Case: From Management Decision Problem to Marketing Research Problem

When everybody's busy, something's got to give.

The online grocery industry (that is, grocery

shopping online and home delivery of purchased

items) has developed slowly over the past 20

years to address today's consumer demands of

convenience and time savings. Perhaps the best

known provider in the industry is Peapod.com, an

operation that began outside Chicago. Since its

founding in 1989, it has expanded to 18 U.S.

markets, making over 10 million deliveries to over

270,000 customers. Other national competitors

have entered the market, but only a few have had

any staying power. One of these is netgrocer.com

which delivers groceries and an assortment of

other merchandise as well across the country

using FedEx. In addition to larger multi-market

online grocers, there have been many local

providers.

Online grocery services typically provide virtual

stores through which the electronic visitor

navigates, as if pushing a shopping cart in a

traditional grocer. The user clicks on items to

purchase, which are placed in the user's cart.

When complete, the user is ''checked out,''

specifying a delivery date and time. Users pay

delivery costs proportionate to each shopping bill.

The software allows the user to store his or her

preferences in a personal shopping list that can be

altered, adding or deleting items as necessary

with each e-visit. Across the various providers, the

software also usually allows easy consumer

comparison. For example, the SKUs in a particular

category may be sorted by brand name, by price,

by value (price per ounce, for example), by what is

on ''feature'' (sale and point-of-purchase

promotions), by various dietetic goals (such as

''healthy,'' ''low fat''), and so on. The user may

write in ''notes,'' to specify in more detail, for

example, ''Please pick up green (unripe) bananas,

not yellow ones,'' or ''If Fancy Feast is out of beef,

please get turkey instead,'' which instruct the

professional shopper as to the user's particular

preferences. Categories of items that can be

purchased are continually expanding, from foods

to drugstore items and other merchandise.

Online grocery providers tend to conduct the

online business very well, if customer satisfaction,

repeat visits, and word-of-mouth advertising are

any indicators. That is, the software provided, the

merchandise selected, the delivery reliability, and

so on, are valued by the customer, with few

complaints. Most users are women, employed

full-time, and married, with well-above-average

household incomes.

Samantha Gerard is an M.B.A. student, taking her

last term of classes, and thinking about starting up

a local online grocer. She's certain that by learning

from the templates of the current providers in

other markets, she, too, can run the logistics of

the business. However, she hopes that, given her

contacts with computer experts, she can create a

competitive advantage in the software setup, if

she understands the consumers' mindset as they

travel through the e-grocery stores. She wants to

know just what a user is thinking from the first

click onto the Web site to the last ''Done

Shopping'' click off the site.

This knowledge would allow her to offer better

advice to her software developers in terms of

what features would facilitate the visitors'

navigation through the grocery store. Data like

these would help improve the system, and it

would also lend great insight to the consumers'

decision processes.

Questions for Discussions

1. What is the decision problem?

2. What is are the research problem?

3. What types of errors might be committed here in defining the marketing research

problem? Explain how the impact of such errors can be reduced in this context.