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 well-designed 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, decision-
making 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 techniques—called
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 up-to-date 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 techniques—called 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 information—a 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 Not-for-
Profit Organizations
• Marketing research also occurs in and is important to
small businesses and not for-profit 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 well-off.
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.