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MGT301 - Principles of Marketing - Lecture Handout 11

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Lesson overview and learning objectives:

In last Lesson we discussed the marketing environment factors or forces. Today we will study some strategies that a company designs to meet the requirements of the environment, to analyze the opportunities available. In order to analyze the environment company needs information that is acquired through marketing information system. Keeping in view this importance of the marketing information and research we will be covering the topic of MIS or marketing research system in this Lesson. Main objective of this Lesson is to eexplain the concept of marketing information system, emphasising ways of assessing information needs, the sources used for developing information and ways of distributing information.
So our today’s topics are:

A. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING
STRATEGIES
B. MIS

Analyzing Marketing opportunities and developing strategies We discussed in last two Lessons those companies and their marketing departments’ success depends upon the careful analysis of the marketing environment. Opportunities are need to be analyzed and capture in order to make the profits. Changing market opportunities must be explored and pursued.
In order to correctly identify opportunities and monitor threats, the company must begin with a thorough understanding of the marketing environment in which the firm operates. The marketing environment consists of all the actors and forces outside marketing that affect the marketing management’s ability to develop and maintain successful relationships with its target customers. Though these factors and forces may vary depending on the specific company and industrial group, they can generally be divided into broad micro environmental and macro environmental components. For most companies, the micro environmental components are: the company, suppliers, marketing channel firms (intermediaries), customer markets, competitors, and publics. The macro environmental components are
thought to be: demographic, economic, natural, technological, political, and cultural forces. The wise marketing manager knows that he or she cannot always affect environmental forces. However, smart managers can take a proactive, rather than reactive, approach to the marketing environment.

ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING

As marketing management collects and processes data on these environments, they must be ever vigilant in their efforts to apply what they learn to developing opportunities and dealing with threats. Studies have shown that excellent companies not only have a keen sense of customer but an appreciation of the environmental forces swirling around them. By constantly looking at the dynamic changes that are occurring in the aforementioned environments, companies are better prepared to adapt to change, prepare long-range strategy, meet the needs of today’s and tomorrow’s customers, and compete with the intense competition present in the global marketplace.

A. Marketing Information System:

Marketing information is a critical element in effective marketing as a result of the trend toward global marketing, the transition from buyer needs to buyer wants, and the transition from price to non-price competition. All firms operate some form of marketing information system, but the systems vary greatly in their sophistication. In too many cases, information is not available or comes too late or cannot be trusted. Too many companies are learning that they lack an
appropriate information system, still do not have an information system, lack appropriate information, or they do not know what information they lack or need to know to compete effectively.

a. The Marketing Information System

No matters what type of marketing organization we refer to, marketing managers need a great deal of information to carry out their marketing so as to provide superior value and satisfaction for customers. However, despite the growing supply of information, managers often lack enough information of the right kind or have too much information of the wrong kind. To overcome these problems, many companies are taking steps to improve their marketing information systems. In this Lesson the marketing information system is discussed, along with the marketing research process thus showing the types of information gathered and how it is gathered.

If a marketing organization is to produce superior value and satisfaction for customers, marketing managers need information at almost every turn. They need information about customers such as resellers, end-users (who tend to be called consumers), as well as competitors, governmental and other forces in the marketplace. A marketing information system (MIS) consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers. MIS works in the following way

  • A well-designed marketing information system (MIS) begins and ends with the user. The MIS first assesses information needs by interviewing marketing managers and surveying their decision environment to determine what information is desired, needed, and feasible to offer.
  • The MIS next develops information and helps managers to use it more effectively. Internal records provide information on sales, costs, inventories, cash flows, and accounts receivable and payable. Such data can be obtained quickly and cheaply, but must often be adapted for marketing decisions.
  • Marketing intelligence supplies marketing executives with everyday information about developments in the external marketing environment. Intelligence can be collected from company employees, customers, suppliers, and resellers; or by monitoring published reports, conferences, advertisements, competitor actions, and other activities in the environment. Marketing research involves collecting information relevant to a specific
    marketing problem facing the company.
  • Finally, the marketing information system distributes information gathered from internal sources, marketing intelligence, and marketing research to the right managers at the right times. More and more companies are decentralizing their information systems through networks that allow managers to have direct access to information.

The Marketing

b. The working of the Marketing Information System:

If a marketing organization is to produce superior value and satisfaction for customers, marketing managers need information at almost every turn. They need information about customers such as resellers, end-users (who tend to be called consumers), as well as competitors, governmental and other forces in the marketplace. A marketing information system (MIS) consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.

I. Assessing information needs:
Marketing organizations must establish what information is needed or likely to be needed. This is a key feature of the MIS that underscores the importance of information.

II. Developing information:
Internal Records - provide a wealth of information, which is essentially raw data for decisionmaking. An effective MIS organizes and summaries balance sheets, orders, schedules, shipments, and inventories into trends that can be linked to management decisions on marketing mix changes.

III. Marketing Intelligence:
Provides the everyday information about environmental variables that managers need as the implement and adjust marketing plans. Sources for intelligence may vary according to needs but may include both internal and external sources.

IV. Marketing Research:

Marketing research links the consumer, customer, and public to the marketer through an exchange of information.

c. Subsystems of Marketing Information System:

A well-designed market information system consists of four subsystems.

  • The first is the internal records system, which provides current data on sales, costs, inventories, cash flows, and accounts receivable and payable. Many companies have developed advanced computer-based internal reports systems to allow for speedier and more comprehensive information.
  • The second market information subsystem is the marketing intelligence system, supplying marketing managers with everyday information about developments in the external marketing environment. characterized by the scientific method, creativity, multiple methodologies, model building, and cost/benefit measures of the value of information.
  • The third subsystem, marketing research, involves collecting information that is relevant to specific marketing problems facing the company. The marketing research process consists of five steps: defining the problem and research objectives; developing the research plan; collecting information; analyzing the information; and presenting the findings.
  • The fourth system is the Marketing Decision Support System (MDSS marketing system) that consists of statistical and decision tools to assist marketing managers in making better decisions. MDSS is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware. Using MDSS software and decision models, the organization gathers and interprets relevant information from the business and the environment and turns it into a basis for marketing action. MDSS experts use descriptive or decision models, and verbal, graphical, or mathematical models, to perform analysis on a wide variety of marketing problems.

d. Why to acquire information:

Managers mostly want to be able to predict the future for a company and its products. That future embraces the total market demand and the nature of such demand, the company’s share by brand and what competitors will be doing. They want this information so they can chart their own firm’s future and thereby are proactive rather than be forced into reacting to a competitor’s actions.

  1. The firm’s internal record system should be set up in such a way as to easily provide information in a form the manager can act on. But this is largely historical information such as sales by account, by territory, by salesperson and so on. Acquiring forward-looking information is the name of the game. By monitoring the relevant intervening variables, firms are able to monitor intentions to purchase among many other factors such as competitor’s activities. Such intervening variables differ by industry sector and company. For consumer goods companies’ measures of awareness, attitudes toward the brand, and distribution levels — among others — are indicators of future sales performance. In the case of industrial companies, relationships between buyers and sellers are all important. So measures of customer service levels, product performance measures and acceptability of the technical knowledge of the salespeople will be partial indicators of whether particular suppliers will be chosen. In both instances, economic indicators are scanned before companies decide on the level of marketing expenditure. That is, whether an expanding or contracting local and global economy faces the industry and firm.
  2. Well accepted salespeople invariably have stronger relationships with their clients, and being closer to them, are privy to more information on the buying company’s performance, expectations of the future and even the views on the supplying companies strengths and weaknesses as well as their competitors. Often it is necessary to establish performance rankings in a formal manner

In much the same manner as consumer companies assess the important criteria that consumers user to decide between brands, industrials conduct research that identifies the criteria purchasers use to choose and maintain suppliers, as well as the ratings for individual companies. Given the generally high education level of such as sales engineers, it is not uncommon for the field force to administer such research. Others use research companies.

e. Marketing Research

The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

Steps in the Marketing Research Process
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.

f. Why to Conduct Business Research?

Marketing Research is a Systematic & objective process of designing, gathering, analyzing & reporting information that is used to solve a specific problem. It Provides information for aid in making business related decisions, to Identify opportunities and generate & refine actions. It is important for the mangers for many decisions like

  • Helps reduce risk inherent in decision-making
  • Provides an important link to customers
  • Allows implementation of the business concept
  • Enables managers to identify & understand stakeholders wants & needs and to develop appropriate strategies to meet these needs

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