The quality of marketing decisions depends, in large part, on the information available to the person making the marketing decisions. The role of market research is to provide information for this decision making. A marketing manager who does not know how to use or evaluate market research is like a general manager who does not understand the profit and loss statement of the company. Both individuals are severely limited in their ability to perform their jobs effectively.
goals
The main purpose of this topic is to provide the future marketing manager with an understanding of marketing research. This session can serve as a basic text for people with career goals in the field of market research. This topic is designed to be used in a market research course for junior or senior college students, or an initial market research course for graduate students in Business Administration, Finance, Accounting, and Marketing.
Introduction
In an increasingly global and changing environment like the current one, the company needs to have information in time to define the most appropriate marketing strategy. Based on marketing research and the rest of the elements that make up the marketing information system, the company obtains knowledge whose availability constitutes a competitive advantage for the company since it allows it to make the most appropriate decisions.
For information to help reduce risk in decision-making by marketers, it must meet certain characteristics. Must be:
- Solid: that is, it must be sufficient, precise, relevant and updated and available whenever it is needed, as well as incorporating predictive elements that allow assessing the possible evolution of the phenomenon to be studied. Efficient: so that the cost of achieving information is less than the benefit it provides to the company.
What the company should aim for is not to obtain information per se but to obtain understandable and useful information that can become knowledge applicable to the design of future marketing actions.
The process begins by identifying the data that may be of interest to the company and then interpreting it and making sense of it based on the interests of the company.
Market research: definition
What is market research?
There are many excellent definitions. For example, WADA has defined it as follows:
“Market research is the function that links the consumer, the customer and the public with the marketer through information. This information is used to identify and define marketing opportunities and problems; as well as to generate, improve and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Market research specifies the information required to address these problems; designs the method to collect the information; directs and implements the data collection process; analyzes the results and communicates the findings and their implications.
This is a meaningful and useful definition, insofar as it describes many of the applications of marketing research and summarizes the process for actually conducting a marketing research project. However, for the purposes of this topic, we prefer a shorter definition.
Our definition focuses on the essentials of what constitutes adequate market research, leaving for later the analysis of the uses of market research and the current process to carry it out. For our purposes, there are four terms that must be included in this definition. These are:
- systematic, objective, information and decision making.
Therefore, "Market research is the systematic approach to the development and provision of information for the decision-making process."
- Systematic: refers to the requirement that the research project must be well organized and planned: the strategic and tactical aspects of the research design must be detailed in advance, and the nature of the data to be collected and the mode of analysis must also be anticipated to be used.Objective: implies that market research tries to be neutral and unemotional in the performance of its responsibilities. It is often heard that marketing research is the application of the scientific method to marketing, and the hallmark of the scientific method is the collection, analysis and objective interpretation of data. The remaining 2 elements of this definition are information and process. decision-making.It is important to recognize that these 2 elements differentiate marketing research from research in other areas. The main purpose of market research is to provide information, not data, for the managerial decision-making process.
Marketing Information System Concept
It is tempting to turn immediately to an analysis of contemporary research techniques and methodology, but this would be rash; You first need to study various introductory concepts and topics.
In particular we will analyze the following questions:
- What is the nature of the marketing activity? What is the task of marketing management? What kind of information does marketing management need? What are the sources of information for marketing decisions? What is the role of market research in the marketing system?
The marketing information system is the set of elements, instruments and procedures to obtain, record and analyze data in order to transform them into useful information for marketing decisions. Therefore, the marketing information system is responsible for continuously obtaining a large amount of both internal and external data.
In order to design an information system, Marketing managers have to identify the necessary information and in order to determine it, the following steps should be taken into account:
- The type of decisions that are commonly made (add, remove products). The type of information that is needed to make these decisions. The type of information that is received regularly in order to assess its usefulness. The types of special studies that are regularly requested. The type of information needed and not currently received, and the frequency with which it is required. The reports and journals that would be appropriate to have on a regular basis. The topics on which it would be appropriate to have information. The data analysis programs that should be available. The improvements that could be made to the current marketing information system.
Specific studies are often required on a particular topic and may be the information provided by internal data systems and marketing intelligence, both designed for common and more frequent decisions.
Marketing research consists of the design, collection and analysis of data and relevant information to solve a specific marketing problem that the company faces. It uses current scientific methods, techniques and knowledge, so it is applied research.
The current complexity of the environment, markets and the interior of organizations requires improving Marketing decision-making processes.
The Marketing Information System is a tool that, when properly designed, implemented and managed, can greatly increase the quality of these decisions. However, at present, this tool is not widely used in the business environment.
The marketing information system (SIM) can be defined as a set of structured relationships, where men, machines and procedures intervene, and whose objective is to generate an orderly flow of pertinent information, coming from internal and external sources to the company, intended to serve as the basis for decisions within specific areas of marketing responsibility.
In order for a correct interpretation and application of the data from information to be made, the following must be determined:
- The degree of reliability of the information, subjecting it to an objective analysis examining the method followed to obtain it, as well as the people and institutions that collected the data and published the information. The rate of update of the information used, since We need the most recent one that conforms to reality. The degree of discrimination or detail of the information used, so that data that allow knowing the components of the phenomenon studied are not included in the same concept.
Only adequate information allows you to have a company policy that determines the objectives to be achieved, the activity to be carried out, the decisions to be taken, etc.; have a program, follow it and coordinate it; and, finally, establish a control mechanism that verifies that everything is going according to plan, make the necessary corrections and adaptations.
Graphic. Marketing Information Systems (Sim)
Despite the advent of new tools for information processing for business decision making, Marketing Information Systems, conceived in the mid-sixties of the last century as instruments to support Marketing decision making, can still add value to this end.
Marketing is a business management philosophy where the actions of the exchange must have as a starting point the needs and desires of consumers. The foregoing has a direct implication on the need for knowledge on the part of the client's organization, their needs and desires; and the creation of an adequate and coherent offer with said knowledge to deliver the satisfiers demanded by said consumers.
Both the knowledge of the client and the creation of an offer presuppose for the organization the reflection and action of all the personnel, but more specifically of the managers linked to the activity, which implies that the entire organization and its managers direct their efforts production and marketing towards the satisfaction of the needs and expectations of consumers, considering them as the starting point of all its actions.
It is for this reason that this management philosophy must provide its executors with both a way of thinking and conceiving the exchange, as well as a significant number of useful tools to carry it out satisfactorily.
Nowadays many organizations and their managers know the importance and value of Marketing for the improvement of business management and the achievement of organizational objectives, however, one of the main difficulties lies in the implementation of its principles and techniques in the everyday practice.
The fundamental reason why this happens is that the business dynamics and the daily life of the organizational environment lead to the prevalence of the operational over the strategic and the short term over the long term in decision-making.
In particular in Marketing decision making, Michel de Chollet in his book "The Marketing Mix" makes a distinction between four possible ways or methods in which the Marketing decision-making process can be conceived. These are:
- Subjective or egocentric process: it consists of unconsciously projecting one's own motivations and perceptions, transferring them to the market for free, so the combination of Marketing variables that the decider likes the most is chosen. Intuitive or allocentric process: abstracting from the ego, it consists in imagining what the market wants, in intuitively sensing market expectations and complying with them.Objective process based on market studies: decisions are made based on what the decision maker knows, objectively, thanks to their market studies. Experimental method: it is supported by laboratory tests or pilot tests, acting directly on a representative sample of the market.
The first method can be classified as dangerous egocentricity and the second as guessing the needs of the market. Although both can sometimes produce positive results, of course, they do not have the best chance of success.
The last two are the ones that can provide the best results, and therefore, a more effective Marketing for the organization. However, they have the disadvantage of being more expensive; the fourth above all, because although it is the most scientific, it requires the realization of the Marketing offer itself and its testing in the market, which, although carried out on very small scales, represents non-negligible costs for an organization.
Therefore, putting the four alternatives on a continuum, the third seems to be an intermediate position, where costs and benefits are compensated for making Marketing decisions.
Unquestionably, it is easily appreciated that to the extent that you want to move from one stage to another in the presented decision-making continuum, the needs to make use of Marketing information increase.
Yann A. Gourvennec, French consultant for Marketing Information Systems, referring to the value of information for Marketing decision making, states: “Without information, the 21st century company will find it more difficult to grow or even survive in an environment that it gets more fierce: information to deal with its customers, data about its own performance, about its markets and more and more information about its entire environment. "
Reaffirming the above in a simpler sentence, another author states: "The adoption of the Marketing concept requires the provision of Marketing information."
For his part, the academic Philip Kotler systematizes these considerations when he conceptualizes: “The Marketing process comprises the analysis of Marketing opportunities, search and selection of the target audience, design of strategies, program planning, organization, management and control of the effort of Marketing."
The previous description of the Marketing process covers both strategic and operational activities; Any of them can be conceived as a decision-making process for the organization, requiring no little information for this.
Information is a resource that organizations use on the same level as material, technical, financial and human resources.
And like the rest, the precise information on tools for its proper management. In this context, the Marketing Information System should be conceived as the tool that can enhance the proper use of this resource in the management of an organization.
Starting from the fact of the value of useful information for an adequate Marketing decision-making, it is necessary to consider the moment of emergence of Marketing Information Systems and to verify that the needs that led to their conception are still valid. These needs can be classified as existing needs within the organization and needs caused by the dynamics of the environment.
In 1969, Berenson made reference to the following needs caused by the dynamics of the environment:
- The increased complexity of business requires more information and better execution. The Life Cycle of Products is getting shorter and shorter. The advent of techniques that can provide information for proper decision-making are now within everyone's reach. The development achieved by computer media.
Regarding the existing needs within the organization, in 1966, Kotler raised as a primary cause for the establishment of what would later be called Marketing Information Systems, the dissatisfaction of those who make decisions expressed in the following type of complaints, which he was able to verify through his work with executives and Marketing specialists of numerous companies:
- There is a lot of unnecessary Marketing information and very little Marketing information that is needed. Marketing information is so dispersed throughout the company that it is usually necessary to go to great lengths to locate simple facts. Sometimes important information is suppressed by other executives or subordinates for personal reasons. Often times, important information is obtained too late to be useful. Often times, information is obtained in a way that does not show reliability of its accuracy and precision and does not exist to who to ask to confirm the validity of it.
To the above, one could add as needs of this type, what was raised by Berenson in 1969:
- The growth of some companies requires the integration of their information in a Marketing Information System so as not to lose it in the dispersion generated by growth. The speed with which Marketing decisions are taken has increased. The integration of different Marketing activities in a single person or manager who needs to work with more information and of higher quality to execute the Marketing process effectively.
The question may arise as to why resort to the design of a Marketing Information System, if in short, in all organizations this type of information is used in a less formalized way.
The conclusions of the Albaum study offer a convincing answer showing the weakness of having an informal Information System in three essential problems:
- Disappearance of the information: the receiver of the information may forget the retransmission of the same, may not know to whom it may be useful, or may purposely suppress it for personal reasons Delay of the information: the retransmission of the information obtained may take longer than necessary to travel from the original point of acquisition to the center where the decision is made. Information distortion: the message is distorted many times in the encoding, transmission and decoding process.
On the other hand, Berenson summarizes the benefits that the possession of a Marketing Information System brings to Marketing management, as follows:
- Provide more information within the time required in the company. Concomitantly, better performance can be achieved throughout the organization Allows a large and decentralized firm to use and integrate information that is generated in distant locations Allows better adoption of the Marketing approach Allows selective information retrieval from In such a way that the user only gets what they need and want, it allows a quick recognition of market trends that are developing, it allows a better use of information that is collected in the organization in the course of its business activities, for example: sales by product, by client, by region, etc. It allows better control over the company's Marketing plan by detecting breaches in it.It prevents important information from being quickly erased.
For these reasons, and considering the criteria of various authors, the Marketing Information System is presented below.
The Marketing Information System
In 1966 Kotler made the first description of how Marketing managers could use the power of electronic computers as an administrative tool, which he called: "Marketing Information and Analysis Center."
In 1967 Cox and Good were the first to offer both the “Marketing Information System” (MkIS) - Marketing Information System - as well as the way it could be implemented.
From that date to the present, numerous publications by researchers and academics have dealt with the subject and many Marketing Information System models have been proposed.
A valid and complete definition of Marketing Information System is the one offered by Kotler: “A Marketing Information System is a permanent and interactive structure composed of people, teams and procedures, whose purpose is to obtain, classify, analyze, evaluate and distribute relevant, timely and accurate information that will serve those who make Marketing decisions to improve planning, execution and control. "
The concept is very interesting because it groups together a series of essential categories to achieve an adequate conception of a Marketing Information System.
It begins by stating that this tool is a structure, thus implying that there is order. When something is structured, it is because there are clearly delimited parts and relationships.
Later, Kotler argues that this structure is composed of people, teams and procedures.
Although such clarification may seem unnecessary, it is very timely: on many occasions, managers think of Information Systems as the equipment, preferably IT, that supports said Systems; when in reality, the fundamental link of an Information System is the person.
Another mistake that can be made when designing and putting into operation a Marketing Information System is the lack of clarity in the procedures necessary to carry out each and every one of the functions it must carry out.
The concept also includes the functions that the System will be in charge of: obtaining, classifying, analyzing, evaluating and distributing the information; as well as its users: those responsible for making Marketing decisions related to planning, execution and control, all tasks integrated into the Marketing Process.
Another aspect that the concept takes into consideration is the quality of the information as a resulting product. Here Kotler argues that the information must be relevant, that is, it must conform to the requirement for which it was requested; also timely, therefore, that it is obtained at the right time to make the decision; and lastly, precise, which implies the absence of vagueness in it.
Something important to keep in mind when designing a Marketing Information System is the following statement made by Gandhi and Bodking: “Originally Marketing Information Systems were considered a special class of MIS, but today, Marketing Information Systems Marketing refers to a systematic approach to managing Marketing information developed using Marketing data.
The System assists in answering specific Marketing questions, and unifies changes in Marketing information within Marketing departments and across functional areas within the company. "
From the above, it is necessary to emphasize the change of focus in the conception of the Marketing Information System. Many authors are of the opinion that with the possibility that existed in the sixties of the last century of processing greater volumes of information through computational technologies that were just emerging, the Marketing area was one of the first to visualize the possibilities that these teams offered for the treatment of Marketing information.
Therefore, it is not surprising that, to a large extent, Marketing Information Systems were conceived as independent tools that serve as support for Marketing decision-making. However, the information required to process a Marketing Information System is generated beyond the borders of the Marketing department. For this reason, the need for recognition about the required integration between it and the rest of the functional areas of the organization.
Following this same line of analysis, the researchers Rogers, McLeod and Li are even more categorical in their conception of the Marketing Information System when they express: “More than existing as a physical System, the Marketing Information System is simply a way of think about the solution to the information needs of Marketing managers.
The Marketing Information System recognizes that Marketing managers have certain unique needs, and specifies how those needs can be addressed.
Therefore, the Marketing Information System is a conceptual System. This Conceptual System can be approached in a variety of ways.
The most interesting thing about this conception is the practically total break with the approach that a Marketing Information System must be established in a specific area of the organization, which was the initial conception about the tool when in 1966 Kotler made the proposal from the "Marketing Information and Analysis Center." In this way, the System was conceived as a physical and tangible System.
However, in this statement Rogers, McLeod and Li propose that the Marketing Information System is rather a conceptual System, that is, a way of thinking and conceiving the solution to the information needs of those who make Marketing decisions.
This clarification is very precise and appropriate for the moments in which modern organizations develop. Rigid and inflexible structures that do not allow the company to adapt to the environment and its changes are criticized. Similarly, the subsystems that make up an organization, within which are the Information Systems, need to be endowed with the necessary flexibility to face the needs imposed by change.
It is, perhaps, the rigidity with which these Systems have been conceived and stereotyped, the fundamental cause that at present a connoisseur of the subject could mention more than 10 tools that throughout the existence of his organization, he has tried the same, or have you thought about trying, to solve the information needs of your decision makers.
For this reason, the statement by Rogers, Mcleod, and Li has at least two important implications:
- It commits the organization and any agent of the same that obtains or produces useful information, in its provision for those who make Marketing decisions. It lays the fundamental bases for success today, in the design and implementation of an Information System of Marketing: organizational thinking and reflection is required to solve information needs problems.
Notwithstanding the foregoing, there are specific characteristics that are highly desirable to be present in a Marketing Information System, which guarantee its proper functioning, “An ideal Marketing Information System is one that generates regular reports and recurring studies as needed; integrates old and new data to provide updated information and identify trends…
The most important aspect of this approach is the proactive nature of an ideal Marketing Information System: it is not only content to produce information about the past, which is useful for control, but it must integrate said information with the most current in order to anticipate future behavior.
And the foregoing may also be another cause of the failure of many tools for the treatment of information: their limitation of providing old and outdated information, when in reality, those who make decisions require that the information allows, as far as possible. possible, anticipate the future.
The proper functioning of the Marketing Information System depends on three factors: the nature and quality of the available data; the way the data is processed to provide useful information; and the ability of the Marketing Information System operators and managers to work together on that information.
On many occasions the dissatisfaction of a manager with his Information System lies in the fact that if the inputs of said System were not well defined, unequivocally the outputs will be poor and in many cases, useless. On the other hand, nonconformity can occur due to rudimentary and outdated information processing methods.
At this point, computer technologies have reached a high degree of development that favors the application of statistical methods and mathematical models that can constitute a true support for Marketing decision-making.
But indisputably, the fundamental cause of dissatisfaction with an Information System on many occasions lies in the aforementioned dichotomy that is established within an organization: the disconnection between those who design the System and its users.
For a System to function properly, there must be correspondence between both parties. It is therefore necessary that the design of the System anticipates the clear establishment of the objectives and purposes that the users of the information pursue with it. Only on this basis are the conditions for your future success created.
For this reason, at present, we speak of information managers, more than specialists in information processing, and it would be desirable, as an ideal, that everyone in the organization became information managers, that is, people who know design the solution to your information needs.
The last aspect to be dealt with are the subsystems that make up the System. The figure shows the conception of the Marketing Information System in a graphic.
The figure, enclosed in broken lines, shows the different subsystems that make up the System.
The Marketing Research subsystem is in charge of being activated in the company when a problem arises that involves specific and punctual information needs that cannot be provided by the rest of the subsystems.
An optimal use of Marketing research occurs when the rest are used until the possibilities of obtaining the required information are exhausted.
The Marketing Intelligence subsystem plays a fundamental role within the System. He is in charge of being vigilant of the events that occur in the environment and the markets of the company. This implies that all company personnel are alert, but fundamentally for Marketing activity, the contact and sales personnel are the ones who can best perform in this task, as their fundamental activity is interaction with the organization's customers.
The Internal Data subsystem is proposed by Kotler as the most basic subsystem of a Marketing Information System. This is fed by relevant internal information, which is generated in the company when executing activities related to its markets or that have an impact on them.
Source: Adapted by the authors from McLeod, R., Rogers, JC, Li, E. "MkIS their current status in fortune 1000 companies., Journal of Management Information Systems, Spring 1985, Vol. I, No. 4 p. 60. The organization's own sources that feed the Internal Data subsystem are the Sales, Marketing, Manufacturing and Accounting departments.
A last subsystem, whose function is to integrate the rest of the information from the previous ones, is the Marketing Decision Support subsystem. In the figure, the authors conceive this subsystem as the set of Data Bases and the Software Library, which is going to be in charge of the information processing.
It is for this reason that most of the authors agree that this is the one that requires the most computer support, as it is based on the use of mathematical and statistical models that allow the integration of information in a useful way, to choose between several courses action, the best.
The Marketing Information System, today this is a tool forgotten by many managers and also in the academic field. Despite this perception, it is essential for a company that wants to do good Marketing to have a Marketing Information System: practice confirms that many competitive companies, such as the Fortune 500, have it.
There is an objective reality that is inescapable: new conditions of competition in the market impose new ways of conceiving and doing business. The question is: what are third world organizations doing to compete in that environment? Do organizations have all the relevant information that allows them to know current customers and potential markets, to achieve their loyalty?
The solution, whatever the problem, is to raise the quality (understood as what the customer wants) of the productions, which is achieved in the first place by understanding the tastes of the customers, therefore, doing Marketing, for what which the Marketing Information System can bring great value.
However, if the Marketing Information System is a forgotten tool due to the implications of its design and effective implementation in an organization, it is important to bear in mind that there will always be problems. However, organizational growth is, as in the personal sphere, in seeking creative solutions to difficulties.
Marketing System Model
To facilitate our understanding of the nature and role of marketing research, it is first necessary to describe the marketing system of which it is a part. In the figure that follows, a schematic model of this system is presented. This conceptual scheme describes the marketing system from the point of view of the sales organization.
The model specifies one or more performance measures for the organization, identifies the relevant variables in the process, and classifies the variables as dependent or independent.
It is useful to differentiate between the terms "information" and "data." Data is observations and evidence regarding some aspect of the marketing system. Information refers to data that reduces uncertainty in a decision situation. This definition makes the uses of the term information dependent on the manager and the decision-making situation.
Types of Information Needed for Planning and Control
I Situational Analysis
A. Demand analysis
1. Characteristics and behavior of the buyer
to. What buy?
b. Who buys?
c. Where do you buy?
d. Why buy?
and. How do you buy?
F. When do you buy?
g. How much do you buy?
h. How will the characteristics and behavior of the buyer change in the future?
i. Are the customers satisfied? At what level?
2. Market size characteristics:
to. Market size potential
b. Segments
c. Selective demand
d. Future market trends
B. Competition
- Who are the competitors? Competitor characteristics
a) Marketing programs
b) Competitive behavior
c) Resources Main strengths Future competitive environment
C. General Environment
- Economic conditions and trends Government regulations and trends Pollution, security, consumer concerns Technology trends Political climate Security
D. Internal Environment
- Marketing resources / skills Production skills / resources Financial skills / resources Technology resources / skills Future trends in the internal environment.
II Marketing Mix
A. Product
- What attributes / benefits of the product are important? How should the product be differentiated? What segments will they attract? How important is packaging? Is there a need for product / product line variation? How important is service, warranty, etc.? How is the product perceived in relation to the offers of the competition?
B. Distribution
- What types of distributors should handle the product? What are the channel's attitudes and motivations for handling the product? What intensity of wholesale / retail coverage is needed? What margins are appropriate? What forms of physical distribution are needed?
C. Price
- What is the elasticity of demand? What pricing policies are appropriate? What should the price of the product line be? How are price variations established for a product? How important is the price to the buyer?
D. Promotion
- How is the effectiveness of promotional tools measured? Which ad copy is the most effective? What means of communication are the most effective? What is the right promotional mix?
Steps of the Investigation Process
- Establish the information need Specify the research objectives and information needs Determine the research design and data sources Develop the data collection procedure Design the sample Collect the data Process the data Analyze the data Present the results of the investigation.
Practical Case: Food Ingredients supplier company.
Bibliography:
De Cholet, Michel, El Marketing Mix, Ediciones Deusto SA Bilbao, Spain, 1983
Sommers, M., Barnes, J., Stanton, W., Etzel, M., Walker, B; Fundamentals of Marketing, McGraw-Hill, Seventh Canadian Edition, 1995, Canada.
Kinnear / Atylor, Market Research, MCGrawHill, Quinta ED.
Questions for homework for Saturday 27, 2010
1. Mini-case
Procter & Gamble is considering the simultaneous launch of a liquid detergent in ten states of the United Mexican States. This product is based on a successful introduction of the product in the United States. What market research program would you recommend that P&G initiate?
2. Minocaso
Brenntag wants to stimulate the primary demand for wool in Mexico. What market research could the board do to facilitate the development of a primary demand stimulation campaign? Briefly describe a market research program. Explain how potential market research errors would be controlled in this type of program.
3. Mini case
A young EBC student is considering the simultaneous launch of a new food ingredients distribution chain in Chihuahua, Mexico City and Querétaro. How could market research be helpful in planning ALL ASPECTS OF MKT for this distribution?
