Chapter 4 Managing Marketing Information PDF

CHAPTER 4: Managing Marketing Information to Gain Customer Insights I - Marketing Information and Customer Insights Objective 4-1: Explain the Importance of Information for Customer Insights To create customer value and meaningful relationships, marketers need deep ins...

CHAPTER 4: Managing Marketing Information to Gain Customer Insights I - Marketing Information and Customer Insights Objective 4-1: Explain the Importance of Information for Customer Insights To create customer value and meaningful relationships, marketers need deep insights into customer needs and desires. Customer insights are essential for building engagement and competitive advantage. However, gathering these insights is challenging as consumer needs and motivations are often unclear. A. Marketing Information and Big Data Big Data: Large, complex datasets from advanced technology for data collection, storage, and analysis. Companies are now flooded with data from diverse sources like social media, digital interactions, and real-time monitoring. Although managers have vast data resources, they need better data, not necessarily more, and must focus on refining and using the data effectively. Effective handling of big data offers opportunities for timely, rich customer insights but requires skill to avoid overload and convert data into useful information. B. Developing Customer Insights Customer Insights: Fresh, marketing information-based understandings of customers that drive value, engagement, and relationships. Major companies (e.g., Unilever, Starbucks) have formed customer insights teams to extract and use valuable insights strategically. Example: Unilever’s Consumer & Market Insights (CMI) team gathers diverse data through methods like focus groups and AI programs, such as PeopleWorld, to quickly answer questions and dive deeper into specific consumer needs. B. The Marketing Information System (MIS) Marketing Information System (MIS): A structure of people and procedures focused on gathering and utilizing information to generate actionable customer insights. An effective MIS provides timely, relevant data to marketing managers, enabling stronger customer relationships and better decision-making. MIS begins with identifying the information needs of users, gathers data from both internal and external sources, and culminates in providing actionable insights for customer engagement and relationship management. II - Assessing Information Needs and Developing Data Objective 4-2: Define the marketing information system and discuss its components. A. Assessing Marketing Information Needs A marketing information system (MIS) serves a company’s marketing and managerial needs, sometimes extending to external partners, like suppliers and agencies. A balanced MIS filters between necessary information and excessive data, avoiding overload while still capturing essential insights. Costs of managing and analyzing data are significant, so companies must assess whether the value of additional insights justifies the expenses. B. Developing Marketing Information 1. Internal Data Internal databases: collections of consumer and market information sourced from within the company. Companies collect data from departments like marketing, customer service, accounting, operations, and sales, which can offer competitive advantage through insights. Example: Westpac Bank’s “Know Me” program uses customer data to tailor marketing efforts, increasing customer engagement and driving revenue. Internal data can be quick and cost-effective, but it can be outdated, incomplete, or difficult to manage. 2. Competitive Marketing Intelligence Competitive Marketing Intelligence: This involves the systematic collection of publicly available information about consumers, competitors, and market trends. Techniques include observing consumer behavior, online research, and monitoring social media. This helps companies understand consumer interactions and competitors’ actions. Example: Samsung monitors social media activity during Apple’s product launches to adjust its marketing strategies quickly. Ethical practices are essential; companies should use public sources responsibly and avoid unethical methods of gathering intelligence. III - Marketing Research Companies like IKEA and Mastercard have social media command centers to engage with real-time consumer conversations. This approach helps brands respond to trends and build relationships through timely, relevant engagement. Marketing research: The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. Definition: Marketing research is the structured design, collection, analysis, and reporting of data relevant to a specific marketing scenario. It is distinct from general market intelligence by its focus on particular customer and market insights for defined marketing decisions. Examples include companies like Starbucks, Google, or Samsung seeking feedback on product ideas, web redesigns, or customer demographics. A. Traditional Marketing Research in Transition Traditional methods like in-person surveys and focus groups are being complemented by agile, digital approaches (e.g., social media monitoring, online surveys). While traditional methods can be slower, they provide deep insights that digital methods sometimes lack. The pandemic accelerated the shift to digital due to safety concerns, yet traditional methods retain their value for in-depth understanding. Effective marketing research today blends digital and traditional approaches to enhance agility and insight depth. The Marketing Research Process: B. Defining the Problem and Research Objectives Close collaboration between managers and researchers is essential. This step requires clarifying the issue and research objectives, which guide the research process. Objectives can be exploratory (for problem understanding), descriptive (for market description), or causal (to test cause-effect hypotheses).  ○ Exploratory Research: Gathers preliminary information to help define problems and suggest hypotheses. ○ Descriptive Research: Describes marketing situations or problems, such as market potential or customer demographics. ○ Causal Research: Tests cause-and-effect relationships, such as the impact of pricing changes on consumer behavior. C. Developing the Research Plan This step specifies data sources, research approaches, and tools. A clear plan, especially for complex or outsourced projects, aligns the research objectives with the methods and data types (secondary or primary). ○ Secondary Data: Existing data from sources such as company records or external databases. It is cost-effective but must be evaluated for relevance, accuracy, currency, and impartiality. ○ Primary Data: New data collected specifically for the project. It provides direct insights but may be more time-consuming and expensive to gather. D. Gathering Secondary Data Often the starting point, secondary data is more accessible and affordable, but its relevance and quality must be verified. E. Primary Data Collection Secondary data offers a foundational understanding and helps define research problems and goals. However, companies often need to gather primary data as well, which requires a specific plan addressing research approaches, contact methods, sampling, and research instruments. 1. Research Approaches Primary data collection methods include observational research, surveys, and experiments: Observational Research: Involves gathering data by observing relevant individuals, actions, and situations to gain insights beyond what direct questioning can provide. For example, Domino's uses observation to develop new menu ideas based on customer interactions. This approach also includes social listening, where marketers track consumer conversations online. Ethnographic Research: Sends trained observers to interact with consumers in their natural environments. Intuit’s “follow-me-home” program, where employees observe customer use of their products, is an example. This approach reveals insights that traditional methods may miss, though it’s limited when studying unobservable traits like motivations or private behaviors. Survey Research: The most common method for primary data, best suited for descriptive information on knowledge, attitudes, or behaviors. Surveys are flexible and widely applicable, though they risk response biases and may miss detailed insights due to reliance on self-reported data. Experimental Research: Focused on gathering causal data, where researchers test variables (e.g., product prices in different locations) and analyze outcomes to understand cause-and-effect. Online platforms, such as Microsoft’s A/B testing on Bing, facilitate efficient experimentation with immediate results. 2. Contact Methods Data can be collected via mail, phone, in-person interviews, or online, each with its pros and cons: - Mail: Cost-effective, allows privacy, but slow with low response rates. - Phone: Quicker and flexible but can be costly and prone to bias or lower participation. - Personal Interviews: Include individual or group settings (e.g., focus groups). Individual interviews offer flexibility and direct engagement, though costly. Group interviews provide deeper insights through moderated discussion but face challenges with small sample sizes and participant openness. Focus Group Interviews: Effective for qualitative insights, focus groups enable real-time observation of participant reactions, though they may not fully capture authentic views. Modifications, such as conducting focus groups in relaxed environments or using “immersion groups,” aim to elicit more genuine responses. For example, Bizdaq used focus groups to better target small business owners, achieving a 210% customer increase. Online Marketing Research Online channels offer various methods, including internet and mobile surveys, online focus groups, and experiments. Online research is efficient for quantitative data collection and can simulate shopping environments, track behaviors, or conduct quick A/B testing. It has become crucial, especially post-COVID-19, due to its safety, reach, and immediacy advantages. Online Behavioral and Social Tracking and Targeting Marketers increasingly use online data to understand consumer behavior in real-time. By analyzing spontaneous reviews and social media comments, they gain insights into shopping habits and preferences. Techniques like behavioral and social targeting allow personalized ads based on individual interests. However, with this level of tracking, privacy concerns have grown, prompting laws like GDPR and CCPA to protect consumer data rights by allowing users to control their information and opt-out of data collection. Sampling Plan A sample is a group representing a larger population in research. Designing a sample includes: 1. Identifying who to study. 2. Deciding how many participants are needed, balancing reliability and cost. 3. Choosing how to select participants, with probability samples being more accurate and nonprobability samples offering cost savings. Research Instruments Primary data collection uses questionnaires (versatile with open or closed-ended questions) and mechanical devices (like people meters for TV or sensors for biometrics). Questionnaires should start with general questions and save personal ones for last. IoT devices like smart home systems provide more real-time data, enabling brands to understand user needs through instant feedback. Implementing the Research Plan After finalizing the research plan, companies collect, process, and analyze data. It’s vital to ensure data quality and use statistical tools for insights. Interpreting and Reporting the Findings Finally, researchers interpret findings, report conclusions, and help guide marketing strategies and decisions.  IV - Analyzing and Using Marketing Information Information Analysis Needs: Internal databases, competitive intelligence, and research data require advanced analysis to extract actionable insights for marketing. Analytical Tools → Managers use advanced analytics and models to better understand customer data relationships and make informed decisions. A. Customer Relationship Management (CRM) CRM Functionality: Manages and integrates customer data across all touchpoints to build customer loyalty and improve service. Touchpoints include purchases, support calls, social media, etc. CRM Systems: CRM tools (e.g., Salesforce, MetLife’s “The Wall”) consolidate data to provide a 360-degree view of customer interactions. Outcomes: Enables targeted marketing, customer service, and cross-selling, enhancing customer satisfaction and relationships. B. Big Data, Marketing Analytics, and Artificial Intelligence (AI) Marketing Analytics: Helps marketers identify actionable insights by analyzing vast data sources (web, social media, customer transactions). AI Use in Marketing: Supports personalized advertising, customer engagement, and big data analytics. Requires human oversight to maintain focus on relationships, not just technology. C. Distributing and Using Marketing Information Timely Access: Effective marketing relies on timely and easy access to relevant information through performance reports, intelligence updates, or research results. Intranets & Extranets: Company intranets facilitate internal information sharing; extranets enable selective access for suppliers and partners to update data and place orders. Mobile Access: Modern systems allow managers to access company data remotely (e.g., via laptops or smartphones) for faster, customized decision-making.  IV - Other Marketing Information Considerations A. Marketing Research in Small Businesses and Nonprofit Organizations Needs: Like large firms, small businesses and nonprofits need customer insights but lack the budget for large studies. Techniques: Smaller organizations can use informal surveys, observation, and secondary data collection to gain insights at low costs. Resources: Government resources, like the U.S. Small Business Administration and the Census Bureau, offer accessible data. Conducting Research: Even informal research must be well-planned to avoid biases and ensure useful outcomes. B. International Marketing Research Challenges: International research faces unique issues like diverse markets, limited data, and sampling challenges. Data Scarcity: Reliable secondary data is often unavailable outside the U.S., necessitating primary data collection. Data Collection: Reaching respondents varies globally, with mobile surveys growing in popularity in regions with limited internet access. Cultural Barriers: Language differences and cultural norms add complexity; translations can introduce errors, and some cultures are less responsive to surveys. Necessity: Global companies must conduct international research despite the higher costs, as it prevents costly mistakes and missed opportunities. C. Public Policy and Ethics in Marketing Research 1. Intrusions on Consumer Privacy: ○ Concerns: Many consumers feel uncomfortable with how much personal data companies collect, fearing invasion of privacy. ○ Transparency Needed: Companies should respect privacy boundaries to maintain trust, balancing personalization with privacy concerns. ○ Privacy Safeguards: Many firms have appointed chief privacy officers and created initiatives like the “Respondent Bill of Rights” to address these issues. 2. Consumer Data Security and Protection:  ○ Data Breaches: Major companies have suffered breaches affecting millions, leading to financial losses and potential fines. ○ Trust Impact: Breaches harm consumers and damage brand reputations; companies must invest in robust data security measures. 3. Misuse of Research Findings: ○ Biased Claims: Research can sometimes be manipulated to favor a brand’s agenda, leading to biased or misleading claims. ○ Ethical Standards: Organizations like the AMA and CASRO have developed ethical standards, emphasizing the importance of responsible research to maintain public trust.