Marketing Management

Session ­ 5

Prof. Arbuda Sharma

Marketing information
systems
With this we learn….
 Explain the importance of information to the
company.
 Define the marketing information system and
discuss its parts.
 Outline the steps in the marketing research
process.
 Explain how companies analyze and distribute
marketing information.
 Discuss the special issues some marketing
researchers face, including public policy and ethics
issues.
• Despite the importance and growing supply of
information, managers often lack enough
information of the right kind
• or have too much of the wrong kind to make the
critical decisions necessary to be successful in the
highly competitive global marketplace.
• Marketing managers don’t need more information,
but better information.
• To overcome these problems, many companies are
taking steps to improve their marketing information
systems.
• A commitment to an information system is not just a
technological commitment but a corporate culture
commitment as well.
• A well­designed marketing information system
(MIS) first assesses the information needs.
• The MIS then develops needed information
(generally from internal company data, marketing
intelligence activities, marketing research, and
information analysis procedures and sources).
• And, finally, the MIS distributes information to
managers in the right form at the right time to
help them make better marketing decisions.
• Once the system is in place and functioning,
decision­making becomes easier and better. Some
firms with efficient information systems also fail
in the marketplace.
• Marketing research, which is one of the
components of an information system, involves
collecting information relevant to a specific
marketing problem faced by the company.
• The marketing research process consists of four
steps:
1. Defining the problem and research objectives,
2. Developing the research plan,
3. Implementing the research plan, and
4. Interpreting and reporting the findings.
Online databases and Internet data sources are
becoming more important to the marketing
research process.
• Many companies now, have acquired or
developed special software and analysis
techniques­called customer relationship
management (CRM)­for integrating and
applying the mountains of individual customer
data contained in their databases.
• When the organization that has superior
information and the ability to act on it, the
organization has a significant advantage over
competition.
• Acquisition of information and development of
information systems will be one of the
challenges and necessities of the century.
• Companies have to be careful, to respect the
privacy of the consumers on whom the
studies are being conducted..
• Intrusions into the lives of consumers and
the misuse of data about consumers are a
growing problem. Solving this problem in the
rapidly changing information age will be a
challenge for marketers and researchers
Introduction…
• Marketers are viewing information not just as an input for
making better decisions but also as an important strategic asset
and marketing tool.
●
A company’s information on the market and around may prove
to be its chief competitive advantage.
●
Having up­to­date information is essential.
• Often marketers complain that information of the right kind is
not available.
• Most marketers do not need more information, they need better
information.
 A marketing information system (MIS) consists of people,
equipment, and procedures to gather, sort, analyze, and
distribute needed, timely, and accurate information to
marketing decision makers.
• MIS begins and ends with information users.
 The MIS helps information users to:
1). Assess information needs.
2). Develop needed information.
3). Distribute marketing information.
1. Assessing marketing information needs…
 Steps in developing an effective and efficient MIS is
assessing information needs.
1). A good marketing information system balances the
information managers would like to have versus what
they really need and what is feasible to offer.
2). Interviews of managers help pinpoint the
information that they would like.
3). A company needs to assess the benefits of having
an item of information versus the cost of obtaining
that information.
4). The MIS must watch the marketing environment
in order to provide decision makers with information
they should have to make key marketing decisions.
5). Sometimes the company cannot provide the
needed information.
6). The costs of obtaining, processing, storing,
and delivering information can mount
quickly.
7). Marketers should not assume that additional
information will always be worth obtaining.
2. Developing marketing information…
 The second step in developing a MIS is to develop
information. The information needed by managers
can be obtained from internal data, marketing
intelligence, and marketing research.
• Internal databases consist of electronic collections of
information obtained from data sources within the
company.
• They can usually be accessed more quickly and
cheaply than other information sources. These forms
of reports are used regularly.
But problems such as ….
• Because internal information was collected for other
purposes, it may be incomplete.
• It may be in the wrong form
• Data ages quickly.
• Because of the volume of information
generated by companies, it is often difficult
to keep track of information and accessibility
is difficult.
3. Marketing intelligence..
 Marketing intelligence is systematic collection and
analysis of publicly available information about
competitors and developments in the marketing
environment.
• Marketing intelligence information can be gathered from
many sources:
• Rival company personnel (such as executives, engineers,
purchasing agents, or the sales force).
• Suppliers, resellers, and key customers.
• Information on competitors (often found in annual
reports, speeches, press releases, Web pages, business
publications, trade shows, and advertisements
• Analyzing competitor products after purchase by
the company’s intelligence department.
• Look for new patents or patent applications.
• Information can be bought from outside suppliers.
• Online databases
4. Marketing Research…
 Marketing research is the systematic design,
collection, analysis, and reporting of data and
findings relevant to a specific marketing
situation facing an organization.
• Every marketer needs research.
• Marketing research can be done by an internal
department or it can be done by an outside firm
• The marketing research process consists of four
steps: defining the problem and research
objectives, developing the research plan,
implementing the research plan, and
interpreting and reporting the findings.
Step 1. Defining the problem and research
objectives
• The marketing manager and the researcher
must work closely together to define the
problem carefully and agree on the research
objectives.
• Managers must know enough about marketing
research to help in the planning and to
interpret research results.
• Defining the problem and research objectives is
often the hardest step in the process.
• After the problem has been defined carefully,
the manager and researcher must set the
research objectives.
• The three general types of objectives are:
• Exploratory research where the objective is to
gather preliminary information that will help
define the problem and suggest hypotheses.
• Descriptive research is where the intent is to
describe things such as the market potential for
a product or the demographics and attitudes of
customers who buy the product.
• Casual research is research to test hypotheses
about cause-and-effect relationships.
• The statement of the problem and research
objectives will guide the entire research
process.
• It is always best to put the problem and
research objectives statements in writing so
agreement can be reached and everyone
knows the direction of the research effort.
Step 2. Developing the research plan…

 In developing the research plan, the attempt is

to determine the information needed (outline
sources of secondary data), develop a plan for
gathering it efficiently, and presenting the plan
to marketing management.
• The plan spells out specific research
approaches, contact methods, sampling plans,
and instruments that researchers will use to
gather primary data
• The firm should know what data already exists
before the process of collecting new data
begins.
• Research objectives must be translated into
specific information needs.
• The research plan should be presented in a
written proposal.
• Gathering data can include:
• Secondary data …an information that already
exists somewhere, having been collected for
another purpose.
• Primary data an information collected for the
specific purpose at hand.
 Sources of secondary data include both internal
and external sources.
• Companies can buy secondary data reports
from outside suppliers.
• Information can be obtained by using
commercial online databases.
 Advantages of secondary data include:
• It can usually be obtained more quickly and at
a lower cost than primary data.
• Data can sometimes be provided that an
individual company could not collect on its
own.
 Some problems with collecting secondary data
include:
1]. The needed information might not exist.
2]. Even if the data is found, it might not be
very useable.
3]. The researcher must evaluate secondary
information to make certain it is relevant,
accurate, current, and impartial.
 Collecting primary data.
 A plan for primary data collection calls for a
number of decisions on research approaches,
contact methods, sampling plans, and research
instruments.
a). Research approaches can be listed as:
1]. Observational research where information is
gained by observing relevant people, actions,
and situations. However, some things such as
feelings, attitudes, motives, and private behavior
cannot be observed.
Ethnographic research, however, combines
intensive observation with customer interviews and
can gain deep insight into how customers buy and
live with their products
• Mechanical observation can be obtained via
machines or computer.
• This is where electronic monitoring systems
link consumers’ exposure to television
advertising and promotion (measured using
people meters) with what they buy in stores
(measured using store checkout scanners).
• Observational research can be used to obtain
information that people are unwilling or
unable to provide on the Internet
2]. Survey research is the gathering of primary data
by asking people questions about their knowledge,
attitudes, preferences, and buying behavior.
Survey research is best suited for gathering
descriptive information. Survey research is the
most widely used form of primary data collection.
• Using huge consumer panels, some firms provide
marketers with comprehensive looks at buying
patterns using single-source data systems.
• The major advantage of survey research is
flexibility.
• Disadvantages include the respondent being
unwilling to respond, giving inaccurate answers, or
unwilling to spend the time to answer.
3]. Experimental research involves the gathering
of primary data by selecting matched groups
of subjects, giving them different treatments,
controlling related factors, and checking for
differences in group responses.
• This form of research tries to explain cause-
and-effect relationships.
• Observation and surveys may be used to
collect information in experimental research.
• This form is best suited for gathering causal
information.
 Contact methods can be listed as:
1]. Mail questionnaires-can be used to collect
large amounts of information at a low cost per
respondent.
2]. Telephone interviewing-one of the best
methods for gathering information quickly, and
it provides greater flexibility than mail
questionnaires.
3]. Personal interviewing-(which can be either
individual or group interviewing).
• A form of personal interviewing is focus-group
interviewing.
• Focus-group interviewing consists of inviting six to ten
people to gather for a few hours with a trained
interviewer to talk about a product, service, or
organization.
• The interviewer “focuses” the group discussion on
important issues
 Computer assisted interviewing-is a new method
being used in the technology age present today.
Consumers read questions from a computer screen
and respond.
 Online (Internet) marketing research can consist of
Internet surveys, experiments, or online focus
groups. Many experts predict that online research will
soon be the primary tool of marketing researchers.
 Sampling plans are used to outline how samples will
be constructed and used.
• A sample is a segment of the population selected for
marketing research to represent the population as a
whole.
• Marketing researchers usually draw conclusions
about large groups of consumers by studying a small
sample of the total consumer population.
• Designing a sample calls for three decisions:
a]. Who is to be surveyed (sampling unit)?
b]. How many people should be surveyed (sample
size)?
c]. How should the sample be chosen (sampling
procedure)?
 Research instruments can be divided into two
main categories:
1]. The questionnaire is by far the most
common instrument. It consists of a set of
questions presented to a respondent for their
answers. In preparing the questionnaire, the
marketing researcher needs to decide:
• What questions to ask.
• The form of the questions.
1.] Closed-end questions are questions that
include all the possible answers and allow
subjects to make choices among them.
2.] Open-end questions are questions that allow
respondents to answer in their own words.
• The wording of questions.
• The order of questions.
 Mechanical instruments are also used to collect
information.
• Two common forms are people meters and
supermarket scanners. Other forms of
mechanical instruments measure subjects’
physical responses.
a]. A galvanometer measures strength of
interest or emotions aroused by a subject’s
exposure to different stimuli, such as an ad or
picture.
b]. Eye cameras are used to study
respondents’ eye movements to determine at
what points their eyes focus first and how long
they linger on a given item
Step 3. Implementing the research plan…
 At this stage, the marketing researcher puts
the research plan into action. This involves
collecting, processing, and analyzing the
information.
• Data collection is generally the most expensive
part of the research process.
• Researchers must now process and analyze the
collected data and isolate important
information and findings.
• Data collection is subject to error.
• Important information must be isolated.
Step 4. Interpreting and reporting the findings…
 The market researcher must now interpret the
findings, draw conclusions, and report them to
management.
• The researchers should keep from overwhelming
managers with numbers and fancy statistical
techniques.
• Researchers should present important findings
that are useful in the major decisions faced by
management.
• Interpretation should not be left only to
researchers.
• Marketing managers will also have important
insights into the problems.
• Interpretation is an important phase of the
marketing process. The best research is
meaningless if the manager blindly accepts
wrong interpretations from the researcher.
5. Analyzing market information
 Information gathered in internal databases and
through marketing intelligence and marketing
research usually requires more analysis.
• Information analysis might involve a collection
of analytical models that will help marketers
make better decisions.
• These models can help answer the questions of
“what if” and “which is best?”
Customer relationship management
 In recent years, many companies have acquired or
developed special software and analysis techniques­called
customer relationship management (CRM)­for integrating
and applying the mountains of individual customer data
contained in their databases.
• Integration of customer information can come from many
sources and the aim is to build stronger customer
relationships.
• Companies look for touch points. These includes customer
purchases, sales force contact, service, and support calls,
Web site visits, satisfaction surveys, credit and payment
interactions, market research studies, etc.
• Because information can become scattered, CRM integrates
the information
• CRM analysts develop data warehouses and use
sophisticated data mining techniques to unearth
the riches hidden in customer data.
• A data warehouse is a companywide electronic
storehouse of customer information­a centralized
database of finely detailed customer data that
needs to be sifted through for gems.
• Most experts believe that a good customer data, by
itself, can give companies substantial competitive
advantages.
• Even though there are risks and costs, the benefits
usually prevail.
6. Distributing and using marketing information
 Marketing information has no value until it is
used to make better marketing decisions.
• Many firms use an intranet to facilitate the
information distribution process.
• Additionally, companies are increasingly
allowing key customers and value-network
members to access account and product
information and other data on
demand on extranets.
• Most executives and managers can now access
data anywhere, anytime.
Other marketing information considerations

 Marketing Research in Small Businesses and Not­for­

Profit Organizations
• Marketing research also occurs in and is important to
small businesses and not for­profit organizations.
• Many times these types of firms can do research
simply by observing what goes on around them.
• Managers can conduct informal surveys using small
convenience samples.
• The use of small focus groups is also a useful
technique.
• Managers can also conduct their own simple
experiments.
• One of the best sources of information for
these firms is secondary data.
• No matter how these firms conduct research,
they must still follow the same basic rules of
sound research used by larger more
sophisticated firms.
International marketing research
 International marketing research follows the same
steps as domestic marketing research. It is,
however, often more difficult and there are
different problems because there are often many
countries involved in the research effort
• In foreign markets, the international researcher
often has a difficult time finding good secondary
data.
• Collection of primary data poses the same problem
as for domestic research.
• In addition, cultural differences can cause
additional problems……
• because of language, differences in buying roles
and consumer decision processes, willingness to
respond, ability to respond (illiteracy), and
respondents may make false claims in order to
appear to be well­off. Translation is always a very
difficult problem.
• Despite these problems, international marketing’s
popularity has given rise to an increase in
international marketing research.
Public policy and ethics in marketing research

 Public policy and ethics in marketing research

are important considerations. When properly
used, marketing research benefits both the
company and its customers.
• When misused, however, marketing research
can also abuse and annoy customers.
• The marketer wants to avoid intrusions into the
consumer’s privacy and use the research in an
ethical way.
• Two major problems are:
1). Intrusions on consumer privacy. There is
increasing resentment here.
a). Industry is responding with education programs
and stricter enforcement of codes and ethics.
b). Marketers must show customers that there is
value in giving marketers information. If this is done,
consumers should be more willing to give the
information.
2). Misuse of research findings.
a). Companies often use research findings as
advertising gimmicks.
• Because of this intent, some companies rig
their research efforts.
c). Some independent surveys are not really
independent at all. They get paid for by a
company.