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4 Understanding The Marketing Information Systems
4 Understanding The Marketing Information Systems
Unit4
Unit4 UnderstandingtheMarketingInformationSystems(MIS)
Structure
4.1Introduction 4.2 CharacteristicsofMIS 4.3 BenefitsofMIS 4.4 TypesofMarketingInformation 4.5 ComponentsofMIS 4.6 MarketingResearch 4.7 FeaturesofMarketing 4.8 ObjectivesofMarketing 4.9 MarketingResearchProcess 4.10ImportanceofMarketingResearch 4.11 AdvantagesandLimitationsofMarketingResearch 4.12 Summary TerminalQuestions AnswerstoSAQsandTQs. 4.1. Introduction In the earlier chapter, we saw how marketing environment is changing and presenting new opportunities and threats to an organization. The main responsibility for identifying significant changes in the market placefalls on the marketing department. They are better placed and have advantages in undertaking this task because they are regularly interacting with customers and observingcompetition. The Marketing Departments need to develop Marketing Information Systems that provide them informationaboutbuyerwants,preferences,behaviorandalsoaboutcompetition.Theyareableto do this by setting up systems and marketing related research methods to collect this valuable informationwhichisultimatelyusedtohelpmakemarketingdecisions.
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AMarketingInformationSystemisasetofprocedurestocollect,analyzeanddistributeaccurate, promptandappropriateinformationtodifferentlevelsofmarketingdecisionmakers.
LearningObjectives Afterstudyingthisunit,youwillbeableto: 1. Understand the concept of Marketing Information System, as well as its characteristics & benefits. 2. Outline different components of a Marketing Information system and classify different types of MarketingInformationthatarebeingused. 3. UnderstandroleandscopeofMarketingResearchinmakingMarketingdecisions. 4. Definetheobjectivesofatypicalmarketingresearchstudy 5. OutlineandexplainthestepsinvolvedinMarketingResearchprocess 6. Understandtheimportanceofmarketingresearch 7. Explaintheadvantagesandlimitationsofthemarketingresearchfunction. 4.2. CharacteristicsofMIS PhilipKotlerdefinesMISasasystemthatconsistsofpeople,equipmentandprocedurestogather, sort,analyze,evaluateanddistributeneeded,timelyandaccurateinformationtomarketingdecision makers. Itscharacteristicsareasfollows: 1. Itisaplannedsystemdevelopedtofacilitatesmoothandcontinuousflowofinformation. 2. It provides pertinent information, collected from sources both internal and external to the company,foruseasthebasisofmarketingdecisionmaking. 3. Itprovidesrightinformationattherighttimetotherightperson. A well designed MIS serves as a companys nerve centre, continuously monitoring the market environmentbothinsideandoutsidetheorganization.Intheprocess,itcollectslotofdataandstores in the form of a database which is maintained in an organized manner. Marketers classify and analyzethisdatafromthedatabaseasneeded.
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WiththeadventofComputerTechnology,MIShastakenastepfurthertoprovidemanagersdirect accesstothedatabases.ThissystemcalledMarketingDecisionSupportSystem(MDSS)linksa decisionmakertorelevantdatabasesandanalysistools,therebyallowinghimtogaindeepinsights intoneedsandtrendsofcustomerswiththehelpofsophisticatedstatisticalanalysis. Today companies organize the information in databases such as customer database, product database,andfieldsalesdatabaseandcombinethemtobestoredinahugedatabasecalledData Warehouse.Theprocessofsearchingthroughinformationindatawarehousetoidentifymeaningful patternsthatguidedecisionmakingiscalledDataMining.
4.3. BenefitsofMIS
VariousbenefitsofhavingaMISandresultantflowofmarketinginformationaregivenbelow: 1. It allows marketing managers to carry out their analysis, planning implementation and control responsibilitiesmoreeffectively. 2. It ensures effective tapping of marketing opportunities and enables the company to develop effectivesafeguardagainstemergingmarketingthreats. 3. Itprovidesmarketingintelligencetothefirmandhelpsinearlyspottingofchangingtrends. 4. Ithelpsthefirmadaptitsproductsandservicestotheneedsandtastesofthecustomers. 5. By providing quality marketing information to the decision maker, MIS helps in improving the qualityofdecisionmaking.
4.4. TypesofMarketingInformation
AMarketingInformationSystemsuppliesthreetypesofinformation.
1. RecurrentInformationisthedatathatMISsuppliesperiodicallyataweekly,monthly,quarterly,
orannualinterval.Thisincludesdatasuchassales,MarketShare,salescallreports,inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of companys brands, advertising campaigns and similar data on close competitorscanalsobeprovided.
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4.5.
ComponentsofMIS
The following diagram shows a typical Marketing Information System with its components. Which are?
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Fig4.1 TheMarketingInformationSystem
Marketing Information
MarketingdecisionsandCommunications
Source: PhillipKotler,MarketingManagemnet:Analysis,Planning,andControl,
th 5 ed.(EnglewoodCliffs,N.J.:PrenticeHall,1984),p.189
InternalRecordsSystem Thisincludesinformationon(i)Ordertopaymentcycleand(ii)salesinformationsystems. Order to payment cycle has a system which records, the timing and size of orders placed by consumers,thepaymentcyclefollowedbyconsumersandthetimetakentofulfilltheorders,inthe shortest possible time. Customers place order through sales people and companies dispatch the goodsandreceivepaymentsdirectlyorthroughbank.Aproperrecordsystempertainingtoorder to payment cycle management helps mangers to decide on production and dispatch schedule, inventory and accounts receivable schedule and also logistics and distribution management schedules,
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SalesInformationSystems recordeverythinginthesalesDepartment,startingfromSalesCall Reports to prospects history to Sales territory and quota information for better sales planning and forecastingpurpose. MarketingIntelligenceSystem This is a set of procedures and sources used by managers to obtain everyday information about developmentsinthemarketingenvironment.ThissystemsupplieshappeningsdataunlikeInternal Records System which supplies results data. Marketing managers collect data from published sources like books, magazines and journals by talking to customers, intermediaries and sales personnel.Somecompaniesappointspecialiststogatherconsumerandcompetitorinformation,who doesmysteryshoppingtomonitortheperformanceoftheirownorcompetitorsdealers.Competitor information can also be obtained by buying their product, attending their press conferences, trade showsandreadingtheirannualreports.Companiespurchasecommercialinformationfromoutside suppliersandmarketresearchagencieslikeIMRB,ORGMARGtoobtaincompetitivedataontheir sales,advertisingexpendituresetc.,besidestheirown. MarketingResearchSystem ThisisthethirdcomponentofMIS.MarketingResearchprovidesinformationtomarketingmanager when he/she encounters marketing problems. This may involve conducting Marketing Research survey by collecting primary data. These surveys may be conducted by the marketing department itselforaitcanhireservicesofanexternalmarketingresearchagency. AnalyticalMarketingSystems AlsoknownasMarketingDecisionSupportsystems(MDSS),thisisacoordinatecollectionofdata, systems, tools and techniques with supporting software and hardware by which an organization gathersandinterpretsrelevantinformationfrombusinessandenvironmentandturnsitintoabasis for marketing action. All the data which is generated through the other three systems described above are stored in a data base. The storage and retrieval capability of decision support system allowsthecollectionanduseofawidevarietyofdatathroughoutthecompany.Seniormanagerscan accessthedatabaseandcontinuallyandmonitorsales,markets,performanceofthesalespeople andothermarketingsystemsaswell.
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SelfAssessmentQuestions1 1. AMarketingInformationSystem(MIS)caterstotheneedsof______________ 2. MIS enables a company to develop effective ______________ against emerging marketing threats. 3. RecurrentInformationisthedatathatMISsupplies_______________ 4. ____________Informationisdevelopedandprovidedinresponsetoanyspecificdatarequested byamarketingmanager. 5. In Marketing Decision support systems, the manger is provided direct access to _______________
4.6.
MarketingResearch
Earlier we saw that Marketing Research is an important component of the Marketing Information System.Marketersneedtoacquiregoodunderstandingoftheirownmarketstomonitorthechanging environment. They need information to assess their own past performance as well as to prepare futuremarketingplans.Hencetheyrequiretimelyandaccurateinformationontheirconsumersand competitors as well as on the performance of their products. In todays highly competitive and complexenvironmentconsumerneedsarechangingatafastpace.Hencedecisionmakingisvery challenging. MarketingResearchperformsthetaskofcollecting,recordingandanalyzingrelevantdata.Thus,it hasemergedasoneoftheimportantactivitiesofthemarketingfunction. AmericanMarketingAssociation(AMA)definesMarketingResearchas Definition: MarketingResearchisthefunctionwhichlinkstheconsumer,customersandpublicto the marketer through information information used to identify and define marketing opportunities andproblemsgenerate,refineandevaluatemarketingactionsmonitormarketingperformanceand improveunderstandingofmarketingasaprocess. Philip Kotler defines Marketing Research as the systematic design, collection, analysis and reportingofdatafindingsrelevanttoaspecificmarketingsituationfacingthecompany.
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5.7
FeaturesofMarketingResearch
1. ItisasystematicprocessIthastobecarriedoutinastepwiseandsystematicmannerand thewholeprocessneedstobeplannedwithaclearobjective. 2. It should be objective It is important that the methods employed and interpretations are objective. The research should not be carried out to establish an opinion nor should it be intentionallysuitedtowardspredeterminedresults. 3. It is multidisciplinary Marketing Research draws concepts from other disciplines such as Statistics for obtaining reliable data and from Economics, Psychology and sociology for better understandingofbuyers.
4.8. ObjectivesofMarketingResearch
Marketing Research may be conducted for different purposes. Based on how organizations use MarketingResearch,objectivesofMarketingResearchcanbesummarizedasfollows:
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Collecttheinformation
Analyzetheinformation
Presentthefindings
Fig4.2MarketingResearchProcess StepIDefinetheproblemandresearchobjectives Itissaidthataproblemwelldefinedisaproblemhalfsolved.Acarefulandprecisedefinitionof themarketingproblemwillleadtousefulandrelevantresultswhichcansolvethemarketingproblem. Eachresearchprojectshouldhaveoneormoreobjectiveswhichformthebroadframewithinwhich researchhastobeconducted. Itisveryimportanttoformulatetheproblemproperlyasbeingthefirststepintheprocessanyerror inthiscanmisleadtheentirestudytowardsincorrectanderroneousresults. StepIIDeveloptheResearchPlanandDesign AResearchplanissimplytheframeworkwithinwhichcollectionandanalysisofdataisundertaken. This step involves decisions on the data sources, research approaches, research instruments, samplingplanandcontactmethods.
1. DatasourcesTheresearcherhastodecidewhichdatasourcestouseSecondaryDataor
PrimaryDataorboth.
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SecondaryDataaredatawhichcollectedforsomeotherpurposeorforcommercialpurposeof selling. Primary Data are freshly gathered for a specific purpose or a specific research project. ResearchersusuallylookforSecondaryDatatoseewhethertheresearchproblemcanbepartlyor fullysolvedwithoutcollectingprimarydata.SecondaryData,whenavailable,shouldbecheckedfor reliability,accuracyandrelevancetospecificsituation.Ifso,itisamuchbetteroptionasitischeaper and is immediately available. If such needed data is not available, primary data will have to be collected. 2 ResearchApproachesPrimaryDatacanbecollectedusinganyofthefiveapproaches.They are:
1. Observational Research Fresh data can be collected by observing the situation and the
peopleinthesituation.
2. FocusGroupResearchisamethodofdiscussioninwhichateamofeighttotwelvepersons
invitedforagroupdiscussioninpresenceofaskilledmoderatortodiscussaproduct,service,a firmoranymarketingrelatedactivity.Theproceedingsareobservedandrecordedonvideotape andsubsequentlyanalyzedtounderstandconsumerattitudes,beliefsandbehavior.
3. SurveyResearchThisisthemostcommonoftheapproacheswhereinsurveysareundertaken
withthehelpofaquestionnairetolearnaboutpeoplesknowledge,beliefsandpreferences.
4. Behavioral Research Customers actual behavior in terms of actual purchases reflect their
preferencesandaremorereliablethanresponsesprovidedinsurveyswhicharememorybased.
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Questionnaire This consists of a set of questions logically arranged and presented to the respondents to answer. Questionnaire is the most commonly used instrument for collection of primarydataduetoitsflexibility.Itneedstobecarefullypreparedandpretestedbeforebeing usedforactualdatacollection.
ii Mechanical Devices Mechanical Devices such as galvanometers are used to measure the interest or emotions aroused by exposure to an ad. Eye Cameras study respondents eye movementtoseewhichpartofanadattractedattentionfirstandhowlongtheypayattentiontoa singleitem.ThesedaysTelevisionaudienceratingsaremeasuredusingAudiometerswhichcan beattachedtoTVsinasetofsamplehouseholds.Thesedevicesrecordwhenthesetisonand towhichchannelitistuned.Thedatacollectedbymechanicaldevicesaregenerallyfoundtobe moreaccuratethanbyhumanobservation. 4 SamplingPlanNowtheresearchermustprepareasamplingplanwhichoutlineswhoshould besurveyed(SamplingUnit),Howmanyshouldbesurveyed(SampleSize)andhowshouldthey beselectedforthesurvey(SamplingProcedure). i Sampling Unit Researcher must define the element of the target population by whom informationshallbecollected.Forexample,housewifeorayouthbetween1625yearsoran officelocatedonM.G.Road. ii SampleSizeLargesamplesprovidemorereliableresultsthansmallersamples.Butnormally sample size is decided based on nature of the study and variance in the population, level of accuracydesiredandaboveallmoneyavailableforresearch. iii Sampling procedure Two types of methods are available for selecting the samples ProbabilitySamplingandNonProbabilitySampling. Probability sampling method requires that each element of the population has an equal or known chance of getting selected. It also allows the calculation of confidence limits for Sampling Error. Three commonly used Probability sampling methods are Simple Random Sampling, Stratified RandomSamplingandClusterSampling. InNonProbabilitySamplingmethod,respondentsarechosenonthebasisofresearchersjudgment or convenience and this method does not allow sampling error to be measured. In spite of these limitations,manyresearcherstakeNonprobabilitysamplesduetotimeandcostconstraints.Three commonly used Non Probability sampling methods are Convenience Sampling, Judgment SamplingandQuotaSampling.
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5 Contact Methods Now the researcher has to decide how the respondent should be contacted.The choices of methods available are mail, telephone, personal interview or online interview. MailQuestionnaireThisisthebestwaytoreachpeoplewhomaynotgivepersonalintervieworif the subject of the study is of a personal nature. This questionnaire should be simple and clearly wordedsothatrespondentcanfilluptheanswerswithoutanyassistance.Theresponserateinthis methodisusuallylowandresponsescomeslowly. Telephone Interview This method is very quick way for gathering information. The method is interactive,incaseanyclarificationisrequired,butsuchaninterviewtypicallyshouldbeshort.Only few questions can be asked through this method. In India, Telephone interviewing is difficult as peopledonotliketoanswerquestionscomingfromstrangers. Personal Interview This is the most versatile method which can be adapted to any kind of researchsubject.Byfacetofaceinteractionresearcherwillbeabletomakepersonalobservations. It is the most expensiveandalsotime consuming method.Personal Interviews canbe undertaken afterarranginginterviewsattherespondentspremisesoratShoppingMallsbystoppingpeopleand requestinginterview.ThelattermethodiscalledMallInterceptMethod.Thismethodisnecessarilya nonprobabilitymethodbutislessexpensiveanddoesnottaketoomuchtime. Online Interviews Thereare many ways to collect informationthrough the internet. A Company canputaquestionnaireonitswebsiteandofferincentivetopeopletoanswerabannercanbekept onapopularsitelikeYahoo!,invitingpeopletoanswersomequestionsandwinaprize.Everyday new methodsarebeingevolved to startanewway to collect data.Advantages of online Interview arethatitisveryinexpensiveandcanbeveryfast,whereasdisadvantageisthatithaslimitedreach andresultscanbeskewed. StepIIICollecttheInformationAfterdesigningtheresearchinstrument,theresearchershould nowactuallycontacttherespondentandcollecttheinformation.Atthisstage,itisveryimportantto keepthequalityofthedataundercontrolbyensuringaccurateunbiasedanswersandbyseekingthe entire respondents cooperation. In case the researcherhas to appoint data collectors to collect theinformationfromrespondents,theymustbewelltrainedandmotivated.
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Step IVAnalyze the information In this stage researcher collects the data and codify it. Nowadays,manyquestionnairesareprecodedwhichmakesthetaskofdataentryveryeasy.The coded data is then tabulated to provide frequency distributions. Tabulated data is now analyzed. Averages and measures of dispersion are computed for the major variables. Advanced Statistical Techniques are used to discoverfindings. Here thedata is converted to information which maybe usedindecisionmaking. Step V Present the findings At this last step, the researcher should present findings to the decisionmakersorusersoftheinformation. Normally, the findings are presented in the form of a report which should present the following aspectsoftheresearchundertaken. GeneralFormatofaReport 1. IntroductionAnintroductiontobackgroundofthemarketingproblemandthefirm. 2. Statement of Purpose Statement of purpose and objectives of the study including hypothesis/hypothesesis/areproposed. 3. Research Methodology Methodology of data collection used and tools used, Sampling ProcedureusedandSampleSize,Limitationsofthestudyifany. 4. Analysis of Data Includes tables /graphs and statistical analysis used along with data interpretation. 5. FindingsandConclusionsMajorfindingsandconclusions. 6. RecommendationsRecommendationsforaction. 7. AppendixandBibliography.
4.10. ImportanceofMarketingResearch
With the increase in customer orientation, it has become necessary to acquire information on consumers needs,preferencesandopinions. This will help the marketers to make changes in the marketingmix.Thusmarketingresearchisaveryimportantandusefultoolinenhancingthedecision makingabilityofthemarketerintodaysdynamicenvironment.
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4.11. AdvantagesAndLimitationsOfMarketingResearch.
Advantages:MarketingResearchhasseveraladvantages 1. It uses a scientific approach in designing the problem and finding out alternative solutions throughuseofstatisticalandmathematicaltechniques. 2. It helps to make better marketing decisions as they are based on authentic information, rather thanpurejudgmentorguesswork. 3. Ithelpsinevaluatingtheeffectivenessofvariousmarketingactionsanddrawsattentiontolikely problemareas. 4. Itishelpfulinascertainingthereputationofthefirmanditsproducts. 5. Ithelpsthefirminknowingthemarketingandpricingstrategiesofitscompetitors. 6. It is helpful to a firm in making sales forecasts for its products and thereby, establishes a harmoniousmatchbetweendemandandsupplyofitsproducts. Limitations: Likeanyothermanagerialtool,marketingresearchisnotfreefromflaws.Itisseenthatinmany cases, wrongly executed marketing research project or improperly interpreted findings, has had to disastersinbusiness.Followingaresomeofthelimitationsofmarketingresearch. 1) NotanexactScience:Thoughmarketingresearchusesscientificmethodsbutitisnotanexact science. It deals with human behavior and many controllable and uncontrollable factors, which influencemarketingforces,playtheirrole.
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2) Itisnotapanacea:MarketingResearchcanonlyprovideaccurateinformation,basedonwhich marketers have to take their decision using their experience and judgment as well. Marketing Researchisonlyanaid,itdoesnotprovidesolutions. 3) HumanTendenciesConsumers,dealers,wholesalersetcarethebasicconstituentsonwhom marketingresearchiscarriedout.Humanbeingsbehaveartificiallywhentargetedforresearch information.Theseaspectsofhumanbehavioraffectthequalityofmarketingresearchdata. 4) Inexperiencedresearchstaff:Itneedswelltrainedandexperiencedresearcher,interviewerand investigator,otherwisequalityofdatawillbeadverselyaffected. 5) Involves high cost: It is considered a luxury or a wasteful activity in India, as it involveshigh cost. 6) Limitationsof toolsandtechniques: Thevalidityofmarketingresearchisalsolimitedbythe limitationoftoolsandtechniquesinvolved.
4.12 Summary
1. MarketingResearchisthesystematicgatheringrecordingandanalyzingofdataaboutproblems relatingtomarketingofgoodsandservices. 2. Marketing managers need a Marketing Information System (MIS) to carry out their tasks of analysis,planning,implementationandcontrolrelatedtothemarketingfunction,effectively. 3. By providing timely and accurate information, MIS helps in improving the quality of decision making. 4. AnMIShasfourComponents(I)InternalRecordsSystem(II)MarketingIntelligenceSystem(III) MarketingResearchSystem(IV)AnalyticalMarketingSystem. 5. Marketing Research Process refers to a set of sequential steps to be followed to conduct a marketingresearchstudy. 6. The main features of Marketing Research are that it is a systematic process it should be objectiveanditismultidisciplinaryinnature. 7. Withthechangingcharacterofmarkets,increaseinCustomerneedsandwantsandincreasing competition,itisimportantthatmarketersacquireinformationaboutconsumer,themarketsand thecompetition.MarketingResearchnowisanimportanttoolformarketersasanaidindecision making.
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TerminalQuestions 1. ExplainthebenefitsofMIS? 2. DiscussbrieflytheprocessofMarketingResearch? 3. WhatarethefeaturesofMarketingResearch? 4. WhatistheusefulnessofMarketingDecisionsupportsystem? 5. WriteashortnoteonlimitationsofMarketingResearch? AnswerstoSelfAssessmentQuestions SelfAssessmentQuestions1 1. MarketingDecisionMakers 2. Safeguard/Defuse 3. Periodically 4. Customized 5. Databases SelfAssessmentQuestions2 1. FocusGroupResearch 2. Secondary 3. Experimental 4. NonProbability 5. MallIntercept AnswerstoTerminalQuestions 1. Referto4.3 2. Referto4.9 3. Referto4.7 4. Referto4.5 5. Referto4.11
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