mris

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Chapter – 4 (A)

Marketing Research & Information System

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Marketing Information System & Marketing Research

Why some Marketing Information System is required in a company?– Because most company executives often

complain that:• There is not enough Marketing Information of

the Right Kind.• These is too much Marketing Information of the

Wrong Kind.

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• Information is so dispersed throughout the organization that it is difficult to locate even simple data.

• Important Information often arrives too late to be useful.

• It is difficult to know whether the information is accurate or not.

• Many people in the organization (including colleagues & subordinates) often suppress the information when they believe it will reflect unfavorably on their performance.

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Marketing Information System

• Three developments rendered the need for marketing Information stronger than at any time in the past.– From local to national to global

marketing.

– Shift from buyer needs to buyer wants.

– Shift from price to non-price competition.

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• “A Marketing Information System consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute the needed, timely, and accurate Information to Marketing decision makers.

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• These are four major components or sub-systems of M.R.I.S :-1.Internal records system.

2.Marketing intelligence system

3.Marketing research system.

4.Marketing decision support system (MDSS)

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The Marketing Information System

MarketingDept.

MarketingAnalysis

Planning

Imply

Control

AssessingInformationNeeds

Distributing Information

Internal Records

Mkting DecisionSupport System

MktingIntelli-gence

MktingResearch

Developing Information

Mkting Environ

Target Markets ChannelsCompetitorsPublics

MacroEnvironForces.

I SMk

Marketing Decision and Communication

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Internal Record System:

The most basic information system used by marketing managers is the internal records system. These records include reports on orders, sales, prices, inventory levels, receivables, payables and so on.

By analyzing this information marketing managers can spot important opportunities and problems.

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• The important internal sub- systems & tasks are:1.The order shipping-billing system.

2.The system of sales reporting.

3.Designing a user-oriented reports system.

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Marketing Intelligence System:“A Marketing Intelligence System is a

set of procedures and sources used by managers to obtain everyday information about pertinent developments in the marketing environment.”

• Managers scan the environment in Four ways:1. Undirected viewing.

2. Conditioned viewing.

3. Informal search.

4. Formal search.

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• How managers gather Marketing Intelligence?1.Gather information from the secondary

sources / through their own efforts.

2.Through their sales force.

3.Through Dealers & Distributors.

4.Purchase data & information from outside agencies ( Org-marg, IMRB, CMIE )

5.Through an internal marketing information centre.

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Marketing Research System

• “Marketing Research is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company.”

• Companies can either have their own M.R. departments or they may buy information form outside organizations.

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• Outside organizations (MR firms) are of Three types:1.Syndicated service research firms (Such as

org. – MARG, IMRB, IIFT,CMIE)

2.Custom marketing Research firms (Such as Lintas, O&M, HTA, Rediffusion etc.)

3.Specially line research firms. (Firms providing specialized services to companies and other MR firms).

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• The Scope of M.R.1.Product Research.

2.Sales and market Research.

3.Advertising Research

4.Business environment / corporate Research

5.Corporate responsibility Research.

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Marketing Research Process

Defining the Problem

&Research

Objectives.

Developing The

Research Plan.

Collecting The Data

Information.

Presenting The Findings

(Report Writing)

Analyzing The Data

& Information.

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• Step – 1:Define the business problem

Define the research problem

Decide about the specific research objectives.

Form the hypotheses to be tested.

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• Step – 2 :– Developing the research plan:1. Data Source

– Internal v/s External source– Primary Data v/s Secondary Data.

2. Research Approaches.– Observational Research – Focus group interview– Survey / cross sectional study– Experimental Research.– The functional classification is :

» Exploratory, descriptive, causal, predictive.– The methodological categories are:

» Historical (Desk Research)» Survey (field Research)» Experimental and motivational Research

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3. Research Instrument– Questionnaires

– Mechanical / Electronic Devices

4. Sampling plan– Sampling Unit – Respondent

– Sample Size

– Sampling Procedure

– Sampling Frame

– Universe / Population

5. Contact methods– Telephone Interview

– Mail Questionnaire

– Personal Interview

– Internet

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Types of Questionnaires:1. Open – End Questions.

Examples :-

1. Completely Unstructured

What is your opinion about the overall quality of this oven?

2. Word Association What is the first word that comes to your mind when I say “Chocolate”?

3. Sentence Completion When I choose some dress material, the most important consideration in my decision is………

4. Story Completion An incomplete story is presented and respondents are asked to complete this.

5. Picture Completion A picture of two characters is presented, with one making a statement, respondents are asked to identify with the other and fill in the empty balloon.

6. Thematic Apperception Test (TAT)

A picture is presented and respondents are asked to make up a story about it.

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2.Closed End Questions

No. Examples:

1. Dichotomous :

A Question offering only two choices.

Do you buy ‘x’ Brand?

2. Multiple Choice:

Offering Many Choices.

How frequently do you buy this brand?

Very regularly

Regularly

Occasionally

Rarely

Data collected through these scales are nominal / interval data.

NOYES

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3. Likert Scale:

A statement is made first, then the respondent is asked to show the amount of agreement or dis-agreement.

“Smaller firms give better service than larger firms.”

-2 -1 0 1 2

Strongly Dis- Neither ‘A’ Agree Strongly

disagree agree Nor “D” Agree

OR.

“Young people smoke charms most”

Data so collected are termed as interval data

4. Semantic Differential scale:

A scale is inscribed between two Bi –Polar words. The respondent selects the point that represents the direction and intensity of his/her feelings.

What type of an organization do you think GMM is ?

Large 7 6 5 4 3 2 1 small

Modern 5 4 3 2 1 Old Fashioned

Experienced 3 2 1 Inexperienced

The data thus obtained are known as metric or interval data/ * Ratio data.

1 2 3 4 5

1 2 3 4 5 76Strongly disagree

Strongly Agree

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5. Rating scale:

A scale that rates some attribute from ‘poor’ to ‘excellent’ or on the basis of its importance from ‘extremely important’ to ‘not at all important’.

How is the taste of this fruit salad?

Excellent V. Good Good Fair Poor

How important is ‘service’ to you in a color TV purchase decision?

2 1 0 -1 -2

Extremely very Neither "I” Not Not at Important Imp. Nor ‘VI’ VI All

6. Ranking scale :

Two or more items / attributes are ranked in order of his/her preference fro them.

Please Rank the following brands of detergent power in order of your own preference.

Brands RanksSurf ---------

Rin ---------

Nirma ---------

Wheel ---------

O.K. ---------

The data so generated are known as ordinal data.

5 4 3 2 1

5 4 3 2 1

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7. Ratio scale:

It represents equality of Ratios (2/4 = 6/12) equal ratios among the scale values correspond to equal ratios among the entities being measured.

If the ‘Sweetness’ of ‘Thumsup’ is measurement as ‘1’ what should be the measurement of sweetness of the following brands?

Thums up ----1-----

Coca cola -----------

Pepsi -----------

Diet coke -----------

The Data so obtained are known as Ratio data.

8. One more scale that is used very often is intention to buy scale basically it is a differential

scale.

E.g.:- “if a regular health check service is offered by a reputed hospital or nursing home at a fee of Rs. 1000/- per annum, I would

Definitely Probably Not Probably Definitely

Buy Buy Sure Not Buy Not Buy

5 4 3 2 1

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Sampling Plan

• Sampling Plan Calls for Three Decisions:1. Sampling unit : Respondent

• Who is to be surveyed?

2. Sample Size• How many people should be surveyed?

3. Sampling Procedure• How should the respondents be chosen?

Probability Sampling and Non Probability Sampling.

Universe

Sampling Frame

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Types of Samples

A. Probability Samplesi. Simple Random Sample

ii. Stratified Random Sample

iii. Cluster / Area Sample

B. Non – Probability Samplesi. Convenience Sample

ii. Judgment Sample

iii. Quota Sample

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• Step – 3– Collecting The Information

• This is the most expensive and time consuming step in M.R.

• In Case of Surveys Four major problems arise-1. Respondent ‘Not at Home’

2. Respondent refuses to cooperate

3. Biased for dishonest answer.

4. Interviewer’s bias.

• Step – 4– Analyzing The Information.

• Step – 5– Presenting The Findings.

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Characteristics of Good M.R.

1. Scientific Method

2. Creativity

(Use Creative Research Methods & Imagination)

3. Multiple Methods

4. Interdependence of Models and Data

(Type of Data needed will depend on type of model used).

5. Value and Cost of Information.

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Marketing Decision Support System

Marketing Data

MarketingEvaluations

AndDecisions

Regression, Correlation,Discriminant

Analysis ANOVA

Factor analyCluster -”-

Conjoint analysisMDS

Statistical Bank Model BankProduct Design

ModelPricing Model

Media planning& media Mix modelAdv. Budget Model

.

.

.

Marketing Decision Support System

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• A Marketing Decision Support System (MDSS) is a set of statistical tools and decision models with supporting hardware & software available to marketing managers to assist them in analyzing data and making better marketing decisions.

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• Statistical BankStatistical Bank is a collection

of statistical procedures for extracting the meaningful information from data.

Data converted to a useful form for decision making is known as Information.

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• The Model BankModel Bank is a collection of models

that will help marketers develop better marketing decisions.

A model is a set of variables and their interrelationship designed to represent some real systems or process.

Models are built by operation researchers by using scientific methodology to achieve understanding, prediction or control over some management problems.

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Classification of Models:• According to Purpose • According to Techniques

A. Descriptive Models:1. Markov process model.

2. Queing model.

B. Decision models:1. Differential Calculus.

2. Mathematical Programming.

3. Statistical Decision Theory.

4. Game theory.

A. Verbal Models.

B. Graphical Models :1. Logical flow model

2. Net work planning Model

3. Causal Model

4. Decision tree models

5. Functional relationship model

6. Feedback systems model.

C. Mathematical models :1. Linear v/s non linear model

2. Static v/s dynamic model

3. Deterministic v/s stochastic model

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Descriptive Models

• Descriptive models are designed to communicate, explain or predict. They can be built at Three Levels of detail:

1. Macro Level (or a macro Model) consists of a few variables and a set of relationships among them.Example: A sales model with total sales as dependent variable and national income, average price level and company’s promotional budget as independent variables.

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2. Micro level (or a Micro Analytical Model) specifics more links between a dependent variable and its determinants.Example : ‘Demon’ model in which the

effects of advertising expenditure on sales are explained through a set of successive links between adv. Exp. , Gross number of exposures, reach, frequency, adv. awareness, consumer trial, usage rate etc.

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3. Micro Behavioral Model: It creates hypothetical entities (Customers, Dealers etc.) who interact and produce a record of behavior, which is then analyzed.Example: Two Micro Behavior Model in

or literature are particularly indicated for marketing problems. They are Markov process Model and queuing Model

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A. Descriptive Model1. Markov Process Model describes the possibilities of moving from any

current state to any new state.• Example: Suppose there are three coffee brands A, B, & C. those

consumers who bought brand A or B or C last five some of them retain the same brand and rest switch over to the other two brands.

• A brand switching Matrix is given below: Switch over ToA B C

Switch A 0.7 0.2 0.1Over B 0.17 0.33 0.5From C 0.00 0.5 0.5 Repeat Purchase Rate

for each brand.Switching In and Switching Out Rate

• The Repeat Purchase rate can be used as a measure of ‘Brand Loyalty’. If the Switching Rate remains the same the matrix can be used to predict the ultimate Brand shares.

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2. Queing Models: describe waiting line situation and answer two questions:

1. What waiting time can be expected in a particular system?

2. How will this waiting time change if the system is changed?

– This model is relevant to those situation where customer have to wait for some product or services (Super Markets, Petrol Pumps, Rly. Tickets). If waiting time is excessive, it may lead to loss of some customers to competitors.

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B. Decision ModelsAssist managers in evaluating alternatives & finding a good solutions.

• Optimization Models– Mathematical routines can be

used for finding the best solution.

– Four optimization type decision models are of particular relevance to marketing.

• Heuristic Models– Computational routines can

be used to find a pretty good solution.

– The analyst applies certain ‘Heuristics’ or ‘Rule of Thumb’ to save time and money.

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1. Differential Calculus is applied to well defined mathematical functions to find the maximum value.

2. Mathematical Programming : Here the objective is expressed as some variable to be optimized subject to a set of explicitly expressed constraints. (Linear expressed Constraints).

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3. Statistical Decision Theory or (Bayesian Decision Theory) Identify major alternatives, estimates the probability of each event, estimate the value (payoff) of each alternative, select the best alternative. (E.g.:- Change the Price or Not to Change.

4. Game Theory: It is identical to statistical decision theory with the only difference that, your competitor is assumed to be a major uncertain variable.

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A.Verbal Models– Models in which the variables and their

relationship are described in prose. Many models of consumer behavior (e.g. ‘AIDA model) are essentially in verbal model form.

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B. Mathematical Models (Including the statistical and econometric models) can be classified in many ways:

1. Linear & Non Linear: If the relationship between the variables is considered to be constant – A Straight Line – it is known as a Linear Model. If the relationship varies in an increasing or diminishing proportion it is know as a Non- Linear Model.

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2. Static & Dynamic Models: A static model is independent of time (The demand supply price Model) whereas a Dynamic Model brings time explicitly into its frame work (Brand switching Model)

3. Deterministic and Stochastic Model: in deterministic Model chance plays no role. It is based on a set of exact relationships. (The L.P. Model for determining blends for oil). In stochastic model ‘Chance’ or random variables are introduced explicitly. A brand switching model is stochastic in the sense that customers’ brand choice are regulated by probabilities .

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Graphical Models• Graphical models present a useful step in

the process of or operations, events (boxes) are connected in a sequential flow pattern and related through two operations – Branching & Looping.

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1. Logical Flow Diagram

It is a visual presentation of logical process or operations. Evens (Boxes) are connected in a sequential flow pattern and related through two operations – branching & Looping.

START

Choose Competitor Let(i+1) = i

DoesCompetitor

CutPrice

Is it the Only

Competitor

Tabulate theEffect

END

Loop

YES

NO YES

NO

Logical flow Diagram depicting a firms efforts to determineHow many competitors will cut price.

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Decision Tree DiagramIt portrays the decision alternatives and consequences found in a

decision situation. The best decision can be made by using the statistical decision theory.

Competitor Reacts

Competitor Doesn’t React

Competitor Reacts

Competitor Reacts

Competitor Reacts

Competitor Doesn’t React

Competitor Doesn’t React

Competitor Doesn’t React

Recession

Recession

FlourishingEconomy

FlourishingEconomy

Leave

Price Unchanged

Raise the price

PriceDecision

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Functional Relationship DiagramIt portrays functional relationship (s) between two or more functions.

(viz-SRF)

Quadrant - II I – Quadrant

0Demand Price

The two quadrants in the diagramEnable an analyst to trace theEffect of a particular price throughPerceived quality on a particular Demand level.

Perceived Quality

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Net-work Planning Diagram(Critical path diagram) It portrays the event that must occur to

complete a project. The events shown as circles, are connected by arrows indicating precedent relationships. By estimating the completion time of each task, the analyst can find the earliest date for completion of the entire project.

2 5

3

1 6

4

5 Weeks

5 Weeks2 weeks

2 weeks

4 Weeks4 W

eeks7 W

eeks

The net-work contains a critical path that defines the earliest completion time.( 15 Weeks in this case )

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Causal DiagramIt used to portray the direction of influence of specific variable on each other

Price Expenditure

OnAdvertising

Perceived Quality

Demand

+

++

+

+- It helps in exposing the

Complex relationshipsThat the analyst must Take into account.

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Feedback System DiagramIt portrays any system whose outputs return and influence subsequent outputs. Thus Feedback system Diagrams are useful devices for presenting variables that have Interactive and feedbacks.

New Capacity Profits

Salesvolume

Higher AllowanceTo middle

Men Surplus

Capacity

Short Delivery

Time

+

+++

+

++

-

-

This diagram shows The interactions amongSales, profits, capacity And marketing variables.

Additional Capacity

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Case Method• A case method is a problem in our usage, a

business problem. It is a description of a situation that has actually been faced by a businessman and required his analysis and decision.

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– How to analyze & prepare a case ?1.Read the case at least twice.

2.Note – down the important points about the organization, product, price, competition, promotion and the over all philosophy/ strategy of the organization.

3.Identify the problems involved.

4.Identify the decision areas.

5.Think of as many alternatives as possible to analyze problems and solve them.

6.Select the best possible alternative keeping in mind the financial and other implications of the decision.

7.Discuss all the aspects thoroughly within your group.