An Analysis of the Fundamentals of Marketing (part 33)

Marketing Research (part A)

by

Charles Lamson

Introduction

Marketing research is the activity whereby market information is gathered and analyzed to help management reduce the risk associated with decision making, and as such, marketing research plays an important role within Management Information Systems.

Management Information Systems

Within every organization management is required to bring together the information gathered through its functional activities and to analyze that information to help management decision making. The information obtained can come from a range of sources. The Marketing Information System (MIS) concentrates on the provision of the data related to the market being targeted. These marketing data contribute to the overall Management Information System for the organization. A MIS has been defined as being:

people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.

(Kotler, 1997)

Persons operate within the marketing and marketing research functions under the MIS. Internal staff within the marketing services function (or department), usually located at or within close proximity to, the organization's central head office, are expected to manage the MIS. The marketing information is gathered through a combination of informal and formal communication  routes using internal and external sources within the organization. It can come from any, or all, of the functional areas, including Accounting and Finance, Research and Development, Production and Personnel. Informal communication routes can cover the networks used by the sales staff to reach potential and actual buyers; formal routes could include the functional reporting systems feeding their progress reports to management. Formal internal issues of information are likely to involve sales monitoring and sales force reports; while informal sources could be intelligence gathered through meetings with colleagues and associates. Formal external sources of information can come from sources including statistics produced by international bodies such as the United Nations, the World Health Organization and the World Bank, national governments, trade associations, and so on. More informal external sources of data might be gathered from experts attending trade exhibitions and seminars, as well as from industry marketing research agencies, advertising agencies and management consultancies. A MIS is developed from the inter-linkage and analysis of data collected from three types of information gathering (Figure 1). These are internal reporting, marketing intelligence and marketing research. The three information-gathering sources should interact on a continuous basis. In this way, internal reporting sources covering information obtained from within the organization can be used in the preparation of marketing research studies. Similarly, marketing intelligence environmental scanning may be used in conjunction with the internal reporting process which, in turn, can feed into the marketing research function.

Figure 1 Marketing Information System

Type of information gathering	Information processing	Source of information
1 Internal reporting	Management information	Reports on orders, sales, credit control, etc.
2 Marketing intelligence	Environment scanning	Examines the marketing environment through feedback from sales force, distribution channels, external market reports, etc.
3 Marketing research	Focused Studies	Cover desk and field research targeting specific marketing issues, e.g. market surveys, test marketing and advertising effectiveness studies.
Analysis	Qualitative and quantitative techniques	Use different methods of analysis according to the source material gathered, e.g. statistical analysis for mass market assessment. In-house customer databases and market models may be developed.

All the data gathered from the internal reporting process, from marketing intelligence and from marketing research should be analyzed and assessed to determine market trends. These, in turn, may be used to develop databases for the organizations which are likely to comprise listings of actual and potential customers. They may be used as a management tool to monitor market activity and to ascertain the organization's performance within the market. For example, a list of present customers might detail customer locations, their purchasing patterns and the payment methods that they use. This information could enable the marketing department to decide on the most appropriate marketing mix to use to reach the customer, i.e. it could be used to make targeting and product positioning decisions related to the product's pricing, promotion and its channels of distribution.

Within the organization, the information gathered from the MIS should be analyzed and assessed. The findings should be passed upwards from the marketing services function/department through to corporate or strategic planners to help strategic planners to help strategic decision making. The strategic planners should, in the same way, feed information back into the MIS to direct, or target marketing services department. This information should also be communicated to, and should be received from, the other functional sections of the organization, including Production, Research and Development, Finance and Sales. Within the organization, individual functional departments, company subsidiaries and Strategic Business Units (SBUs) should provide marketing information related to their own particular product, or service, to include within the MIS. The system should take this information, assimilate with the data from all the other sources, inside and outside the organization, analyze and feed back the findings to the various functional department for management decision making.

The information obtained for the MIS will be of varying quality and may require careful interpretation in the light of its source. Information gained from SBUs within an organization may be delayed or adjusted before being passed to the central marketing services for processing within the MIS. For example, sales may be provided in an incomplete manner in an attempt to avoid highlighting a downturn in sales that might lead to reductions in resources for the SBU concerned. Consequently, close control is required in the collection of data for the MIS to ensure that accurate market assessments are made.

While the specific objectives of the MIS will differ from organization to organization, generall, such systems monitor the marketing environment and the performance of the organization within that market. The MIS should provide information that will bring together the different functions, or departments, within the organization. It should identify the needs of customers, competitor performance and indicate how well the organization is performing within the market. It should help to decide on production levels, the most appropriate marketing mix and sales effort as well as product stocking qualities, transport and distribution within logistics to enable customer service needs to be addressed in a cost-effective manner. The MIS should be an effective and reliable decision-making tool to help management satisfy consumer demand.

*SOURCE: FUNDAMENTALS OF MARKETING, 2007, MARILYN A. STONE AND JOHN DRESMOND, PGS. 114-117*

END

Type of information

gathering

Information

processing

Source of information

1 Internal

reporting

Management

information

Reports on orders, sales,

credit control, etc.

2 Marketing

intelligence

Environment

scanning

Examines the marketing

environment through feedback

from sales force, distribution channels,

external market reports, etc.

3 Marketing

research

Focused

Studies

Cover desk and field research

targeting specific marketing issues,

e.g. market surveys, test marketing

and advertising effectiveness studies.

Analysis

Qualitative and quantitative techniques

Use different methods of analysis

according to the source material

gathered, e.g. statistical analysis

for mass market assessment.

In-house customer databases

and market models may be developed.