ORIGIN AND DEVELOPMENT OF OPERATION RESEARCH

The term, Operational Research, was first coined in 1940 by McClosky

and Trefthen in a small town, Boxesey, of the United Kingdom.

This new science came into existence as a result of research on military operations during World
War II. During the was there were strategic and tactical problems which were greatly
complicated,to expect adequate solutions from individuals or specialists was
unrealistic.

Therefore, the military management called on scientists from various disciplines and organised
them into teams to assist in solving strategic and tactical problems, i.e. ,to discuss,evolve and
suggest ways and means to improve the execution of various military projects.

By their joint efforts, experience and deliberations, they suggested certain approaches that
showed remarkable progress. This new approach to systematic and scientific study of the
operations of the system was called the Operations Research or Operational Research.

A marketing information system (MkIS) is a management information system (MIS) designed
to support marketing decision making. Jobber (2007) defines it as a "system in which marketing
data is formally gathered, stored, analysed and distributed to managers in accordance with their
informational needs on a regular basis." In addition, the online business dictionary defines
Marketing Information System (MkIS) as a system that analyzes and assesses marketing
information, gathered continuously from sources inside and outside an organization.
[1]

Furthermore, an overall Marketing Information System can be defined as a set structure of
procedures and methods for the regular, planned collection, analysis and presentation of
information for use in making marketing decisions. (Kotler, at al, 2006) Developing a MkIS
system is becoming extremely important as the strength of economies rely on services and to
better understand the specific needs of customers. Kotler, et al. (2006) defined it more broadly as
"people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,
timely, and accurate information to marketing decision makers."
[2]

As our economy focuses on services, marketing is becoming extremely important to monitor the
marketing environment for changes in buyer behavior competition, technology, economic
conditions, and government policies.
[3]
In this sense, the role of marketing is becoming pivotal
for an organization to adapt to changes in the market environment. (Harmon, 2003)
Furthermore, as our economy relies heavily on the acquisition of knowledge, MkIS systems are
necessary to be able to define and differentiate the value proposition that one organization
provides with respect to another, as well as to define their competitive advantage. (Harmon,
2003)
The main benefit of MkIS systems is to integrate market-monitoring systems with strategy
development and the strategic implementation of policies and processes that help capture and act
on customer management applications with marketing decision support systems. This area
constitute Marketing intelligence that supports the analysis and market based activities that
support customer relations and customer service with real time information with real time
applications that support market based approaches.
According to Robert Harmon (2003), MkIS systems are composed on four components: (1) user
interfaces, (2) applications software, (3) databases, and (4) systems support. The following is a
description of each one of these components.
1. User interfaces. The essential element of the MkIS is the managers who will use the system
and the interface they need to effectively analyze and use marketing information. The design of
the system will depend on what type of decision managers need to make.
2. Application software. These are the programs that marketing decision makers use to collect,
analyze, and manage data for the purpose of developing the information necessary for marketing
decisions.
3. Database marketing. A marketing database is a system in which marketing data files are
organized and stored.
4. System support. This component consists of system managers who manage and maintain the
system assets including software and hardware network, monitor its activities and ensure
compliance with organizational policies.
Along with these components, MkIS systems include Marketing Decision Support Systems
(MDSS), which in turn rely on simple systems such as Microsoft Excel, SPSS, and on-line
analytical tools that help collect data. Data compiled for analysis is stored and processed from a
data warehouse, which is simply a data repository system that helps store and further process
data collected internally and externally. (Harmon, 2003)
Components of a marketing information system
A marketing information system (MIS) is intended to bring together disparate items of data into
a coherent body of information. An MIS is, as will shortly be seen, more than raw data or
information suitable for the purposes of decision making. An MIS also provides methods for
interpreting the information the MIS provides. Moreover, as Kotler's
1
definition says, an MIS is
more than a system of data collection or a set of information technologies:
"A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate
information for use by marketing decision makers to improve their marketing planning,
implementation, and control".
Figure 9.1 illustrates the major components of an MIS, the environmental factors monitored by
the system and the types of marketing decision which the MIS seeks to underpin.
Figure 9.1 The marketing information systems and its subsystems

The explanation of this model of an MIS begins with a description of each of its four main
constituent parts: the internal reporting systems, marketing research system, marketing
intelligence system and marketing models. It is suggested that whilst the MIS varies in its degree
of sophistication - with many in the industrialised countries being computerised and few in the
developing countries being so - a fully fledged MIS should have these components, the methods
(and technologies) of collection, storing, retrieving and processing data notwithstanding.
Internal reporting systems: All enterprises which have been in operation for any period of time
nave a wealth of information. However, this information often remains under-utilised because it
is compartmentalised, either in the form of an individual entrepreneur or in the functional
departments of larger businesses. That is, information is usually categorised according to its
nature so that there are, for example, financial, production, manpower, marketing, stockholding
and logistical data. Often the entrepreneur, or various personnel working in the functional
departments holding these pieces of data, do not see how it could help decision makers in other
functional areas. Similarly, decision makers can fail to appreciate how information from other
functional areas might help them and therefore do not request it.
The internal records that are of immediate value to marketing decisions are: orders received,
stockholdings and sales invoices. These are but a few of the internal records that can be used by
marketing managers, but even this small set of records is capable of generating a great deal of
information. Below, is a list of some of the information that can be derived from sales invoices.
Product type, size and pack type by territory
Product type, size and pack type by type of account
Product type, size and pack type by industry
Product type, size and pack type by customer
Average value and/or volume of sale by territory
Average value and/or volume of sale by type of account
Average value and/or volume of sale by industry
Average value and/or volume of sale by sales person
By comparing orders received with invoices an enterprise can establish the extent to which it is
providing an acceptable level of customer service. In the same way, comparing stockholding
records with orders received helps an enterprise ascertain whether its stocks are in line with
current demand patterns.
Marketing research systems: The general topic of marketing research has been the prime '
subject of the textbook and only a little more needs to be added here. Marketing research is a
proactive search for information. That is, the enterprise which commissions these studies does so
to solve a perceived marketing problem. In many cases, data is collected in a purposeful way to
address a well-defined problem (or a problem which can be defined and solved within the course
of the study). The other form of marketing research centres not around a specific marketing
problem but is an attempt to continuously monitor the marketing environment. These monitoring
or tracking exercises are continuous marketing research studies, often involving panels of
farmers, consumers or distributors from which the same data is collected at regular intervals.
Whilst the ad hoc study and continuous marketing research differs in the orientation, yet they are
both proactive.
Marketing intelligence systems: Whereas marketing research is focused, market intelligence is
not. A marketing intelligence system is a set of procedures and data sources used by marketing
managers to sift information from the environment that they can use in their decision making.
This scanning of the economic and business environment can be undertaken in a variety of ways,
including
2

Unfocused
scanning
The manager, by virtue of what he/she reads, hears and watches exposes
him/herself to information that may prove useful. Whilst the behaviour is
unfocused and the manager has no specific purpose in mind, it is not unintentional
Semi-
focused
scanning
Again, the manager is not in search of particular pieces of information that he/she
is actively searching but does narrow the range of media that is scanned. For
instance, the manager may focus more on economic and business publications,
broadcasts etc. and pay less attention to political, scientific or technological media.
Informal
search
This describes the situation where a fairly limited and unstructured attempt is made
to obtain information for a specific purpose. For example, the marketing manager
of a firm considering entering the business of importing frozen fish from a
neighbouring country may make informal inquiries as to prices and demand levels
of frozen and fresh fish. There would be little structure to this search with the
manager making inquiries with traders he/she happens to encounter as well as with
other ad hoc contacts in ministries, international aid agencies, with trade
associations, importers/exporters etc.
Formal
search
This is a purposeful search after information in some systematic way. The
information will be required to address a specific issue. Whilst this sort of activity
may seem to share the characteristics of marketing research it is carried out by the
manager him/herself rather than a professional researcher. Moreover, the scope of
the search is likely to be narrow in scope and far less intensive than marketing
research
Marketing intelligence is the province of entrepreneurs and senior managers within an
agribusiness. It involves them in scanning newspaper trade magazines, business journals and
reports, economic forecasts and other media. In addition it involves management in talking to
producers, suppliers and customers, as well as to competitors. Nonetheless, it is a largely
informal process of observing and conversing.
Some enterprises will approach marketing intelligence gathering in a more deliberate fashion and
will train its sales force, after-sales personnel and district/area managers to take cognisance of
competitors' actions, customer complaints and requests and distributor problems. Enterprises
with vision will also encourage intermediaries, such as collectors, retailers, traders and other
middlemen to be proactive in conveying market intelligence back to them.
Marketing models: Within the MIS there has to be the means of interpreting information in
order to give direction to decision. These models may be computerised or may not. Typical tools
are:
Time series sales modes
Brand switching models
Linear programming
Elasticity models (price, incomes, demand, supply, etc.)
Regression and correlation models
Analysis of Variance (ANOVA) models
Sensitivity analysis
Discounted cash flow
Spreadsheet 'what if models
These and similar mathematical, statistical, econometric and financial models are the analytical
subsystem of the MIS. A relatively modest investment in a desktop computer is enough to allow
an enterprise to automate the analysis of its data. Some of the models used are stochastic, i.e.
those containing a probabilistic element whereas others are deterministic models where chance
plays no part. Brand switching models are stochastic since these express brand choices in
probabilities whereas linear programming is deterministic in that the relationships between
variables are expressed in exact mathematical terms.


The subsystems of marketing information system are


Forecasting system Market forecasting system is essential system. It refers to
estimating the future demand for the services or products. This system normally takes input from
the existing information systems and allows the organization to forecast the future.
By utilizing various techniques of predicting the demand of the products can be ascertained that
serves as basis for all the functional area. Appropriate predicting technique should be utilized
based on the information. The forecasting helps for planning as well as useful for controlling
also.
Customer analysis system This customer analysis system provides useful information
regarding various types of customers. The customers can be divided into: export customers,
government customers, corporate customers, bulk customers and small, individual segment.
The characteristic of each customer varies and these groups of customers should be studied at
length so as to improve the performance of the company in that particular customer segment.
This system allows understanding the problems of various customers.
Market research system This system provides details on particular problem of
marketing. It gathers consumer related data that can be utilized to support decisions of
marketing.
Through marketing research useful information as to promotion, sales and product can be
obtained. Marketing research can be through phone interview, personal interview and mail
services etc.
Market analysis system This system provides analysis regarding the market
information. These analyses are basically related to market segmentation. Segmentation provides
basic data for taking decisions as to which segment is doing well and what value concentration is
required to improve the market.
Market intelligence system This system refers to an information system regarding the
strategies of the competitors. Most of the intelligence system of market obtained in an
unstructured manner will be through the word of mouth or through observing statistics available
through the media as well as commercial data base services.
Nowadays due to heavy increase of competition there is a heavy need for the data of market
intelligence to have appropriate decisions in marketing.
Marketing mix system This system consists of 4P's. They are product, price, promotion
and place. How best these 4P's should be mixed so as to achieve the objectives of marketing.
These 4P's plays very important role in marketing. This system provides details as to which
product is needed by the customers at what price as well as what promotional measures should
be taken to make the services or products to reach the customer and the last but not the least the
delivery place.
Electronic shopping and advertising Electronic shopping allows the customers to view
about products and company on the electronic means, i.e., internet to purchase the goods or
services, in the case of global marketing electronic shopping as well as advertising systems help
heavily though they are expensive.
Advertising creates interest in the customer's minds regarding the products. Advertising is
information regarding the products as well as company. Electronic stalls are employed at a
central location for the purpose of advertising and providing potential customers to access the
information about services and products. They also serve as good tools for market research.
Without websites, organizations today are likely to feel somewhat handicapped. Present days
every type of company maintains websites for the sake of providing information regarding their
services and products. Internet advertisements have become famous for means of organization to
reach new customers.
Delivery rooting and tracking system This system tracks the goods vehicles position
and calculates the status of delivery. Delivery tracking system employs satellite dishes on the
delivery vans in order to monitor the movement and location of vehicles and goods. Delivery
routing systems help to route the vehicles efficiently in order to deliver the goods to the
customers at lesser cost. The routing software works on geographical maps as well as identifies
the best routes for the sake of vehicles that would expedite delivery and reduce the cost.
Point of sale system This system is another fact of the order entry system. It captures
data about the order at the point of sale and frequently found in fast food centers chain
marketing, department store. The information obtained from point of sale becomes input to the
FAIS and also to the marketing information system. Point of sale updates immediately inventory
and sales levels. Through point of sales can be monitored minute and inventory also can be
monitored closely.
Direct mail advertising system In this system, the company mails, brochures and sends
the information directly to the target customers. For this reason company Keeps Company's
mailing address. The data may be drawn from the files of customers, account receivable files and
prospect files as well as other data purchased from outside. This is quite opposite to mass
advertising that reaches an unspecified number of people that may purchase the product or not.
This direct mail advertising system permits high target market selectivity, flexibility,
personalization, early testing of the product or services as well as measurement of the results.
Telemarketing system This system means use of telephone to sell the products or
services. It has become a common as well as important means by which organizations improve
productivity of their sales force. This system allows sales people to initiate contacts, offer
services or products as well as follow-up on sales without incurring travelling cost. This
telemarketing system enables sales person to reach many customers within a given time for
telemarketing use electronic directories as well as online databases for the purpose of gathering
particulars of prospective of customers to meet the sales targets. This system has allowed several
firms to increase their sales substantially and gain market share as well as at the same time
decrease the cost per sale.
Data warehousing and micro marketing system Micro marketing means diving sales or
advertising campaigns to very narrowly defined customers. With the help of computers, micro
marketing is possible. They are utilized for the sake of identifying and targeting specific
customer or prospects from large database. It needs large customer database known as data
warehouse. Data warehouse have extensive data regarding customers. This information in data
warehouse can be sorted analyzed to obtain specific customer information. This process is
known as the data mining and its main is to identify new opportunities in marketing and is
helpful to the department of marketing for the purpose of focusing on narrow as well as niche
markets in many activities of marketing.
Sales force automation system The sales force automation system is designed for the
sake of increasing the productivity of sales people. In this system identifying prospective
customers, contacting them, making demonstration, calling on customers, giving answers to the
questions, and choosing the sales and follow-up on sales. This system addresses only the task of
administrative of sales people.

The sales force automation system helps the sales force in the following methods.

This system provides details as to travel expenditure or salesmen sales commission. It provides
details regarding the sales like product wise, area wise, region wise, salesperson wise, order
booking can be recorded and analyzed. It assists in maintaining and collecting details pertaining
to customers their sales history, product preference. For this job contact management subsystems
helps very much.

To help the sales forces to collect existing as well as potential customers. In this case the
prospective information system helps sales force in locating potential customers from source
such as existing customers, customer enquiries, vendors, directories and online database by
external agencies etc. The benefits of this system are reducing sales cycle, increase revenue on
sales, developing order management and capturing customer related information.