Managing
BF3316 Marketing
Information
PRINCIPLES OF Marketing
Marketing
Marketing
MARKETING
Information Research
Research
System Issues
Week 5: Managing Marketing Information Definitions Process
Functions Roles
Components
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LEARNING OUTCOMES
At the end of this chapter, you will be able to:
• explain the importance of information to companies
• define and explain the marketing information system and its components
• explain the steps in marketing research process
• describe how companies analyse marketing information
• discuss the issues in conducting a marketing research
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4.1 Understanding the Marketing
Information System (MkIS)
• MkIS encompasses people, equipment, procedures and policies to gather,
sort, evaluate and distribute needed, timely and accurate information to
decision maker.
• MkIS is built with the availability of computing capability in a company,
however, it can also be based entirely on manual system such as using
reference cards and files.
• MkIS provides insights into marketing decision making with comprehensive
and up-to-date information on both macro and microenvironmental factors
to businesses.
• Marketers recognize that the marketing environment is constantly
presenting new opportunities and threats, and they understand the
importance of continuously monitoring and adapting to the environment.
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4.1 Understanding the Marketing
Information System (MkIS)
Functions of Marketing Information System
• MkIS interacts with marketing managers in determining their information
needs.
• MkIS builds information that is needed from internal databases,
information analysis, marketing intelligence and marketing research.
• MkIS distributes the useful information for the firm’s marketing activities.
These activities are the main functions of MkIS.
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4.1 Understanding the Marketing
Information System (MkIS)
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4.2 Assessing Information Needs
• To make effective marketing decisions, managers must know the types of
information that is needed. The managers must gather only relevant information as
the cost can be high. Having too much information or too little information both the
cases can be harmful to a firm.
• Sometimes, managers do not know what information they should have and end up
with having information that they would not like to have rather than what they need.
• Other times, they know the information that they need but the information may not
be available.
• Good MkIS enables a manager to balance the information that they would like to
have versus the information that they need, and the information that is available.
Since the cost of gathering, processing, storing and distributing information
increases quickly, the MkIS should help the company to choose information that is
valuable and worth the cost.
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4.2 Assessing Information Needs
Developing Information
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4.2 Assessing Information Needs
Internal Records
• Information is defined as data that is presented in a way that is useful for making
decisions.
• Data is just facts and statistics. A data would show the presence of a sales trend. A
marketing manager will select, process, and organize the data that can be useful
for decision making. These converted data are information.
• Information often remains underutilized because it is in various forms, format, and
locations, either in the form of an individual entrepreneur or in the functional
departments of larger businesses.
• From the sales data, sales trend throughout the year of a company can be derived
for better decisions making on the number of production. Sometimes, employees
holding these data do not see how the data could help decision makers in other
functional areas.
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4.2 Assessing Information Needs
Internal Records
• The internal records that are of immediate value to marketing decisions
are orders received, stockholdings and sales invoices. These data although
it looks simple, it is capable of generating a great deal of information.
• By comparing orders received with invoices, an enterprise can establish the
extent to which it is providing an acceptable level of customer service. In
the same way, comparing stockholding records with orders received helps
an enterprise to ascertain whether its stocks are in line with current
demand patterns.
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4.2 Assessing Information Needs
Marketing Research
• Marketing research is a proactive search for information either to search
for marketing opportunities or to solve a perceived marketing problem.
• Data is collected to address a well-defined problem – a problem which can
be defined and solved within the course of study.
• Another form of marketing research which is not related to solving a
particular problem, is research that continuously monitors the marketing
environment and its opportunities. These monitoring or tracking exercises
often involve panels of marketers, consumers or distributors from which
the same data is collected at a regular basis.
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4.2 Assessing Information Needs
Marketing Intelligent
• Marketing research is a proactive search for information either to search
for marketing opportunities or to solve a perceived marketing problem.
• Data is collected to address a well-defined problem – a problem which can
be defined and solved within the course of study.
• Another form of marketing research which is not related to solving a
particular problem, is research that continuously monitors the marketing
environment and its opportunities. These monitoring or tracking exercises
often involve panels of marketers, consumers or distributors from which
the same data is collected at a regular basis.
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4.2 Assessing Information Needs
Marketing Decision Support Systems
• Marketing research is a proactive search for information either to search
for marketing opportunities or to solve a perceived marketing problem.
• Data is collected to address a well-defined problem – a problem which can
be defined and solved within the course of study.
• Another form of marketing research which is not related to solving a
particular problem, is research that continuously monitors the marketing
environment and its opportunities. These monitoring or tracking exercises
often involve panels of marketers, consumers or distributors from which
the same data is collected at a regular basis.
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4.2 Assessing Information Needs
Developing information Information obtained from source
Internal records Nike would look at past sales of running shoes
Marketing intelligence Nike would attend trade shows, read industry trade
journals, and talk to retailers to determine changes in
the market place
Marketing Research Nike would conduct surveys or run experiments to
determine customer demands and interests. It might
use mail, telephone, personal, or online surveys to
gather data from its customers.
Marketing decision support Nike would analyse sales or retail data from its
system database and mine the data to see how a factor such
as price, colour or material can affect sales.
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4.3 Market Research
• Marketing research is defined as the systematic design, collection, analysis
and reporting of data relevant to a specific marketing situation facing an
organisation.
• Marketing research is important because it is a formal study of specific
situations. By conducting a marketing research, it enhances understanding
and knowledge in explaining what and how things work.
• Companies stand to gain a lot of information and insights through
marketing research.
1. It can help marketers understand customer satisfaction and purchases
behavior,
2. It can help them assess market potential and market share, and
3. It can measure the effectiveness of pricing, product, distribution, and
promotional activities.
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4.3 Market Research
• Recognising the importance of marketing research, large companies
usually have their own research departments that work together with
marketing departments on marketing research projects.
• Companies that do not have research departments frequently hire outside
research specialists to consult with management on specific marketing
problems and conduct marketing research studies.
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4.4 Market Research Process
• There are four steps in the marketing research process which begins with
defining problems and research objectives, followed by designing the
research plan, implementing the research plan and finally, interpreting and
reporting the research finding.
Defining problem and research
objectives
Designing research plan
Implementing research plan
Interpreting and reporting findings 16
4.4 Market Research Process
Defining Problems and Research Objectives
• Understanding the marketing problem and developing research objectives
are two crucial tasks as they determine the research approach in the
subsequent steps.
• In most cases, manager fail to identify recognize the fundamental problem
of their companies.
Sally, a marketing manager at FOS, the retail store chain, was of the opinion that
decline in sales for the year 2016 was due to poor advertising. She ordered a
research to test the effectiveness of the company’s advertising. The research found
that there was nothing wrong with the existing advertisements. The real problem was
that the chain was not delivering products and services as promised in the
advertisements.
A careful problem definition would have avoided the unnecessary research cost.
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4.4 Market Research Process
Defining Problems and Research Objectives
• Sometimes it is not easy to develop a problem statement. The
tendency is to confuse a problem and a symptom. A problem is
a situation requiring some type of action while a symptom is
merely the evidence that a problem exists.
• When a problem statement is not defined correctly, the
mistake can be costly to the firm. For example, when Coca-
Cola faced a taste test challenge from Pepsi, Coca-Cola
thought that the problem was ‘which formula tasted best’.
However, one of the problems that they should define first will
be ‘How will consumers react if we replace our formula with a
newer one?’. 18
4.4 Market Research Process
Defining Problems and Research Objectives
• Sometimes it is not easy to develop a problem statement. The
tendency is to confuse a problem and a symptom. A problem is
a situation requiring some type of action while a symptom is
merely the evidence that a problem exists.
• When a problem statement is not defined correctly, the
mistake can be costly to the firm. For example, when Coca-
Cola faced a taste test challenge from Pepsi, Coca-Cola
thought that the problem was ‘which formula tasted best’.
However, one of the problems that they should define first will
be ‘How will consumers react if we replace our formula with a
newer one?’. 19
4.4 Market Research Process
Exploratory research
Research Classification Descriptive research
Causal research
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4.4 Market Research Process
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4.4 Market Research Process
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4.4 Market Research Process
• One will normally start with an exploratory research to define a
clear picture of a situation. After objectives are clearly defined,
the organization may use descriptive or causal research.
• Once the objective is determined, the researcher will state the
hypothesis. Hypothesis is a testable statement. An example of
a hypothesis is ‘a higher advertising budget leads to higher
sales’. This hypothesis is normally tested visa data analysis.
• In a typical research, the managers would often start with
exploratory and later do the follow-up with descriptive and
causal research. The statement of the problem and research
objectives guides the entire research process so that it is
within scope, budget and time frame. 23
4.4 Market Research Process
Designing Research Plan
• After the research problems and objectives have been defined, researchers
must then determine the exact information needed, develop a plan for
gathering it efficiently, and present the plan to management.
• The research plan outlines sources of existing data and spells out the
specific research approaches, contact methods, sampling plans, and
instruments that researchers will use to gather new data.
• Research objectives must be translated into specific information. A typical
marketing research would require information such as the demographic,
economic and lifestyle of existing consumers, and the patterns of
consumers’ consumption.
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4.4 Market Research Process
Types of Information Needs
• In the early research stage, a researcher needs to decide the type of data
required, whether to use primary data, secondary data, or a combination of
the two.
• Primary data: The information collected for the specific purpose at hand.
• Secondary data: The information that already exists or has been collected by a
third party for another purpose. Typically, secondary data is used in the
beginning to develop a plan for gathering primary data. Secondary data is used
for exploratory purpose.
• Researchers usually start gathering secondary data because it can be
obtained more quickly and at a lower cost than primary data.
• There are various sources of data either in electronic or printing format
such as the company’s annual reports.
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4.4 Market Research Process
Types of Information Needs
• However, secondary data can also present problems such as:
• The needed information may not exist – researchers can
rarely obtained all the data that they need form secondary
sources.
• Even when the data can be found, they might not be very
usable . The researcher must evaluate secondary
information carefully to make certain it relevant, accurate,
current, and impartial.
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4.4 Market Research Process
Data Collection Methods
Survey Non-survey
Questionnaires Interviews Observation Experiment
Contact
Mail/Email/Online/Face- Telephone/ Face-to- Face-to-face / personal /
to-face/personal face/personal/online online
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Medium
4.4 Market Research Process
Sampling Design
• A sample is a segment of the population chosen to represent
the population at whole.
• The sample should be representative of the population that
needs to be researched on.
• Designing the sample requires three decisions:
Who is to be surveyed (the sampling unit)?
How many people should be surveyed (the sample size)?
How should people in the sample be chosen (the sampling
procedure)?
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4.4 Market Research Process
Sampling
Probability Non-profitability
Sample random, Convenience,
stratified, Judgemental,
cluster Quota 29
4.4 Market Research Process
Sampling Design
• Probability sampling: It ensures that each population’s
member has a known chance of being included in the sample,
and researchers can calculate confidence limits for sampling
error. It gives the opportunity for everyone in the population to
be chosen.
• Simple random sampling: Equal opportunity to be selected
is applied to every member of the population.
• Stratified sampling: Population are divided into mutually
exclusive group (age, gender) and a random sample is
applied to each group.
• Cluster / area sampling: Population is divided into mutually
exclusive group (region or block) and a random sample is 30
applied to each group.
4.4 Market Research Process
Sampling Design
• Non Probability sampling: The most convenient, however
sampling error cannot be measured.
• Convenience sampling: Respondents are easily accessible
by the researcher, e.g. family and friends.
• Stratified sampling: Respondents are chosen by
researcher’s own judgement. e.g. a researcher will need to
choose someone who has visited Malaysia to be interviewed
to obtain accurate view and information about Malaysia.
• Quota sampling: Respondents are chosen by a prescribed
number of people in each of several categories.
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4.4 Market Research Process
Implementing the Research Plan
• Next, the researcher puts the marketing research plan into action. This
involves collecting, processing, and analyzing the information.
• The data collection phase of marketing research process is generally the
most expensive and the most subject to error.
• Researchers must process and analyse the collected data to isolate important
information and findings. They need to check data for accuracy and completeness
and code it for analysis.
• The researchers then tabulate the results and compute averages and other
statistical measures.
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4.4 Market Research Process
Implementing the Research Plan
• Next, the researcher puts the marketing research plan into action. This
involves collecting, processing, and analyzing the information.
• The data collection phase of marketing research process is generally the
most expensive and the most subject to error.
• Researchers must process and analyse the collected data to isolate important
information and findings. They need to check data for accuracy and completeness
and code it for analysis.
• The researchers then tabulate the results and compute averages and other
statistical measures.
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4.4 Market Research Process
Interpreting and Reporting the Findings
• The final stage of a marketing research process, the researcher must now
interpret the findings and conclusions, and report them to management.
• The researcher must not try to overwhelm managers with numbers and fancy
statistical techniques, Rather the researcher should present important findings that
are useful in the major decisions faced by management.
• Interpretation should not be left only to the researchers. The marketing manager
would know more about the problem and the decisions that have to be made. In
many cases, findings can be interpreted in different ways, and discussions between
researchers and managers will help point to the best interpretations.
• The results of the research must also be communicated to management. Usually
oral and written reports are required. The reports should include conclusions and
recommendations for improvement.
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4.5 Market Research Roles
• Marketing research provides managers with information on effectiveness
of the current marketing strategies
Role Explanation Example
Descriptive role • The gathering and presenting statement of fact are It will answer the question: who
the essential descriptive role of the marketing buys local products like Proton
research. Cars?
• This type of research provides the marketers with
necessary data in knowing the effectiveness of the
current marketing mix and guides them in planning
and implementing effective changes.
Diagnostic role • The data explanation is the diagnostic role of E.g. why did the sales of Proton cars
marketing research. decrease by 10% in Malaysia?
• Data explanation is the main source of MkIS and
marketing decision support system.
Predictive role It answers the ‘what if’ questions in attempting to If an awareness campaign
estimate the results of a planned marketing decision. advertisement on buying local
product allocation increases by
10%, what sales effect could
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expected.
4.6 Market Research Issues
1. Marketing research in small businesses and non-profit organisations
• A low budget research project can be undertaken. This could be done by
observing things around them or conducting their own experiments.
• Small businesses or non-profit organisations could also make use of
secondary data.
• Marketing research is useful regardless of the size of the business.
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4.6 Market Research Issues
2. International marketing research
• The international researchers sometimes has difficult time finding good
secondary data in foreign markets. In some countries, access to secondary
data is very limited or restricted, and sometimes there is no research
service available.
• Thus, international researchers often resort to collecting their own primary
data. The researchers may face problems not found domestically.
• They may find it difficult to develop good samples. Reaching respondents
in other parts of the world is not an easy task. Cultural differences from
country to country add more problems.
• Despite all problems, the demand for international marketing research is
still increasing due to the growth of international marketing.
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4.6 Market Research Issues
3. Public policy and ethics in marketing research
• Most marketing research is beneficial to the company and its customers. The
company learns to capture customers’ needs, resulting in more satisfying products,
services, and stronger customer relationship. However, the misuse of marketing
research can harm or annoy consumers.
• Customers’ privacy is a concern. Companies may use their information for the
benefits of the companies without their consent. However, if researchers provide
value in exchange for information, customers will gladly provide it.
• Another concern is that companies often use the results of marketing research as
claims in their advertising and promotion which could be misleading.
• In some countries, there are associations that developed codes of research ethics
and standard of conducts.
• It is difficult to regulate unethical and inappropriate conduct. However, each
company must be responsible in undertaking and reporting its own marketing
research. 38
