Mm unit 1point3

Barriers between Marketing Researchers and Managerial Decision Maker

Course: MBA

Subject: MM II

Unit: I

We consider three types of barriers to information Intelligence.(Figure 1)

A. Behavioral barriers: these are barriers mainly due to behavioral characteristics of managers, decision makers, and researchers.

B. Process barriers: these are barriers mainly due to the process characteristics of an information analysis project.

C. Organizational barriers: these are barriers due to the organizational structure of the groups involved in an information analysis project.

Confirmatory Bias

This is mainly a behavioral barrier. As discussed above one of the fundamental behavioral biases of decision makers in market research is to only look for information that simply confirms existing beliefs and often disregard all other information. Unfortunately there is a saying that ‘‘if you torture the data enough they will reveal anything to you’’. In other words, having a purely confirmatory mind frame will sooner or later lead to evidence that, almost definitely wrongly so, indeed ‘‘confirms’’ the initial beliefs. But then there is effectively no use of the information whatsoever. We found from our interviews, in agreement with the past work on market research outlined above, that the confirmatory bias is, among other behavioral biases (Kahneman et al.,1982), central to the success of market research initiatives. Moreover, even though managers are aware of this trap, they typically do not control for it.

Difficulty to Balance Creativity and Hard Data:

This is also mainly a behavioral barrier. It is a very delicate balance that needs to be achieved between intuition and prior beliefs, and what the data reveal. Lean too much towards hard data, hence ‘‘successfully’’ analyzing the information available, and creativity may be lost.

Unsuccessful Problem Definition

This is due to a very basic characteristic of intelligence projects very often ignored: if you get the wrong questions upfront, you will get the right answer for the wrong problem. As an example, the CEO of a big group asked the CEO of a marketing researchsupplier to work on a strategic question forthe group. But the person who subsequently briefed the project team of the supplier with the objectives was somebody who was not specialized in marketing or research. After receiving the objectives and carrying out some initial research, the group CEO was givena verbal debrief. Although he was quite happy, he also asked for more strategic answers, whereas the brief had been defined only as a tactical problem. The fundamental problem was that the contact person did not correctly lay out the objectives of theproject.

Research Rigidity

This is another fundamental characteristic of intelligence projects: even when they lead to the correct answers for the correct questions, these answers may quickly become outdated. Reality changes fast and one must recognize that information intelligence search is a dynamic, iterative process, not done in one rigid shot. Information intelligence projects are iterative, sometimes to such an extent that they are not really projects but ongoing processes. As some business intelligence managers said, business intelligence is not a project with a beginning and an end, but a process continuing indefinitely.

Misuse of Information Asymmetries

This is mainly an organizational barrier. It is probably the hardest barrier to overcome and has been extensively considered for example for knowledge management initiatives. Information asymmetries arise when one or more parties have relevant information that is not shared with another party or parties involved.

Newcomer Syndrome

It’s always good to have new people with fresh ideas joining an information intelligence project, but sometimes newcomers may be dangerous simply because they are expected to come up with new findings.

Ethical issues in MRMarketing research has experienced a resurgence with the widespread use of the Internet and the popularity of social networking. It is easier than ever before for companies to connect directly with customers and collect individual information that goes into a computer database to be matched with other pieces of data collected during unrelated transactions. The way a company conducts its market research these days can have serious ethical repercussions, impacting the lives of consumers in ways that have yet to be fully understood. Further, companies can be faced with a public backlash if their market research practices are perceived as unethical.

Deceptive Practices

The ease with which a company can access and gather data about its customers can lead to deceptive practices and dishonesty in the company's research methods. This type of ethical problem can run the gamut — from not telling customers that information is being collected when they visit a website to misrepresenting research results by changing database numbers. Any action that uses lies and deception to find out or establish information about consumers falls under this category.

Invasion of Privacy

One of the most serious ethical considerations involved in market research is invasion of privacy. Companies have an unprecedented ability to collect, store and match information relating to customers that can infringe on a person's right to privacy. In many instances, the customer does not know or understand the extent of the company's infiltration into his life. The company uses this information to reach the customer with targeted advertising, but the process of targeting can have a chilling affect on personal freedom.

Breaches of Confidentiality

Another significant ethical consideration involved in market research involves breaches of confidentiality. Companies regularly share information about customers with partners and affiliates, requiring the customer to opt-out of the sharing if he doesn't want to be involved. Some companies sell information they have gathered on customers to outside companies. Ethically, any unauthorized disclosure of customer information is problematic

Objectivity

Marketing and advertising have a significant impact on public perceptions. Market researchers have an ethical obligation to conduct research objectively, so that available data allows for the development of a balanced or reality-based picture. Researchers who allow their own prejudices to skew their work tend to contribute to the perpetuation of stereotypes in advertising, the development of destructive social constructs and the enabling of unjust profiting from poverty. For example, a market researcher with a one-dimensional view of minorities could do a fair amount of harm if allowed to shape an advertising campaign based on skewed data collection.

A marketing information system (MkIS) is a management information system (MIS) designed to support marketing decision making. Jobber (2007) defines it as a "system in which marketing data is formally gathered, stored, analyzed and distributed to managers in accordance with their informational needs on a regular basis."

Marketing Information System

Components of Marketing Information System

The four main components of Marketing Information System (MIS) are:

Internal Records,

Marketing Intelligence,

Marketing Research (MR), andMarketing Decision Support System.

: The first component of MIS is ‘Internal Record’. Marketing managers get lots of information from the internal-records of the company. These records provide current information about sales, costs, inventories, cash flows and account receivable and payable. Many companies maintain their computerized internal records. Inside records help marketing managers to gain faster access to reliable information.

Internal records

Marketing intelligence :The second component of MIS is ‘Marketing Intelligence’. It collects information from external sources. It provides information about current marketing-environment and changing conditions in the market. This information can be easily gathered from external sources like; magazines, trade journals, commercial press, so on. This information cannot be collected from the Annual Reports of the Trade Association and Chambers of Commerce, Annual Report of Companies, etc. The salesmen’s report also contains information about market trends.

The information which is collected from the external sources cannot be used directly. It must be first evaluated and arranged in a proper order. It can be then used by the marketing manager for taking decisions and making policies about marketing.

So, marketing intelligence is an important component of MIS

Marketing research : The third important component of MIS is ‘Marketing Research’. MR is conducted to solve specific marketing problems of the company. It collects data about the problem. This data is tabulated, analyzed and conclusions are drawn. Then the recommendations are given for solving the problem. Marketing research also provides information to the marketing managers. However, this information is specific information. It can be used only for a particular purpose. MIS and MR are not substitutes of each other. The scope of MIS is very wide. It includes ‘MR’. However, the scope of MR is very narrow

Marketing decision support system : The fourth component of MIS is ‘Marketing Decision Support System’. These are the tools which help the marketing managers to analyze data and to take better marketing decisions. They include hardware, i.e. computer and software programs. Computer helps the marketing manager to analyze the marketing information. It also helps them to take better decisions. In fact, today marketing managers cannot work without computers. There are many software programs, which help the marketing manager to do market segmentation, price fixing, advertising budgets, etc

Market potential is the entire size of the market for a product at a specific time. It represents the upper limits of the market for a product. Market potential is usually measured either by sales value or sales volume. For example, the market potential for ten speed bicycles may be worth $5,000,000 in sales each year. On the other hand, the market potential for motorcycles may be 500,000 units each year, which is a measure of sales volume rather than sales value. Keep in mind that market potential is just a snapshot in time. It's a fluid number that changes with the economic environment. For example, rising and falling interest rates will affect the demand for products that are typically financed, like cars and houses

What is Company Demand?

Company demand is demand for a specific company’s goods compared to other company offerings. The demand is determined by sales numbers of a particular brand put against total market sales. For example, if the number of shirts sold within a particular season is 50,000 units (combining all brands and sellers), and if a specific company’s shirts amount to 4,000 units, the company demand for the firm is (4000x100/50000) 8 percent.

Company demand is a brief picture of how consumers perceive and exhibit preference for particular company products and services when compared to the competition. Like other kinds of market demand, company demand is variable and is bound to change periodically. To increase or sustain company demand, a firm must constantly sell quality products and services, backed by effective marketing strategies.

What are sales forecasts?

Sales forecasts are estimates of your sales for the forecast period.

The sales forecast establishes the level of activity used in all the other forecasts and budgets for the business. If your sales forecast varies wildly from your actual results, your cash flow and profitability forecasts will similarly be inaccurate. Regularly updating forecasts ensures current market intelligence, buying signals from clients and the efforts behind the marketing strategy can be taken into account for the next forecast.

To get started, ask yourself how much can you realistically sell next year, and how much will you charge for your goods or services?

If you are already in business, use sales data and internal accounting records from previous years in addition to external current market and economic indicators to develop a realistic forecast.

If you are starting a new business and don't have a trading history, base your sales estimates on market research, industry information, business strategies and objectives

Sales Quota is  the  sales  goal  set  for  a  product  line,  company division or  sales  representative.  It helps  the managers  to define and stimulate sales effort. Sales quota is the minimum sales goal for a set time span.

Generally sales quotas are set slightly higher than the estimated sales so as to stretch the sales force effort.

Sales quotas are developed through the study of annual territory marketing plan. In this the plan for developing new accounts and expanding existing accounts is given by the representatives

Budgeting is important for any business. Without a budget companies can't track process or improve performance. The first step in creating a master company while budget is to create a sales budget.

A sales budget estimates the sales in units as well as the estimated earnings from these sales. Management carefully analyzes economic conditions, market competition, production capacity, and selling expenses when developing the sales budget. All of these factors play an important role in the company's future performance. Basically, the sales budget is what management expects to sell and the revenues collected from these sales.

Sales Budget

What Is Demand Forecasting & Estimation?

• Demand forecasting and estimation gives businesses valuable information about the markets in which they operate and the markets they plan to pursue. Forecasting and estimation are interchangeable terms that basically mean predicting what will happen in the future. If businesses do not use demand forecasting and estimation, they risk entering markets that have no need for the business's product

• Purpose

The purpose of demand forecasting and estimation is to find a business's potential demand so managers can make accurate decisions about pricing, business growth and market potential. Managers base pricing on demand trends in the market. For example, if the market demand for pizza is high in a city but there are few competitors, managers know they can price pizzas higher than if the demand was lower. Established businesses use demand forecasting and estimation if they consider entering a new market. If the demand for their product is currently low, but will increase in the future, they will wait to enter the market.

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http://www.myaccountingcourse.com/accounting-dictionary/sales-budget http://smallbusiness.chron.com/demand-forecasting-estimation-32783.html

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