Marketing information systems Research Paper

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read the chapter in the file and then answer question2.1 to 2.4 at the end

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-Discuss briefly the practice of marketing research

-Discuss the concept of information systems and decision support systems

-Discuss marketing decision support systems


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A DECISION-MAKING PERSPECTIVE ON MARKETING INTELLIGENCE Case 1-3 Ethical Dilemmas in Marketing Research Marketing Research in Practice 2 The following scenarios present a set of ethical dilemmas that might arise in marketing research. Your assignment is to decide what action to take in each instance. You should be prepared to justify your decision. Bear in mind that there are no uniquely right answers: Reasonable people may choose different courses of action 1. You are the market research director of a pharmaceutical company, and the executive director suggests to you that company interviewers telephone physicians under the name of a fictitious market research agency. The purpose of the survey is to help assess the perceived quality of the company's products, and it is felt that the suggested pro- cedure will result in more objective responses regulated companies while serving as a Canadian provin- cial minister. The defense lawyers have asked you, as a market research specialist, to do a research study to determine the characteristics of people most likely to sympathize with the defendant and hence to vote for acquittal. The defense lawyers have read newspaper accounts of how this approach has been used in a number of instances What action would you take? What action would you take? 2. You are employed by a marketing research fimm and have conducted an attitude study for a client. Your findings indicate that the product's marketing efforts are not effec- tive. This finding is badly received by the client's product management team. They request that you omit that data from your formal report, which you know will be widely distributed, on the grounds that the oral presentation was adequate for their needs. 5. You are the market research director for a large chemical company. Recent research indicates that many of your company's customers are misusing one of its principal products. There is no danger resulting from this misuse, though customers are wasting money by using too much of the product at one time. You are shown the new adver tising campaign by the advertising agency. The ads not only ignore this problem of misuse, they actually seem to encourage it. LEARNING OBJECTIVES • Discuss briefly the practice of marketing research. • Discuss the concept of information systems and decision support systems. Discuss marketing decision support systems. • List the various suppliers of marketing research information and the types of services offered by them. Discuss the criteria used to select suppliers, • Explain the impact international trade has had on marketing research. • Describe the career options available in the marketing research industry. What do you do? 3. You are a study director for a research company undertak- ing a project for a regular client of yourcompany. A study you are working on is about to go into the field when the questionnaire you sent to the client for final approval comes back drastically modified. The client has rewritten it, introducing leading questions and biased scales. An accompanying letter indicates that the questionnaire must be sent out as revised. You do not believe that valid infor- mation can be gathered using the revised instrument. What action would you take? 6. You show up your first day for a summer internship to meet your supervisor and get your first assignment. She gives you a questionnaire with specific marketing plan- ning questions and tells you that she would like you to contact the company's main three competitors and tell them you are a student doing a study on the industry and get the answers to the questions. She says you should not tell them you are working for the company over the sum- mer and adds "there is nothing wrong with not telling them—omitting the fact is not really lying." You ask her what you should do if they ask, and she says "just tell them you are a student working on a paper and you don't want to get a poor grade on the assignment." What action would you take? What action would you take? 4. A well-respected public figure is going to face trial on a charge of failing to report his part ownership of certain These vignettes were provided through the courtesy of Professor Charles Weinberg University of British Columbia, and are reproduced with his permission In practice, a marketing research department's goal can be grouped into three major categories': programmatic, selective, or evaluative. Programmatic research is performed to develop market- ing options through market segmentation, market opportunity analysis, or consumer attitude and product usage studies. Selective research is done to test different decision alternatives such as new product concept testing, advertising copy testing, pretest marketing, and test marketing, Evaluative research is carried out to evaluate performance of programs, including tracking advertising recall, corporate and brand image studies, and measuring customer satisfaction with the quality of the product and service. As the number of products and types of services introduced into the market increase, the need for marketing research explodes and the future of marketing research appears to be both promising and challenging, Unquestionably, marketing research is a growth industry. In the last decade, real expenditures on marketing research (i.e., after adjusting for inflation) are more than doubled. This is largely a consequence of economic and social changes that have made better marketing an imperative. With marketing the new priority, marketing research is the rallying cry. Companies are franti- cally trying to get their hands-on information that identifies and explains the needs of powerful new consumer segments now being formed. Kroger Co., for example, holds more than 250,000 consumer interviews a year to define consumer wants more precisely. Some companies are pin- ning their futures on product innovations, others are rejuvenating time-worn but proven brands, and still others are doing both. Not only are the companies that always did marketing research doing a great deal more, but the breadth of research activities also continues to expand. • Senior management is looking for more support for its strategic decisions; therefore, researchers are doing more acquisition and competitor studies, segmentation and market structure analyses, and basic strategic position assessments. 29 31 MARKETING RESEARCH IN PRACTICE Information Systems, Decision Support Systems, and Marketing Research • Other functions, such as the legal department, now use marketing research evidence rou- Decision Support Systems (DSS) tinely. Corporate Affairs wants to know shareholders', bankers', analysts", and employees" attitudes toward the company. The service department continuously audits service delivery Databases have no value if the insights they contain cannot be retrieved. A DSS not only allows capability and customer satisfaction. the manager to interact directly with the database to retrieve what is wanted but also provides a modeling function to help make sense of what has been retrieved. • Entire industries that used to be protected from the vagaries of competition and changing A common example of a DSS in action is that used by many industrial salespeople—especially customer needs by regulatory statutes are learning to cope with a deregulated environment. those selling products that require significant customization. The salesperson frequently will be Airlines, banks, and financial-services groups are looking for ways to overcome product asked whether or not the price and delivery time of a unique product configuration will meet or proliferation, advertising clutter, and high marketing costs brought on by more sophisti- exceed a competitor's promises. Without leaving the customer's office, the salesperson can plug Cated customers and aggressive competitors. a laptop computer into a phone jack and begin communicating with a database stored in the com- In this chapter, we will look how companies use the information gathered by marketing pany's main computer memory. The salesperson types in the product configuration and desired research, at the various ways they obtain this marketing research information, and at the career delivery data, and these requirements are compared to the costs, inventory, and assembly time opportunities available in the marketing research industry. contained in the databank. In a matter of minutes, the salesperson can propose a price and deliv- ery date and perhaps close the sale. Each firm has to develop or adapt models to support its own decision problems. For example, Avon Products, Inc., the door-to-door cosmetics firm, has unique problems as the result of a Information Systems, Decision Support Systems, part-time sales force of almost 400,000 representatives theoretically covering half of the 80 mil- lion households North America. This sales force carries a large product line that each year adds and Marketing Research 1,600 new or reformulated products. The following computer models were added to their DSS to An information system (IS) is a continuing and interacting structure of people, equipment, and help cope with these problems": procedures designed to gather, sort; analyze; evaluate; and distribute pertinent, timely, and accu- • A sales force turnover model, which revealed that the most significant variable influencing rate information to decision makers. While marketing research is concerned mainly with the the turnover rate, was the level of the appointment fee that representatives pay for initial actual content of the information and how it is to be generated, the information system is con- materials. cerned with managing the flow of data from many different projects and secondary sources to the managers who will use it. This requires databases to organize and store the information and a • An order model that explains the components of the average order and isolates the action- decision support system (DSS) to retrieve data, transform it into usable information, and dis- able variables, such as the size and timing of the catalog and the gift incentives, seminate it to users. • A procurement model that helps determine how much of a new product to buy, when to purchase and the risks involved. Databases Applying Information Systems to Marketing Research Information systems contain three types of information. The first is recurring day-to-day in for- mation, for example, the market and accounting data that flow into the organization as a result of Often, the process of developing and using models and information systems reveals gaps in the market analysis research and accounting activities. Automobile firms use government sources for databank that have to be closed. These emergent needs for information become a marketing monthly data on new-car sales by brand and geographic area. In addition, surveys are conducted research problem, for example, yearly to determine the ages and types of automobiles currently being driven, the lifestyles of the • Performance (sales, market share, contributions, and patronage) may be unsatisfactory rela- drivers (their activity and interest patterns), their media habits, and their intentions to replace tive to objectives. Perhaps the condition can be traced to a specific geographic area, but the their cars. The accounting department submits sales and inventory data for each of its dealers on underlying reasons still must be sought before action can be taken, a continuing basis, to update and supplement the information system. A second type of information is intelligence relevant to the future strategy of the business. • A competitor may launch a new product or employ a new advertising appeal, with unknown Automobile firms, for example, collect reports about new sources of fuel to power automobiles. consequences for the firm's competitive position. This information might come from scientific meetings, trade organizations, or perhaps from gov- • An unavoidable increase in costs puts pressures on profitability (or, in the case of a transit ernment reports. It also might include information from salespersons or dealers about new- system, for example, increases subsidy requirements to an unacceptable level). Various pos- product tests being conducted by competitive firms. Intelligence is difficult to develop because it sible increases in prices or fares) must be evaluated. usually involves diverse and changing sets of topic and information sources and is rarely col- lected systematically. • An upsurge in interest in health and nutrition may suggest to a snack company a new prod- A third input to the information system is research studies that are not of a recurring nature. uct line directed toward responding to this interest. Concept testing might be a first step in The potential usefulness of a marketing research study can be multiplied manifold if the informa- exploring this opportunity tion is accessible instead of filed and forgotten. However, the potential exists that others may use Given the sometimes chaotic and usually uncertain nature of most market environments, the study, although perhaps not in the way it was originally intended. large number of problems and some opportunities can emerge. Few will ever be given formal 页码:56763 32 MARKETING RESEARCH IN PRACTICE Marketing Research in Action 2.1 Marketing Decision Support Systems These data may also come in various levels of detail and aggregation. Often, they use different reporting periods and incompatible computer languages. Add to this sales estimates about com- peting brands and advertising, promotion, and pricing activity, and there is a data explosion. Managers don't want data. They want, and need, decision-relevant information in accessible and preferably graphical form for (1) routine comparisons of current performance against past trends on each of the key measures of effectiveness, (2) periodic exception reports to assess which sales territories or accounts have not matched previous years' purchases, and (3) special analyses to evaluate the sales impact of particular marketing programs and to predict what would happen if changes were made. In addition, different divisions would like to be linked to enable product managers, sales planners, market researchers, financial analysts, and production schedul- ers to share information, The purpose of a marketing decision support system (MDSS) is to combine marketing data from diverse sources into a single database that line managers can enter interactively to quickly identify problems and obtain standard periodic reports, as well as answers to analytical questions. THE FOURTH WAVE IN MARKETING nontechnical decision makers. It was a three-way marriage RESEARCH between marketing analysis, computer and information Much of the initial interest in marketing research came about technologies, and the formal marketing planning process. during the transition from a sales-oriented to a marketing- The team approach, including marketing researchers, oriented business environment. In the First Wave, seat-of- systems engineers, and marketing management, provided the-pants decision making progressed to a data-based the synergy needed to build useful computer computer-based sys- decision. But, with more data available, a large problem tems that helped managers through the marketing planning arose: A handful of data was helpful, a truckload was not and evaluation process. Through pooling expertise and necessarily better. So, in the Second Wave, the progression applying oying information technologies, the full potential of mar- was from data-based decision to information-based deci keting information was realized in the Third Wave. sion making. Rather than review a multitude of individual Finally, in the Fourth Wave, the emergence of e-commerce facts, the role of marketing research evolved to manipulate and large customer databases has motivated organizations data to underlying patterns. Unfortunately, to move from an aggregate-level summarization of data much lin order to uncover the underlying patterns as in as in the the criticism of marketing research today is a result of this excessive focus on methodology and statistics. The Second Wave) to a manipulation of data on an individual-by- individual basis. A majority of organizations currently are tered on incompetent analysis, but the lack of a decision- the tool leveraging technology developed during the Third maker's perspective and the inability to provide actionable Wave and the rich information they have about each indi- insights consistently once the data were analyzed correctly. vidual to tailor both their their product/service and In the Third Wave, we progressed from information- on an individual customer basis. Also based decision making to system-based decision making called mass-customization, this strategy develops relations The Third Wave involved a number of developments cen- with every customer that an organization possesses and tered on automated decision systems (ADS) that put the finally allows managers to assess the lifetime value of every power of marketing information directly into the hands of individual customer to the organization the da to summarize problem with waren was not that it was cen- customer marketing messages Characteristics of an MDSS A good MDSS should have the following characteristics: 1. Interactive: The process of interaction with the MDSS should be simple and direct. With just a few commands, the user should be able to obtain the results immediately. There should be no need for a programmer in between. 2. Flexible: A good MDSS should be flexible. It should be able to present the available data in either discrete or aggregate form. It should satisfy the information needs of the managers in different hierarchical levels and functions. 3. Discovery oriented: The MDSS should not only assist managers in solving the existing problems but also help them to probe for trends and ask new questions. The managers should be able to discover new patterns and be able to act on them using the MDSS. 4. User friendly: The MDSS should be user friendly. It should be easy for the managers to learn and use the system. It should not take hours just to figure out what is going on. Most MDSS packages are menu driven and are easy to operate. A typical MDSS is assembled from four components (see Figure 2.1). Source: Adapted from Kumar, Asker, and Day, Essentials of Marketing Research, 2nd ed, John Wiley & Sons, Inc, 2002, and "Third Wave of Marketing Research on the Horizon," Marketing News, March 1, 1993 p.6 Manager consideration. There may be no further need for clarification, the implications may not appear serious, or the response may appear evident in the judgment of the decision maker. Our interest is in those problems or opportunities that need to be clarified, whose consequences are uncertain, or that involve the development of new programs, products, or services. The information system serves to emphasize that marketing research should not exist in isola- tion as a single effort to obtain information. Rather, it should be part of a systematic and continu- ous effort by the organization to improve the decision-making process. Marketing Research in Action 2.1 describes the "fourth wave" in marketing research, telling how marketing research has progressed from the rudimentary to the sophisticated. Modeling Display IXI Analysis + Database Environment Marketing Decision Support Systems A typical marketing manager regularly receives some or all of the following data: factory ship- ments or orders; syndicated aggregate (industry) data services, sales reports from the field sales FIGURE 2.1 force, consumer panel data, scanner data; demographic data; and internal cost and budget data. The Four Components of an MDSS. 0719 : 58/763 34 Marketing Decision Support Systems 35 MARKETING RESEARCH IN PRACTICE Database The database contains data from all sources, stored in a sufficiently disaggregated way so that it can be analyzed by product item, sales district, trade account, or time period. The best systems have databases that can be easily updated with new information and have sufficient flexibility that data can be readily analyzed in new ways. Since most analyses deal with a subset of a larger database, the supporting software should permit random access to any and all data to create appropriate subsets. 9.8 14.0 10.5 6.5 9.3 4.1 4.1 6.3 Reports and Displays The capabilities of an MDSS range from simple ad hoc tables and reports to complex plots, charts, and other graphic displays. Any report or display can include calculations such as vari- ances and running totals, or the results of statistical procedures found in the system. Typical reports produced with an MDSS include status reports that track current trends, exception reports on troubled brands and markets, and variance reports showing budget and actuals for sales and profits. The report in Figure 2.2 answers the question: "In which regions is the Mama Mia brand not keeping up with the industry trend?" Figure 2.2 shows that product category sales were up 5.8 percent, whereas Mama Mia sales were up only 2.0 percent. On a more detailed level, product category sales were up 13.1 percent in Cleveland and 1.7 percent in Miami, while Mama Mia sales rose 6.5 percent in Cleveland and fell 0.3 percent in Miami. 6.4 8.4 6.3 12.1 7.1 7.7 Comparison Matrix Issue 203 Ending April 2, 2003 % Change in Category Sales vs One Year Ago % Change in Mia Sales vs One Year Ago 28.7 Memphis 20.3 San Antonio 13.3 Oklahoma City 13.1 Cleveland 128 Kansas City 128 Detroit 11.6 Cincinnati/Dayton 10.9 Indianapolis 0.0 10.1 Houston Milwaukee -04 9.3 Norfolk/Richmond 0.9 9.3 Phoenix/Tucson 93 Minneapolis/St. Paul Above 8.5 Omaha/Des Moines 8.5 St. Louis 84 Pittsburgh -1.5 7.9 Buffalo 78 New Orleans 78 Albany/Schenectady -4.5 7.8 New York 7.1 Salt Lake City 7.1 Boston Providence 7.0 Dallas/Ft. Worth 6.6 Jacksonville 60 Syracuse 1.3 5.9 Charlotte U.S. Average 5.8 5.3 Portland 4.8 Nashville/Knoxville 4.6 Birmingham/Mobile -0.9 Denver 3.9 Baltimore Washington -3.1 2.9 Seattle/Tacoma Below 2.7 Atlanta 1.7 Miami -0.3 1.2 Chicago 1.3 0.3 Los Angeles San Diego -0.2 -0.6 Philadelphia -4.7 -23 Raleigh Greensboro -0.2 -52 San Francisco -9.6 Below 2.0 Above U.S. Average 3.1 11.1 7.7 6.7 7.8 4.0 Analysis Capabilities Analysis capabilities are used to relate the data to the models, as well as to clarify relation- ships, identify exceptions, and suggest courses of action. These capabilities should include the ability to make calculations such as averages, lags, and percentage changes versus a previous period and to conduct seasonal analyses and standard statistical procedures such as regression, correlation, and factor analysis. These procedures will be covered in subsequent chapters of this book. 3.6 3.2 2.6 7.1 10.1 FIGURE 2.2 Comparison of Brand Performance with Industry Trend, Models Models represent assumptions about how the world works, and specifically how brand sales, shares, and profits respond to changes in elements of the marketing mix. Models are used to test alternative marketing programs, answer"what if" questions, and assist in setting more realistic objectives. For example, managers want help with such questions as: What is the impact on profitability of achieving wider distribution? What is the optimal call level for each sales repre- sentative for each account and prospect? What objectives should be set for coupon redemption and the profitability of promotion programs? The models used to address these questions can range from forecasts to complex simulations of relationships among marketing, economic, and other factors Using an MDSS offers the organization a number of advantages. It results in substantial cost savings because it helps in making better and quicker decisions. The presence of MDSS forces the decision maker to view the decision and information environment with in which he or she operates; hence, it leads to a better understanding of the decision environment. Since managers can now retrieve and utilize information that was never accessible before, it results in the enhancement of decision-making effectiveness. Using an MDSS results in better qual- ity and quantity of data being collected and hence increases the value of the information to managers. Gaining Insights from an MDSS When an over-the-counter (OTC) drug manufacturer suffered a decline in national unit market share for its drug "Alpha," management turned to an MDSS for insights. They suspected that the losses would be traced to actions of the two main competitors. "Beta" was a private-label com- petitor that was sold at half the price of Alpha. The other competing brand, "Delta," was produced and marketed by another division of the same company, following a rather similar strategy. Initial data from the DSS seemed to confirm management's initial suspicions. Alpha's share had dropped 页码:60/763 36 MARKETING RESEARCH IN PRACTICE 37 from 5.0 to 2.5 percent, and Delta's share had more than doubled from 2.0 to 4.5 percent. However, subsequent analysis of the database showed that this information was misleading. The premise of the further analysis was that any competitive effects should be evident at the regional as well as the national level. To test this possibility, the market share changes of Alpha were related to share changes of Beta and Delta, by region, for a six-month period. The results, shown in Figure 2.3, confirmed the adverse effects of Beta on Alpha. In almost every region, a share decrease for Alpha was associated with a share increase for Beta. A differ- ent picture emerged, however, when a similar analysis (shown in Figure 2.4) was done with Suppliers of Information Delta. In the regions where Alpha's share had decreased the least, Delta's share had increased the most. Conversely, Alpha's share had decreased the most in those regions where Delta had gained the least share. Clearly, Delta was not the source of Alpha's problems, more likely, Delta was helping Alpha by combining the two brands' sales force efforts. This analysis prevented a potentially damaging interdivisional dispute and helped focus management's attention on the proper target competitor. Change in Alpha's share in share points 05 Area 03 Area 3 00 Area 5 5 -0.3 Area 1 Area 2 Area -0.5 -08 Area 7 - 10 Area 8 -13 Area 4 -15 -10 0.0 1.0 20 3.0 40 Change in Beta's share in share points FIGURE 2.3 Regional Market Share Changes-Alpha and Beta. Suppliers of Information In general, managers can acquire the necessary information for decision making from two basic types of sources: 1. The corporate or in-house marketing research department. 2. External suppliers. Usually, managers use a mix of in-house and external approaches to solve a certain problem. Both can feed information directly to their clients, who are users with decision-making needs. More often, the outside suppliers get their direction and provide information to an inside research group. These inside suppliers translate the problems of their clients into specific information requirements, decide how the information will be collected and by whom, and then interpret the findings. Figure 2.5 shows the interaction among the participants in a marketing research activity. The purpose of this section is to discuss briefly the nature and attributes of the providers of marketing research services, the types of services they provide, and the factors that influence the choice of a suitable supplier for a given situation. Figure 2.6 gives a concise summary of the dif- ferent types of information suppliers within the marketing research industry. Corporate/In-House Marketing Research The location of the marketing research department within an organization and the strength of the department vary from firm to firm and to a very great extent depend on the requirements for information and the organizational structure of the firm. Some firms have a single centralized research department, housed in the corporate headquarters, which provides the information required to the various business units scattered geographically and/or functionally. The other Area 7 Change in Alpha's share in share points 0.50 0 25 Area 2 0.00 Area 5 Area 6 -0.25 Area 9 Area 1 Area 3 -0.50 Area 8 -0.75 -100 Area 4 - 125 0.0 0.5 1.0 1.5 20 25 3.0 Change in Delta's share in share points FIGURE 2.4 Regional Market Share Changes-Alpha and Delta. Information users . General management • Planning • Marketing and sales managers • Product managers . Lawyers 3.5 Information suppliers: in company • Marketing research department • Sales analysis group • Accounting department . Corporate strategic planning Information suppliers: outside company • Research consultants • Marketing research suppliers • Advertising agencies FIGURE 2.5 Participants in Marketing Research Activities. 页码:62/763
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Running head: MARKETING RESEARCH IN PRACTICE

Marketing Research in Practice
Student`s Name
Institutional Affiliation
Course
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MARKETING RESEARCH IN PRACTICE

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Marketing Research in Practice
2. 1
Marketing information systems play a big role in helping marketers make decisions. To begin
with, these systems has sets of procedures and sources, which help the marketers, obtain
everyday information on the nature of the market. The information gives the marketers a clue on
the kind of environment to expect in the market and therefore know the best decision to take. The
marketers through these information systems are able to know the developments in the marketing
environment. They also give details of possible competition in the market and the best approach
to take. For instance, the marketing information system...


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