QNT 561 WEEK 4 Business Research Methods, Part II.docx
QNT 561 WEEK 4 Business Research Methods, Part II.docx QNT561
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Running Head: Business Research Methods, Part II 1 Business Research Methods, Part II NAME QNT/561 Applied Business Research and Statistics PROFESSOR DATE BUSINESS RESEARCH METHODS PART II 2 Business Research Methods, Part II Introduction Netflix is investigating expanding their movies on demand and DVD bymail business model to include streaming premium channels currently available through cable and satellite providers (Grover, 2010). To validate if this is a viable business expansion area for Netflix, this research will analyze the market acceptance of the premium channel streaming offering. This research will address the question “are customers willing to purchase this service and how much would they be willing to pay for this service?” Also, which premium channels are customers most interested in purchasing. The research is focused to determine if Netflix's plan is viable considering the myriad of media products already established in the industry. Netflix bought the rights to stream films from three studios. That will make it the first true Webbased movie channel. The company already has 15 million subscribers and allows customers to stream movies through devices including Webready TVs like Sony's Bravia, game consoles like Microsoft's Xbox 360, and even gadgets like Apple's iPad. That makes Netflix's $8.99 a month mailorder and online service a threat to moreexpensive premium cable channels (Grover, 2010). Technology has finally advanced to the point where it is easy and convenient to stream movies through the internet to a high definition television. This fact has opened the door for Netflix to capture additional market share by diversifying programming and adding premium channels that once belonged exclusively to cable providers. The research project is focusing on BUSINESS RESEARCH METHODS PART II 3 this possibility by determining what percentage of Netflix subscribers would upgrade to stream premium channels and what price points the market will bear. Research Design Characteristics “Research design is the blueprint for fulfilling objectives and answering questions” (Cooper and Schindler, 2006). The research design chosen for the Netflix premium channel streaming project was a survey to solicit scaled, open and closedend responses by Netflix customers to determine interest in the proposed streaming capabilities. Using the Internet via Facebook and Google Adwords to find respondents to pretest the survey questions, the team commissioned an exploratory study to measure subscription interest in premium channels through Netflix (independent variable), price structure (dependent variable) and premium channel offering possibilities (dependent variable). The design of the survey questions is causal — designed to determine if an asymmetrical relationship exists between likelihood of customers subscription, channels offered, and monthly fee the customer is willing to pay. The method of data collection employed was to collect responses through a sample of convenience to pretest the survey questions from current Netflix customers who are on the internet. Whereas the reliability and validity provides challenges in evaluating, the independent status of Team A in the survey mitigates any perceived bias in the survey. Sample Design and Data Collection The sample design for this communication study is a nonprobability sampling. Current and former Netflix customers volunteered to respond to an experience survey. Data was collected through a selfadministered Internet survey or through personal interviews. The participants were BUSINESS RESEARCH METHODS PART II 4 selected through convenience sampling are considered to be representative of the average Netflix subscriber. A sample of convenience is a subjective approach and offers an unknown probability of selecting population elements (Cooper & Schindler, 2006), and is unrestricted. In other words, because some members of the population have no chance of being sampled, the extent to which a convenience sample actually represents the entire population cannot be ascertained with a high level of confidence. Although this type of sample design also presents challenges with regard to bias, the design was chosen for practical considerations. “While a convenience sample has no controls to ensure precision, it may still be a useful procedure. Often you will take such a sample to test ideas or even to gain ideas about a subject of interest” (Cooper & Schindler, 2006, Non probability Sampling, para. 4). Thus the sample of convenience was considered worthwhile for pretesting the survey questions to determine practicality, validity and clarity of communication. Convenience sampling is often chosen by researchers to satisfactorily meet the limited objectives of the study. In this exploratory research a range of conditions are examined in an effort to determine attitudes and possible conditions for selections of Netflix services. “In the early stages of exploratory research, when you are seeking guidance, you might use this approach. The results may present evidence that is so overwhelming that a more sophisticated sampling procedure is unnecessary” (Cooper & Schindler, 2006, Nonprobability Sampling, para. 4). In addition, other factors to consider in nonprobability sampling are cost and time (Cooper & Schindler, 2006). “Carefully controlled nonprobability sampling often seems to give acceptable results, so the investigator may not even consider probability sampling (Cooper & Schindler, 2006, Nonprobability Sampling, para. 4). BUSINESS RESEARCH METHODS PART II 5 To maintain data validity, the survey must be a good measurement tool. A good measurement tool is one that should be an accurate counter or indicator of what the research is interested in measuring and easy and efficient to use (Cooper & Schindler, 2006). To mitigate the weaknesses of the sample design, the internal validity of the survey was assessed and edited to ensure measurement success. The content validity, criterionrelated validity, construct validity were enhanced to ensure the measurement is actual, reliable, and practical (Cooper & Schindler, 2006). General Response Types The following survey question will be presented in Likert Scale Summated Rating data because the answer that is given will be either a positive or negative response about an object of interest (Cooper, Schindler, 2006). 1) As a Netflix subscriber, how likely would you subscribe to premium channels (like HBO, Showtime, Starz, Cinemax). o Very Likely (5) o Somewhat Likely (4) o Uncertain (3) o Somewhat Unlikely (2) o Very Unlikely (1) Qsorts would be used for the following survey question because the respondent is indicating a specific point that he or she would pay for a product (Cooper, Schindler, 2006). The respondent to the survey question can chose from $1 to $15. 2) What is the maximum monthly price you would be willing to pay for premium channel (like HBO, Showtime, Starz, Cinemax) subscription through Netflix? BUSINESS RESEARCH METHODS PART II 6 Multiple choice single response scale would be used for the following survey questions because there are multiple options a person can chose from but only one answer is needed (Cooper, Schindler, 2006). 3) Which premium channel would you be most interested in subscribing? o HBO o Cinemax o Showtime o Encore o Starz o Other 7) If you have quit your subscription to Netflix, what was the reason for leaving? o Price o Limited selections o Bad Customer service o Other The simple category scale would be used for the following three questions because there are two mutually exclusive answers for the survey question (Cooper, Schindler, 2006). The simple category scale is nominal information. 4) Are you currently a Netflix subscriber? [ ] Yes [ ] No 5) If you are not currently a subscriber to Netflix, have you subscribed in the past? [ ] Yes [ ] No [ ] Not applicable BUSINESS RESEARCH METHODS PART II 7 6) Would the availability of premium streaming channels (like HBO, Showtime, Cinemax or Starz) be a reason for you to subscribe to Netflix? [ ] Yes [ ] No Classify Findings in NOIR Scales The survey includes data on all scales except for the interval scale. The majority of questions are centered on the nominal scale where numeric values are used to classify the data for labeling purposes. The questions using the nominal data scale are: 3) Which premium channel would you be most interested in subscribing? 4) Are you currently a Netflix subscriber? 5) If you are not currently a subscriber to Netflix, have you subscribed in the past? 6) Would the availability of premium streaming channels (like HBO, Showtime, Cinemax or Starz) be a reason for you to subscribe to Netflix? 7) If you have quit your subscription to Netflix, what was the reason for leaving? There is one question that uses the ordinal data scale where the responses will be ranked by increasing desire of the respondent. This scale shows degree of preference, but there is no specific increment by which the data increase is represented. The question with ordinal data for response is: 1) As a Netflix subscriber, how likely would you subscribe to premium channels (like HBO, Showtime, Starz, Cinemax) BUSINESS RESEARCH METHODS PART II 8 There is one question that uses the ratio scale as it relates to the amount the respondent is willing to pay. The ratio data represents real dollars and can have an absolute zero data point. The question utilizing ratio data is: 2) What is the maximum monthly price you would be willing to pay for premium channel (like HBO, Showtime, Starz, Cinemax) subscription through Netflix? Conclusion The initial results from this pretest sample show the need for research into this subject as there is a viable market opportunity for Netflix or their competitors to pursue premium channel streaming. The initial pretest sample also demonstrates the questions are viable in that they communicate clearly to the respondent and are able to be completed with minimal time. Leveraging the internet does provide a good sample of convenience for pretesting, but a thorough study should use a random sample for Netflix target demographics of Internet connected homes in North America. The sample of convenience has validated the interest in this subject by respondents and the usefulness of the survey questions for this audience. While the random sample will be expensive to generate for the final analysis, the benefits of this data for strategic use is critical for business planning. BUSINESS RESEARCH METHODS PART II 9 References Cooper, D.R. & Schindler, P.S. (2006). Business research methods (9th ed.). Boston: McGraw Hill/Irwin. Retrieved from University of Phoenix, QNT561 – Applied Business Research & Statistics Website. Grover, R. (2010). Netflix: Premium Cable's Worst Nightmare. Bloomberg Businessweek. Retrieved from http://www.msnbc.msn.com/id/39237941/ns/businessbloomberg_businessweek/
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