Marketing Management PDF

UNIT II. MARKETING RESEARCH AND INFORMATION SYSTEM FOR DECISION MAKING Overview This unit gives you an idea about the company’s ways of determining which product will be patronized by different types of consumers or demographic and also to decide whether to continue producing and selling th...

UNIT II. MARKETING RESEARCH AND INFORMATION SYSTEM FOR DECISION MAKING Overview This unit gives you an idea about the company’s ways of determining which product will be patronized by different types of consumers or demographic and also to decide whether to continue producing and selling the product or to pull it out from the market. Learning Objectives At the end of the unit, I am able to: 1. define marketing research; 2. discuss the marketing research process; 3. define marketing information system; and 4. differentiate marketing research and marketing information system. Lesson Proper What is Marketing Research? Kotler defined Marketing Research as the systematic design, collection, analysis, and reporting of data and findings relevant to a specific market situation facing the company. Marketing may also be described as the systematic and objective identification, collection, analysis, and dissemination of information for the purpose of assisting management in decision making related to the identification and solution of problems and opportunities in marketing. Who does Marketing Research? When a firm wishes to carry out a research project, the job can be done by the company itself, or by a third-party company that specializes in market research. It can be done through surveys, product testing, and focus groups. Test subjects are usually compensated with product samples and/or paid a small stipend for their time. The Role of Marketing Research The purpose of marketing research is to provide management with relevant, accurate, reliable, valid, and up-to-date market information. Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information. Sound decisions are not based on gut, feeling, intuition, or even pure judgment. Managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers. Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the decide model. The Marketing Research Process To begin with the marketing research, following steps has to be followed: Step 1. Define the Problem The foremost decision that every firm has to undertake is to find out the problem for which the research is to be conducted. The problem must be defined adequately because it is too vague, then it may result in the wastage of scarce resources and if it is too narrow, then the exact conclusion cannot be drawn. In order to define the problem appropriately, each firm must have a clear answer to the questions. What is to be researched? (Content and the scope) and why the research is to be done? (Decisions that are to be made). Step 2. Develop the Research Plan This step involves gathering the information relevant to the research objectives. It includes:  Data Sources: The researcher can collect the data pertaining to the research problem from either the primary source or the secondary source or both the sources of information. The primary source is the first-hand data that does not exist in any books or research reports whereas the secondary data is the second-hand data which is available in the books, journals, reports, government publications, and commercial data.  Research Approaches: The secondary data are readily available in books, journals, magazines, reports, online, etc., but the primary data have to be collected and to do so, the following research can be conducted: Observational Research: The researcher can collect the information by just observing the happenings in the market and sometimes having a friendly conversation with the customers to know about their purchase experiences. Ethnographic Research: it is one of the forms of an observation research where the researcher studies an individual in the real-life situation and not under any market set-up or a laboratory. The purpose of this research is to know the way people live, what they do to earn their living, how they consume goods and services, what they need in their personal and professional lives, etc. Focus Group Research: It is a form of group discussion wherein six to ten people gather and discuss the common topic given by the moderator. A moderator is a person who conducts the group discussion and is skilled in group dynamics. He also keeps the discussion focused on the topic so that relevant information can be obtained from the group members. Survey Research: These are the descriptive research generally conducted to know about the customer’s knowledge about the product, their preferences, and satisfaction level. The best way to conduct survey is through the Questionnaires. Behavioral Data: The customer’s actual purchases at the store reflects its behavior and the choice of product. Thus, observing what customers are buying gives more accurate information about the customer rather than the planned answers given by them in the surveys. Experimental Research: This is done to find out the cause-and-effect relationships. This research is undertaken to study the effects of change in the customer’s behavior due to the change in the product’s attributes.  Sampling Plan: Once the research approach is decided, the researcher has to design a sampling plan and have to decide on the following: The sampling unit – e.g. Whom shall we survey? The sample size – e.g. How many units in the population shall be surveyed? The sampling procedure – e.g. How the respondents shall be chosen?  Contact Methods: The researcher has to choose the medium through which the respondents can be contacted. The respondents can be reached via emails, telephone, in person or online. Step 3. Collect the Information This is one of the most expensive methods of marketing research. At this stage, the researcher has to adopt the methods to collect the information. He may find it difficult to gather the correct information because of the respondent’s biasedness, unwillingness to give answers, or not at home. Step 4. Analyze the Information Once the information is collected, the next step is to organize it in such a way that some analysis can be obtained. The researchers apply several statistical techniques to perform the analysis, such as they compute averages and measures of dispersion. Also, some advanced decision models are used to analyze the data. Step 5. Present the Findings Finally, all the findings and the research are shown to the management level – managing director, CEO, or board of directors to make the marketing decisions in line with the research. Step 6. Make the Decision This is the last step of the marketing research. Once the findings are presented to the top-level management, it is up to them either to rely on the findings and take decisions or discard the findings as unsuitable. Marketing Information System The Marketing Information System refers to the systematic collection, analysis, interpretation, storage, and dissemination of the market information, from both the internal and external sources, to the marketers on a regular, continuous basis. The marketing information system distributes the relevant information to the marketers who can make the efficient decisions related to the marketing operations – pricing, packaging, new product development, distribution, media promotion, etc. Characteristics of Marketing Information System The marketing information system is presently used by all kinds of organizations to attain a competitive edge and success in their business. The following are the characteristics of marketing information system: Computer-Based System: In the marketing information system, all the information is gathered, analyzed, and communicated through a computer device, and the useful marketing information is stored in microfilms. Quick, Selective, and Accurate Information: The organization can maintain relevant marketing database through marketing information system which can be immediately and accurately accessed anytime. Easy Accessibility: The information maintained with the help of the marketing information system can be easily viewed and utilized through a computer system. Interrelated Components: In marketing decisions and communication, all the four components are inter-linked, e.g. the information provided by one element is useful for the functioning of the other aspects. These interconnected components include internal report, marketing research, marketing intelligence, and marketing decision support systems. Future-Oriented: The marketing information system initiates strategy formulation and planning for future marketing operations. Supports Decision Making: Since this system provides an accurate marketing database, it can be certainly used for instantaneous decision making, by the marketing managers. Consistent Information: marketing information system enables the management and decision-makers to assess relevant, updated and valuable marketing information. Applicable at All Levels of Management: Every manager uses the marketing information system to decide marketing strategies, plans, policies and procedures prepared at all managerial levels. Components of Marketing Information System The marketing information system integrates data collection, processing, analysis, and reporting for restructuring marketing activities using the four primary components. These components function within a framework of marketing decisions and communication. Internal Reporting System The company can collect information through its internal records comprising of sales data, customer database, product database, financial data, operations data, etc. The information can be collected from the documents such as invoices, transmit copies, billing documents prepared by the firms once they receive the order for the goods and services from the customers, dealers or sales representatives. The current sales data should be maintained on a regular basis that serves as an aid to the marketing information system. The reports on current sales and the inventory levels help the management to decide on its objectives, and the marketers can make use of this information to design their future sales strategy.  The companies maintain several databases such as: Customer database wherein the complete information about the customer’s name, address, contact number, frequency of purchase, financial position, etc. is saved. Product database wherein the complete information about the products price, features, variants is stored. Sales person database wherein the complete information about the sales person, his name, address, contact number, sales target, etc. is saved. The companies store their data in the data warehouse from where the data can be retrieved anytime the need arises. Once the data is stored, the statistical experts mine it by applying several computer software and techniques to convert it into meaningful information that gives facts and figures. Marketing Intelligence System The marketing intelligence system provides the data about the happenings in the market, e.g. data related to the marketing environment which is external to the organization. It includes the information about the changing market trends, competitor’s pricing strategy, change in the customer’s tastes and preferences, new products launched in the market, promotion strategy of the competitor, etc. In order to have an efficient marketing information system, the companies should work aggressively to improve the marketing intelligence system by taking the following steps:  Providing the proper training and motivating the sales force to keep a check on the market trends, e.g. the change in the tastes and preferences of customers and give suggestions on the improvements, if any.  Motivating the channel partners – dealer, distributors, retailers who are in the actual market to provide the relevant and necessary information about the customers and the competitors.  The companies can also improve their marketing intelligence system by getting more and more information about the competitors. This can be done either by purchasing the competitor’s product, attending the trade shows, reading the competitors published articles in magazines, journals and financial reports.  The companies can have an efficient marketing information system by involving the loyal customers in the customer advisory panel who can share their experiences and give advice to the new potential customers.  The companies can make use of the government data to improve its marketing information system. The data can be related to the population trends, demographic characteristics, agricultural production, etc. that help an organization to plan its marketing operations accordingly.   Also, the companies can purchase the information about the marketing environment from the research companies who carry out the researches on all the players in the market.  The marketing intelligence system can be further improved by asking the customers directly about their experience with the product or service via feedback forms that can be filled online. Marketing Research The marketing research is the systematic collection, organization, analysis, and interpretation of the primary or the secondary data to find out the solutions to the marketing problems. Several companies conduct marketing research to analyze the marketing environment comprising of changes in the customer’s tastes and preferences, competitor’s strategies, the scope of new product launch, etc. by applying several statistical tools. In order to conduct the market research, the data is to be collected that can be either primary data or the secondary data. Marketing research contributes a lot in the marketing information system as it provides the factual data that has been tested several times by the researchers. Marketing Information System Process Step 1. Since every piece of information involves some opportunity cost as well as a real cost, it is essential to wisely select the subject or area requiring the application of a marketing information system and deciding a suitable metrics, accordingly. Step 2. Next comes the collection of required data as per the selected metrics from various internal sources (books of account, sales record, sales reports, and analytics) and external sources (customer surveys, economic or financial metrics, social media insights, and competitor results). Step 3. Then, the gathered data needs to be organized and plotted systematically on a graph to facilitate comparative analysis, future prediction, and interpretation. Step 4. The fourth step is to communicate the graphical information to the various departments for a better interpretation and analysis of the available data and the determination of multiple alternatives (decisions) as per organizational goals. Step 5. The last step is to decide the best possible course of action of the marketing metrics and applying it to the business to enhance the marketing results.