500

The hypothesis can be tested with a two-tailed test. The regions of

rejection for null hypothesis are divided between the two tails. The
95
second hypothesis uses the right tail for rejecting the null hypothesis
whereas the third uses the left tail for rejecting it.

A hypothesis is never accepted; it is only rejected or failed to be rejected.

This statistical testing is not sufficient proof for disproving a hypothesis.
But instead of a clumsily saying that we have failed to reject the
hypothesis, we say that we accept the hypothesis. Rejecting a null
hypothesis is equivalent to accepting the alternative hypothesis and
rejecting an alternative hypothesis is equivalent to accepting the null
hypothesis.

4.14 Errors In Testing

The decision to accept or reject the null hypothesis H0 is made on the

basis of the information supplied by the observed sample observations.
The conclusion drawn on the basis of a particular sample may not
always be true with respect to the population. For instance, in the above
mentioned example we have a 5.0% chance of rejecting a true
hypothesis in the above mentioned example.

In table 4.14, four cases are presented. When the alternative hypothesis
is true, it means that the null hypothesis is false. Using this concept we
can deduce that the cases are accepting a true null hypothesis and
rejecting a false null hypothesis from the table it is clear that in any
testing problem we are liable to two types of errors.

Type-I error: Rejecting a true null hypothesis is called a Type-I error. It is

compared to convicting an innocent person. This is considered a serious
error and researchers generally try to minimize its occurrence as much
as possible.

The probability of rejecting a true null hypothesis in the above example is

5%. This indicates the probability of a type I error. It is denoted by α.

Here, α = 0.05, or 5%

The region between the acceptance and rejection region is called the
critical value. In the above problem the critical values are Rs. 1470 and
Rs. 1530 at a given significance level of 5%. Alternatively, for a given

96
significance level we can calculate the critical values above or below
which a hypothesis can be rejected or accepted.

Type-II error: Accepting a false null hypothesis is called a Type II error

and is compared to acquitting a guilty person. It is difficult to detect such
an error. It is denoted by β. And this error depends on (1) the true value
of the parameter, (2) the α level we have selected, (3) the nature of the
test used (one or two-tailed) to evaluate the hypothesis, (4) the sample
standard deviation, and (5) the size of the example.

Let us assume that the mean has actually moved from 1500 to 1470.
Our null hypothesis is that the average purchase is 1500. This is false.
The probability of not finding this out, which is nothing but assuming that
the given hypothesis is correct, is (β) 95%. For a different population
mean the value of β will be different. Ideally, a zero β indicates an error
free test. This means that ideally 1- β must be equal to 1. The closer
this value is to 1, the better is the test. 1- β is considered as the power if
a hypothesis test for it is the probability of rejecting a false null
hypothesis.

Accept H0 Reject H0
H0 is true Correct Wrong – Type-I
error
HA is true Wrong – Type-II Correct
error

4.15 Selecting A Test

Three questions should be raised when choosing between various tests.

• How many samples does the test involve? One, two or K?

• If moor than one sample is involved, are they related or not?
• What is the type of data? Nominal, ordinal, interval, or ratio?

Questions like the size of the sample, the quality of the sample size and
weighted data can be raised. These questions will be answered in
advanced statistics books and researchers should make use of them
when required.

97
Two samples are often used when there are two different products. Two
samples, one for each product, are taken and tested to find out whether
they belong to the same population.

Table 4.1 lists the various statistical techniques appropriate for different
measurement levels and test situations. ANOVA is discussed in the text,
but in a separate chapter. Only the most commonly used tests are
surveyed in the following sections. Non-parametric tests except chi
square tests, call for an involved discussion and so are not discussed
here. Refer to advanced spastics books for studying these methods in
detail.

Parametric Tests

Parametric tests are called so because they measure the statistical

significance between the parameter and a given static. There are two
main parametric tests: Z and t tests. There is no difference between the
two except that the t test is used for sample sizes of less than 30.
However, the necessity of suing the t test is a contentious issue.

Meas One sample Two sample

urem Related Independent Related Independe
ent nt
level
Nomi • Binomial • McNem • Fisher • Cochara • χ2 for K
nal • χ 2
one ar exact test nQ sample
sample • χ 2
two s
sample test
Ordin • kolmogorov • Sign • Median test • Friedm • Median
al -Smirnov test • Mann- an Two- Extensi
one- • Wilcoxo Whitney way on
sample test n test ANOVA • Kruskal
• runs test matche • Kolmogotov -Wallis
d pairs Smirnov one-
• Wald- way
Wolfowitz ANOV
A
Interv • t test • t test • t test • Repeate • One-
98
al and • Z test for • Z test d way
ratio paired measure ANOV
sample s A
s ANOVA • N-way
ANOV
A

(A) Single Sample Test

Let us illustrate the Z test with the same retail store chain example.
Suppose we have a sample of 121 accounts. It is found that the sample
mean is Rs. 1470 and the sample standard deviation 165. Can you tell
with 90% confidence that the sample mean has not changed from Rs.
1500?

The formula for testing this is

X -µ
t/z = --------------
s
----
√n

Where X = Sample Mean

Μ = Hypothesized mean
S= Sample Standard deviation
N = Sample Size

Let us follow the six-step

Hypothesis : H0 = Rs. 1500

HA = < Rs 1500
Statistical test : Choose the z test because n is larger than 30.

Significance Level : α = 0.1,with n = 121

Calculated Value :
Standard error = 15
Z=2
Degrees of Freedom = (n-1) (121-1) = 120
99
Critical Value : From the tables for a significance of 10% we get a critical
value of 1.289.

Decision : Here the calculated value is greater than the critical value, and
so we reject the null hypothesis and conclude that the average has
changed.

(B) Two independent sample test

The procedure is the same as for single sample tests, except the
formulae for finding z and t values. The required formula for the z test is

( X1 - X2 ) - (µ1- µ2)0
z= --------------------------------
S1 2 S2 2
---- + ----
n1 n2

Where the symbols represent the same as in the single test.

For samples of less than 30 the t test is used. The

( X1 - X2 ) - (µ1- µ2)0
z= --------------------------------
1 1
2
Sp ---- + ----
n1 n2

Formula is as follows:

Where

100
Two related Samples

If the observations are dependent on each other, we have to use a

slightly different method. This problem

(n1-1)S12 + (n2-1)S22
Sp 2 = ----------------------------
n1-n2-2

is solved by finding the difference between each matched pair of

observations, thereby reducing the two samples to the equivalent of one-
sample. The formula for t statistic is as follows.

D
t = -----------
SD /√n
Where

∑D
D = --------
n

(∑ D2 )
∑ D2 - ----------
n
SD = --------------------------
n–1

4.2 χ2) ANALYSIS

CHI SQUARE (χ

This is the most widely used non-parametric test, particularly for nominal
data, but it can also be used for higher scales. It is used for actual values
rather than percentages. It is used to find if difference between the
k

χ2 = ∑ (Oi – Ei)2
i=1 Ei

observed distribution of data among categories and expected distribution

is significant.

101
One sample Test

In this test, we first note the expected (hypothesized) frequencies in each

of the categories. Then the values of actual frequencies are compared
with the hypothesized frequencies. The value χ2 is a measure that
expresses these differences in the form of a mathematical value. The
larger this difference, the larger this difference, the larger is the χ2
value. The formula for χ2 is given as

Where

Oi = Observed number of cases categorized in the ith category

Ei = expected number of cases in the ith category
K= The number of categories
χ2 is unique for each degree of freedom. The degrees of freedom
involved in a category are equal to K-1.

Care should be taken in using the chi square method in the following
cases:

• When d.f. =1,each expected frequency should be at least 5 in

size.
• If d.f.>1, then the χ2 test should not be used if more than 20
percent of the expected frequencies are smaller than 5, or when
any expected frequency is less than 1.

Let us take an example. A survey was conducted in Delhi to measure

the intent of purchasing a second car. A sample of 200 people was
taken. We would like to analyze the data based on the profession of the
respondents. Is the intent dependent on the profession or not?

We assume that these categories have no effect on the income. Now we

proceed with the procedure recommended earlier.

Hypothesis : H0: O1 – Ei. The proportion of the population that intends to

buy independent of their professional categories as given.

Alternative hypothesis is
102
HA:O1<> Ei

Statistical test: The responses are divided into nominal categories and
so we should use Chi square analysis

Calculated value:

Using the Table 4.2 we have calculated the value chi-square to be χ2=
12.68

Degrees of freedom are 4-1=3

Critical value: From the tables we get a critical value of 7.82 for a
significance of 5%.

Decision: here the calculated value is greater than the critical value and
so we reject the null hypothesis conclude that the categories do have an
effect on the intent to purchase a new car.
Table 4.2: The Data and Calculations for Chi-Square with Single
Sample Problem

Profession Intendent Number Percent Expected (Oi-

to buy Oi interviewed (No. Frequencies Ei)2
Interviewed/ (Percent x
200) 60) Ei
Self 14 90 45 27 3.26
employed
(like doctors,
lawyers)
Front Line 17 40 20 12 2.08
workers
Administrative 14 40 20 12 0.33
Academic 15 30 15 9 4.00
Total 60 200 100 60 12.68

Two Sample Test

The basic methodology is same as in the one sample test but the
formula involved is as follows:

103
Here the data is categorized and so is placed in a two

(Oij - Eij)
χ2 = ∑ ∑
i j Eij

Dimensional matrix. The subscript ij refers to ijth cell.

The degree of freedom are given as (r-1)(c-1).

4.3 ONE AND TWO TAILED HYPOTHESIS

There could be two types of situations, based on which hypothesis is

classified as one sided or one tailed and tow sided or two tailed.

When alternate hypothesis HA is defined as only more than or less than

hypothesized mean (µ) i.e. HA> µ i.e. HA > µ or HA < µ is called one tailed
hypothesis. On the other side when alternate hypothesis is stated as not
equal to hypothesized mean (µ) i.e. HA ≠ µ, it means HA could be less
than µ or more than µ. Hence this is called as two sided or two tailed
hypothesis.

4.4 LEVEL OF SIGNIFICANCE AND CRITICAL VALUE OF Z

Level of Critical value of Z

ignorance (α) One tailed test Two tailed test
(zα) (zα)
10% 1.28 1.64
5% 1.64 1.96
1% 2.33 2.58
4.5 ILLUSTRATIONS

Case (i) Two tailed test

Problem : Nicrome Metal works, a leading name in Packaging Industry,

has designed automatic milk packing mache ‘Fill-Pack’ to fill plastic
pouch with 1 litre of milk with a standard deviation of 0.01 litre. A sample
of 100 pouches was examined and then the average volume / quantity of

104
milk found was 0.98 litre. Can we say with 95% confidence that the
machine is working property?

Null Hypothesis = H0 = 1 lit.

Alternate Hypothesis = HA ≠ 1 Lit

X -µ
Test Statistics = t/z = -----------
S / √n

Data : x = 0.98 lit., µ = H0=1 lit, n = sample size = 100, standard deviation
= s = 0.01 lit.
0.98 -1 - 0.02
Hence t/z = ---------------- = --------- = 20
0.01/ 100 0.01

For 95% confidence level, corresponding level of significance is 5%, and

the value of z for two tailed test is 1.96. As such calculated value of z i.e.
20 is more than actual value of z i.e. 1.96. Hence null hypothesis is
rejected. Conclusion – Packing machine is not working properly.

Case (ii): One tailed test

A sample of 1000 spherical roller bearing is found to have average

weight of 50 grams. Sample population standard deviation is 5 gm. One
bearing, randomly selected was found of 60 gm. What is the guarantee
that balance bearing will be of correct weight?

Null Hypothesis = H0=µ – 50 gm

Alternate Hypothesis = H1: µ< 50 gm

x-µ
Test statistics = t/z = ---------
S / √n

Data: x=60 gm, µ = 50gm, S=5 gm, n = sample size =1000

60-50 10 10
105
t/z = ----------- = --------- = ----------- = 63.29
5√1000 5 / 31.62 0.158

Assume level of significance 1% hence value of z for one tailed test is

2.33. Since calculated value of Z (63.29) is much more than actual value
of z (2.33) null hypothesis is rejected.

Conclusion: There is no guarantee that remaining bearings will be of

correct weight of 50 gm.

106
 CHAPTER 5
SAMPLING

5.0 INTRODUCTION

An important step in the data collection process is sampling. Sampling is

the process of selecting a representative part of a population, studying it
and thereby drawing conclusions about the population itself. The most
commonplace examples of the sampling technique are tasting a small
part of a dish to determine its taste, testing the temperature of water in a
bathtub by dipping a finger, glancing through a book before buying it, etc.
Sampling is a very important aspect of marketing research and due care
has to be taken to arrive at the right sample to be studied. Often it is
impossible or too expensive to study the entire population for the
decision-maker to understand the market. In this chapter we will discuss
the basic concepts of sampling, types of sample designs and calculation
of sample size.

5.1 THE SAMPLING TERMINOLOGY

The terminology of sampling has evolved over the period of its existence.
Knowledge of these terms is necessary for understanding sampling. Let
us examine these terms through the hypothetical case of Wild goose, a
marketing research firm. This firm wants to find out the types of movies
the owners of VCD players in India would like to watch.

5.11 Element

An element is a unit of study, which is measured for the purposes of

research. This can be an individual or an organization or even inanimate
objects like soaps manufactured in a production line. In the example
mentioned above, the families owning VCD players constitute the
elements.

5.12 Population

The total collection of elements under investigation is known as the

population. In the study conducted by Wild Goose, all the families
owning VCD players form the population of the study or (a) All members
who buy branded baby products (b) all teenagers who watch MTV.
107
5.13 Sample

The subset of the elements of the population chosen for study is called
the sample or the study sample. The characteristics of a good sample
are discussed later in the chapter. Wild Goose may choose a few cities
for sampling and within these cities it may further select a few families.
The list of the families, thus selected, forms the sample used in the
study.

5.14 Sampling Units

Sampling units are non-overlapping elements from a population. A

sampling unit can be an individual element or a set of elements based on
the sampling process used. If Wild Goose uses simple random
sampling, it considers a single family as a unit. If it uses cluster
sampling, it views each cluster of families as its primary sampling unit,
while the individual family becomes the secondary-sampling unit.

5.15 Sampling frame

The sampling frame refers to a complete enumeration/list of the

population as specified by the research problem. It is a list of all the
sampling units. For example, a list of all the people in the country owning
VCD players constitutes a sampling frame. One should be careful in
designing and selecting the sampling frame. Wild Goose may obtain its
sampling frame from all the manufacturers of branded VCD players, but
this frame will not be exhaustive, as it will not include the people who
made their purchase from the unorganized sector. Example (a)
Telephone directory of any city (b) List of Income Tax Payers.

5.16 Parameters and Statistic

A parameter is the summary descriptor of given variable in the

population, while a statistic is the summary descriptor of a given variable
in the sample. For example, Wild Goose might have found from its study
that the average number of movies per week watched by a family in its
sample is 3.45. This is a Statistic. But the average number of movies
watched per week by a family in the entire population is 3.65. This is

108
parameter. Statistics are used to estimate the corresponding
Parameters.

Table 5.13 Samples taken to measure the average size of the family.

X (Sample Mean) 4.3 4.05 4.23 4.31 3.9

S (Sample 1.15 1.35 1.25 1.03 1.33
Deviation)

5.17 Sampling Errors

There are two types of errors (i) imprecision inherent in using statistics to
estimate parameters and, (ii) errors associated with applying a decided
sampling procedure. If probability samples are used, sampling theory
can estimate the degree of imprecision that may be associated with a
sampling design.

5.18 Sampling Plan

A sampling plan is a formal method for specifying the sampling process

of a particular study.

5.2 THE NEED FOR SAMPLING

If one measures each and every element of a population for some

characteristics of interest, the study is referred to as a census. But if one
selects a small subset of the population for the study and then
generalizes the results to the entire population, then it referred to as
sampling. Sampling is an attractive alternative to the census method as
can be seen from the following discussion.

5.21 Resource constraints

Decision-makers operate with many resource constraints. Of particular

interest here are financial and temporal constraints. There is only a
limited amount of time and money available to the decision-maker.
Since it is not possible to conduct a census study with such resource
constraints, sampling is the better alternative. It provides the required

109
information, albeit with some uncertainty, within the given resource
constraints.

5.22 Accuracy

Management lend decision-makers do not need exact data in order to

take decision. Obviously, they can tolerate some amount of error.
Choosing the right sample and sampling method, the researcher can
provide information within the given tolerable limits. This requires a
lower utilization of the resources and lesser effort than census taking, but
it gives an acceptably accurate answer.

5.23 Impossibility

It is sometimes impossible to take a census, particularly is natural

sciences. In the case of Wild Goose, it is clear that the will probably
never be able to contact all the families that own VCDs. In such cases,
sampling is a must.

5.24 Destructive measurement

A measurement can often involve destruction of the element. For

example, to measure the tensile strength of a steel rod, the rod itself may
have to be destroyed. If we take a census in such cases, all the
produced steel rods will be destroyed.

5.25 Quality

Since samples are smaller than the population, it is possible to be more

thorough in a sample study than in a study of the population. This
results in higher quality of the information obtained.

5.3 CHARACTERISTICS OF A GOOD SAMPLE

• A good sample should be accurate. Accuracy is a measure of

the absence of bias or the absence of systematic variance.
Systematic variation is the variation of a measure in one
110
 direction due to some known factors. The following example
illustrates this definition.

“The classic example of a sample with systematic variance is the Literary

Digest presidential poll, in which more than 2 million persons
participated. The poll said Alfred London would defeat Franklin
Roosevelt for the presidency of the United States. Even the large size of
this sample did not counteract its systematic bias. Later evidence
showed that the poll drew its sample from the middle and upper classes,
while Roosevlet’s appeal was heavily among the much larger working
class.”

• A good sample should be precise, that is, it should have a low

standard error of its estimate.
• A good sample should be able to specify the accuracy and
precision associated with it.
• It should enable researchers to specify the degree of confidence
that can be placed in its parameter estimate.
5.4 SAMPLING DESIGNS

Sampling Designs are of two major types: probability and non-probability

methods. These two types are presented in Table 5.3 along with five
important considerations. Each of these two types comprises a variety of
methods of sampling. The characteristics given in the table are not
accurate to describe each of the sub designs, but only give the overall
characteristics of the probability and non-probability designs.

Probability samples are considered to be more costly because they need

a sampling frame of the entire population. Moreover, in probability
sampling, the selected sample units may be located at inconveniently
distant places, thus entailing higher expenses for covering them. This
type of sampling also takes more time because it is systematic. But this
method is very accurate due to its known probability distribution. Since
the properties of the sample are well defined and predictable, they are
generally accepted. Due to their strong theoretical base, these studies
are replicable and their results are generalisable.

111
Before we deal with complex sampling methods, we shall study basic
sampling concepts.

Table 5.3 : Sampling Design Choice Considerations

Consideration Design Type

Probability Non-Probability
Cost More Costly Less Costly

Accuracy More Accurate Less Accurate

Time More Time Less Time
Acceptance of results Universal Reasonable
acceptance acceptance
Generalisability of Good Poor
results

5.5 SAMPLING CONCEPTS

Let us analyse an example to understand sampling concepts. In a study

on the number of members in a family in city A, the actual census gave
the following figures:

Table 5.4 : Number of family members in a city

Size of Family No. of

Families
1 5,000
2 25,000
3 35,000
4 40,000
5 30,000
6 25,000
7 13,000
8 2,000
Total 175,000

112
Mean ξ = 4.15
Standard Deviation σ = 1.27

Now let us assume that we have taken five different samples and their
results are as follows.

The mean and standard deviation of the five samples do not match with
each other or with the population mean and standard deviations. Then
how do we determine the real mean, or at least the range in which it
falls?

Let us assume that we have taken a repeated number of samples and

then plotted all the means of these samples. What will be distribution
be? Is there any relationship between their distribution and the original
population distribution? If we can answer these questions, we will
probably be able to obtain a method for predicting the real values from
the sample values.

According to the central limit theory for sufficiently large sample (n>30,
where n is the member of limit in a sample), the sample mean will be
distributed around the population mean in a form of distribution referred
to as normal distribution. This result does not depend on the shape or
the size of the population distribution. The major characteristics of a
Sample mean distribution are as follows (See Figure 5.5)

(a) Its mean coincides with that of the sample mean.

(b) The normal distribution is well defined and so its properties are well
known.
(c) The larger the size of the sample, the more tightly clustered the
population mean.

The standard deviation of a sample mean distribution curve is known as

standard error and is denoted by the symbol. The standard error is
important because the proportion of the sample means lying between
any two points on the graph depends only on the value of the standard
error at those points. Further, the proportion of the sample means lying
between the mean and a given point on the graph depends on the
distance of the point from the mean in terms of the standard error.

113
For example, 68.2% of the sample means lie within one standard error
from the mean. 95.4% of the sample means lie within two standard
errors from the mean. Similarly, one can calculate the proportion of the
means within a given limit by using normal distr5ibution tables.

Now let us assume 95.4% of all sample means lie within two standard
errors from the sample distribution mean. So, if one takes a sample
mean, there is a 95.4% probability of finding the sample distribution
mean within the two standard errors of the given sample mean. But the
sample distribution mean is the same as that of the population mean.
This means that there is a 95.4% chance of finding the population mean
within two standard errors from the sample mean. To put it in another
way, we can say with 95.4% confidence that the population mean will be
in the range of two standard errors from the sample mean. Symbolically,
the interval is represented as ξ+2σ.

Figure 5.5 : Relationship between distribution of sample means and

population
distribution
Population
Distribution Population & Sample
distribution mean

Population and
Sample distribution

Using this concept and a given sample mean and a given standard error,
w can calculate an interval and say with a certain degree of confidence
that the population mean will lie within the given interval. This is known
as the confidence interval estimate.

But how does one calculate the standard error of a sample mean
distribution? This can be done by a formula given as
σ
σx = --------
n
114
Where = standard error of the mean
Standard deviation of the universe.
Number of observations in the sample.

But generally we do not know the population mean of a population while

we are conducting the research project. So we substitute it by sample
standard deviation to find the estimated standard error.

σ (N – n)
σx = -------- -----------
n N

Though this is only an approximation, the accuracy obtained is sufficient

for all practical purposes, particularly if the sample is large.

Let us construct a confidence interval estimate. A random sample of

families provided the following information about the number of members
in a family.

Sample mean – 4.23

Sample standard deviation – 0.21

Let us find the interval in which the population mean may lie with a
confidence of 95.4%.

Now the estimated standard error is given by the formula

Using this formula the standard deviation is 0.03.

σ
Z = -------
σx

Let us find a 95.4% confidence interval estimate of the population mean.

The confidence level of 95.4% corresponds to two standard errors.
So, the interval is within which the population mean will fall with 95.4%
probability.

115
 4.23 ± 2*0.03
= 4.23 ± 0.06

We can represent the distance from the mean by the number of standard
deviations. This number is represented by Z and is given by

Where σ = standard deviation of the sample

σx = standard error of the population

5.51 Calculation of sample size

The sample a researcher selects has a particular size, depending on the

precision of the estimate required. To decide on the sample size, a
researcher requires the following information.

a) The precision defined in terms of

• The size of the interval estimate.
• The confidence desired in the estimate.
BOX 5.51: USING STATISTICAL POWER TO SET SAMPLE SIZES

When we learnt about estimating sample sizes right after we learnt about confidence intervals, but
before we learnt about hypothesis testing? The sample size calculations took into account the
confidence level and the width of your confidence interval. We also learned that Type I error is the
mistake of concluding that there is a difference when really there is not one, and “confidence” is the
probability that we’re not making a Type I error. Our sample size calculations were designed to
control Type I error.

Type II error, on the other hand, is the mistake of saying that there is not a difference when there is
one. The probability of not making a Type II error is called “power”. It turns out those standard
formulas we learned for determining sample size tacitly assume only 50% power.

What this means. Suppose we are interested in a pre/post-advertising study and that we want to
detect a 10% difference in unaided awareness before and after. Using our standard sample size for
confidence interval analysis, we’d compute a sample size of 193 pre-study and 193 post-study. This
means that, even if there is a real 10% difference in the marketing place, our research design has
only a 50% chance of detecting it! In other words, there’s a 50% chance of incorrectly concluding
that our company’s advertising had no effect and is a poor use of our employer’s money.

The table identities sample sizes required for specific levels of power and for specific magnitudes of
differences between two independent proportions at 95% confidence. Power computations allow for
other levels of confidence and for a wide variety of other statis5tical tests, but Figure 1 demonstrates
the concept. The table allows us to determine the sample size that best meets our statistical testing
needs, because it accounts for bot6h %Type I and Type II error. A rule of thumb is that we should
aim for a least 70% power.

116
 Note that a sample size of about 150 gives just a 40% chance of detecting a real 10%
difference in, for example, unaided advertising awareness. Why spend money on research
that has a better than even chance of calling successful advertising a failure?

The table also helps us quantify the efficiency of different sample sizes. For instance,
remember hearing that sample size is a diminishing returns sort of thing That’s because the
width of a confidence interval is only halved when sample size is quadrupled. But power isn’t
like that; often we can cut Type II error in half by less than doubling sample size. Recall the
example of the pre and post ad test above. With 193 respondents pre and 193 post, we have
a 50% chance of detecting real 10% change in unaided awareness. By increasing sample
size to 348 pre and 3post (an increase in sample size that yields approximately 40% increase
in cost) we cut our chance of missing a genuine 10% bump in unaided and awareness in half.

Designing, selling or buying research without understanding the implications of sample size
on statistical power is likely to lead you to spend an unnecessary amount of money, both
directly (money spent on useless research) and indirectly (discovering false negatives, such
as finding that a successful new ad campaign is not a potential success).

Difference 40% 50% 60% 70% 75% 80% 90%

.01 14562 19209 24487 30877 34717 39201 52489
.05 582 769 980 1236 1389 1569 2100
.10 145 193 245 309 348 393 525
.15 54 86 109 138 155 175 234
.20 36 49 52 78 87 99 132

-------------------------------------------
www.intelliquest.com

b) Standard deviation of the population. This is generally unknowable

and so the Standard deviation of a sample has to be used. This is
obtainable from a pilot Test, previous research or a rule of
Thumb (one-sixth of the range).

c) Whether a finite population needed corrections. This is needed if

the sample size is larger than 5%, the following formula is used for
the standard error calculation instead of the given equation

Table 5.6 : Sampling Methods or Types of Sampling designs

117
 Type of Brief Advantages Disadvantages
Sampling Description
Probability Assign to each 1. Requires 1. Does to make
designs population minimum use of
A. Simple member a knowledge of knowledge of
random unique population in population
number; select advance. that
sample items 2. Free of possible researcher
by use of classification may have.
random errors. 2. Larger errors
numbers. 3. Easy to analyze for same
data and sample size
compute errors than in
stratified
sampling.

118
 Type of Brief Advantages Disadvantages
Sampling Description
b. Systematic Use natural 1. If population is 1. If sampling is
ordering or ordered with related to
order respect to periodic
population; pertinent ordering of the
select random property, gives population,
starting point stratification increased
between1 and effect and variability may
the nearest hence reduces be introduced.
integer to the variability 2. estimates of
sampling ratio compared to A. error likely to
(N/n); select 2. Simplicity of be high where
items at drawing there is
interval of sample, easy to stratification
nearest integer check
to sampling
ration.
C. Multistage Use a form of 1. Sampling lists, 1. Errors likely to
random random identification be larger than
sampling in and numbering in A or B for
each of the required only same sample
sampling for members of size
stages where sampling units 2. Errors
there are at selected in increase as
least two sample. number of
stages 2. If sampling sampling units
units are selected
geographically decreases
defined, cuts
down field costs
(i.e. travel)
With Select reduces variability Lack of
probability sampling units knowledge of size
proportionate with probability of each sampling
to size proportionate unit before
to their size selection
increases
variability
119
D. Stratified Select from 1. Assures 1. Requires
1. every representativenes accurate
Proportionate sampling unit s with respect to information on
at other than property that proportion of
last stage, a forms basis of population in
random classifying units; each stratum;
sample therefore, yields otherwise
proportionate less variability increases
to size of than A or C, error.
sampling unit. 2. decreases 2. If stratified
chance of failing lists are not
to include available, may
members of be costly to
population prepare them;
because of possibility of
classification faulty
process classification
3. characteristics of and hence
each stratum can increase in
be estimated and variability
hence
comparisons can
be made.

120
 Type of Brief Advantages Disadvantages
Sampling Description
2. Optimum Same as D1 Less variability for Requires
allocation except sample same sample size knowledge of
is than D1. variability of
proportionate pertinent
to variability characteristic within
within strata strata
as well as
their size.
3. Same as D1 More efficient than Less efficient than
Disproportionate except that D1 for comparison D1 for determining
size of sample of strata or where population
is not different errors are characteristics i.e.
proportionate optimum for different more variability for
to size of strata. same sample size.
sampling unit
but is
indicated by
analytical
considerations
or
convenience
E. Cluster Select 1. If clusters are 1. Larger errors
sampling units geographically for comparable
by some form defined, yields size than other
of random lowest field probability
sampling; costs. samples.
ultimate units 2. Requires only 2. Requires ability
are groups; listing of to assign each
select these at individuals in member of
random and selected population
take a clusters. uniquely to a
complete 3. Characteristics cluster, inability
count of each. of clusters as to do so may
well as those of result in
population can duplication or
be estimated. omission of
4. Can be used individuals
121
 for subsequent
samples, since
clusters, not
individuals, are
selected and
substitution of
individuals may
be permissible
F. Stratified Select clusters Reduces variability 1. Disadvantages
cluster at random for of plain cluster of stratified
every sampling sampling added
sampling unit. to those of
cluster
sampling.
2. Since cluster
properties may
change,
advantage of
stratification
may be
reduced and
make sample
unusable for
later research.

122
 Type of Brief Advantages Disadvantages
Sampling Description
G. Two or more Provides estimates of 1. Complicates
Repetitive: samples of population administration
multiple or any of the characteristics that of field work.
sequential above types facilitate efficient 2. More
(doubt) are taken, planning of computation
using results succeeding sample; and analysis
from earlier therefore, reduces required than in
samples to error or final estimate. non-repetitive
design later sampling.
ones or 3. Sequential
determine if sampling can
they are be used only
necessary. where a very
small sample
can
approximate
representativen
ess and where
the number of
observations
can be
increased
conveniently at
any stage of
the research.
Non- Select a Reduces cost of 1. Variability and
probability subgroup of preparing sample and bias of
Designs the population fieldwork, since estimates
Judgment that, on the ultimate units can be cannot be
basis of selected so that they measured or
available are close together. controlled.
information, 2. Requires strong
can be judged assumptions of
to be considerable
representative knowledge of
of the total population and
population; subgroup
123
 take a selected.
complete
count or sub
sample of this
group.
Quota Classify 1. Same cost Introduces bias of
population by considerations as observers’
per income Judgment classification of
properties; (Advantage) subjects and non
determine 2. Introduces some random selection
desired stratification effect. within classes
proportion of
sample from
each class; fix
quotas for
each observer.
1. Select units of Quick and inexpensive Contains unknown
Convenience analysis in any amounts of both
convenient systematic and
manner variable
specified by
the researcher

124
 Type of Brief Advantages Disadvantages
Sampling Description
2. Snowball Select units Only highly specific Representativeness
with rate application. of rare
characteristics; characteristic may
additional units not be apparent in
are referred by sample selected.
initial
respondents.

Let us take an example.

Where
S
Sx = --------
n

N = the number of elements in the population.

n = the number of elements in the sample.

Example

A team intends to find the size of the sample they require to estimate the
number of cards owned on an average by the population of Delhi. They
decided that they should have a confidence of 95% and that the size of
the interval estimate should be 0.05 car. They also conducted a
preliminary survey that resulted in a standard deviation of 0.42,

Computation of the sample size is as follows.

For 95% interval z = 1.96

Standard error is given by

i.e. size of the sample must be at least of 261 car owners.

5.6 TYPES OF SAMPLE DESIGNS/SAMPLING METHODS

125
Sample design can be basically of two types; probability and non-
probability sampling. Each of these sampling methods contains a variety
of sampling types (sub-designs).

Simple Random sampling

A random sample is chosen either by using random tables or by using

computer software that

σ 0.05
σx = ---- = ------- = 0.026
Z 1.96

S2
n = ------ ≈ 261
σx2

generates random numbers. These random tables contain digits in

random order. Whether one goes along horizontally, vertically or
diagonally, there is no repeated sequence. However, care has been
taken to ensure that whatever methodology is used, all the numbers in a
given range have an equal chance of occurring.

Let us assume that Wild Goose needs to choose a sample. First, it

numbers its sample frame in a sequence. The research team then
begins randomly in the table. Let us assume they agree to read the last
four digits of the random numbers as their sample frame consists of 8876
elements. Let us also say they agreed to move horizontally. Now,
suppose that they obtained numbers like 5576, 2396, 9367, 3434, 8244,
… The numbers repeated or numbers larger than the sample frame are
omitted. The remaining numbers are used to select the corresponding
elements from the sample frame.

Complex random sampling

Simple random sampling is not practical in most cases since it requires

the entire population list. It may also be expensive and time consuming.
So one has to turn to mere sophisticated methods. Various complex

126
sampling methods like systematic sampling, stratified sampling etc., are
given in Table 5.6 along with their advantages and disadvantages.

Non-probability sampling

Due to practical considerations, one often uses non-probability sampling

even though it is technically inferior to probability sampling. It is useful
when researchers do not need to generalize the results. In exploratory
research, for example, the researchers may be studying at only a limited
number of objectives, like dramatic variations. To find these variations,
the researchers may need to concentrate only on a particular group or
groups of individuals. Since cost and time-saving are high in non-
probability savings, it is a valuable tool in certain cases. This method is
also useful when the entire population is not available for the study. In
all the above cases, non-probability sampling is favored.

5.7 ANOTHER APPROACH TO SAMPLE SIZE CALCULATION

(Z S)
Sample size = n = e where
n = sample size, Z = standard normal distribution for certain confidence
level, S = population standard deviation and e = Tolerable error in
estimating the variable.

The value of S is calculated as follows

Maximum Value – Minimum Value
S = population standard deviation = 6

The denominator is 6 because 99.7% of the values of the variables

would lie within ± 3 x standard deviation i.e. 3 σ

Illustration

Whirlpool conducted Customer Satisfaction Survey during December

2005 for Washing Machines. It intended to measure customer
satisfaction on a scale of 1 to 10, where 1 means not at all satisfied and
127
10 means completely satisfied. Assume level of significance 5% and
tolerable error 0.5.

Solution :
First we compute S
Max Value of Cust Satisfaction – Minimum Value of Cust
Satisfaction
Here S = 6
= 10-1
6
= 1.5
Value of Z for 5% significance level is 1.95

Hence Sample size = n = (ZS)2 = (1.95 x 1.5)2 = 35

E 0.5

5.8 SAMPLING TECHNIQUES

Probability Sampling Non-probability Sampling

1) Each sampl4e unit in sample
frame has equal or know chance of
being included as sample
2) Samples are selected at random
from sample frame.
3) Whenever large sample size is
involved, this method is used.
4) When highly accurate decisions
of known errors are intended
regardless of cost, this method is
useful.
5) Normally used for consumer
goods survey.
5.9 ILLUSTRATION
1) The chance of each sample unit
from sample frame being included as
sample cannot be estimated.
2) Samples are selected w.r.t. prior
Experience or judgement of the
researcher
3) For accessing small sample size
this method is used.
4) Whenever time and cost
constraints are inevitable (like
exploratory Research), this method
is used.
5) Normally used for industrial goods
survey.

Emami wants to launch ‘Madhuri’ and ‘Ishwarya’ range beauty creams,

say in Pune. How should it do sample design.

Solution:

128
Sample Population : All women in Pune.
Sample Frame : All women between age group 10-50
Sampling Method : Stratified.
Sampling Plan “ Sample frame is divided into 4 groups as follows :

Group 1 – School-going girls between 10-16

Group 2 – College –going girls between 17-23
Group 3 – Working ladies between 24 – 35
Group 4 – Housewives and working ladies between 36-50.

Samples can be drawn from schools, colleges, offices, societies, etc.

Justification : Beauty creams are costly and hence stratified sampling will
ensure the income i.e. affordability. It is seen that at higher secondary
school level, the girls are more cautious about looks. Hence, the age
limit begins with 10. At the age 50, the ladies might value natural beauty.
Four groups are formed to understand in depth the consumer profile and
its preferences.

Sample size : 1% from each group. (Sample frame for Pune contains 8
lacs ladies)

129