Chapter 2: MARKETING INFORMATION SYSTEM AND MARKETING RESEARCH

I. DEFINITION

"Marketing research is the function which links the consumer, customer, and public to the marketer through information that used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; improve understanding of marketing as a process". (The American Marketing Association-AMA)

II. RESEARCH OBJECTIVES

Marketing research helps an organization make more marketing decision by providing the market information and business environment (the five Cs).

- It provides the detailed knowledge of past and potential customer. (Customers)

- It identifies primary competitors and pinpoints their strengths and weaknesses. (Competitors)

- Well-designed research increases the confidence when the organizations meet the customers' needs and wants as well as develop competitive strengths and weaknesses. (Confidence)

- Research results can be used efficiently to back up advertising claims. (Credibility)

- Research is the primary tool for keeping up-to-date with the customers' needs and expectations and the constant state of change of the domestic and international markets. (Change)

However, there are many effective marketing decisions that have been based on no research at all. We can only gather the good research information if meets the requirements: utility, timeliness, cost-effectiveness, accuracy and reliability.

III. MARKETING INFORMATION SYSTEM (MIS)

Every firm must organize and distribute a continuous flow of information to its marketing managers. MIS consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely, and accurate information to marketing decision makers.

A MIS has three components: an internal record system, a marketing intelligence system, and a marketing research system.

3.1. Internal Record system

It supplies result databases of the firm network. They can be accessed more quickly and cheaply than others but they may have some problems such as incompleteness, or in the wrong form for marketing decision. This includes the information of:

- The order-to-payment cycle: Sale representatives, dealers and consumers send orders to the firm. The sales department prepares invoices, transmits copies to various departments, back-orders out-of-stock items. Shipping and billing documents set up based on the shipped items will go to various departments for payment.

- Sale information system: It provides the timely and accurate reports on current sales and inventory data.

- Databases of customers, products, sale persons: Most firms organize their information into databases of customers, products, sale persons by saving these databases and making them easily accessible to decision makers.

3.2. Marketing intelligence system

It supplies happening database competitors and the development in the market place. Its goals is to improve strategic decision making, assess and track competitor's actions and provide early warning of opportunities or threat. It is a set of procedures and marketing manager collects these data by:

- Reading books, newspapers, trade publications.

- Talking to customers, suppliers, and distributors.

- Monitoring "social media" on the internet via online discussion group, email lists and blogs.

- Meeting with other company managers.

3.3. Marketing research system

It is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company. Some large companies have their own research departments that work with marketing managers on marketing research projects, but some firms simply purchase data collected by outside firms to aid their decision making.

In short, the role of MIS is to assess the manager's information needs, develop the needed information and distribute that information in a timely manner.

IV. MARKETING RESEARCH PROCESS

4.1. Research Process

Effective marketing research follows the six steps:

• Problems definition: Marketers must

- define the problems or opportunities to be researched.

- identify the research methods and related questions to use on the selected research objectives.

• Information collection: They must identify what kinds of information are most appropriate for solving the problems.

• Research approaches: In conducting research, marketers must decide whether to collect data or use data that already exist (primary or secondary research). They must decide which research approach (exploratory, descriptive, casual/ conclusive), which instruments to use ( questionnaire, qualitative measures, technological devices), and they must also decide on a sampling plan (sampling unit, sample size, sampling procedure) and contact methods (by mail, phone, person or online).

• Data collection, analysis and conclusion

- Data collection: It depends on the kind of information needed.

- Data analysis and conclusion: The raw data have limited value so they must be analyzed, interpreted (editing, coding, tabulating and applying statically test and procedure) and conclusions are drawn before use.

• Reporting: A report is usually written to communicate the findings to the organization in as understandable and compelling fashion as possible.

• Making decision: The managers who commissioned the research need to weigh the evidence before making decisions (they may even decide to study the issues further and do more research).

4.2. Secondary Research

It is the previously gathered information available from internal or external sources. It is used when organization cannot afford the time and money required for primary research. It can help to shape the primary research but cannot take its place. There are two broad categories: internal data and external data.

• Internal data is the information that contained within the organization's own records, such as: sale volume/revenues (by profit center), customers (demographic, lifestyle), databases (inquiries or turn-away statistic).

• External data is the information that previously published by an outside organization, such as: the media, research companies or consultants, universities and colleges.

4.3. Primary Research

It is the data collected for the first time, by a method other than secondary research to answer specific questions. Primary data collection calls for a number of decisions on research approaches, research instruments, sampling plan and contact method. It can be divided by the type of data provided.

4.3.1. Research approaches

• Quantitative primary research method ( or Descriptive Research)

It describes the marketing problems. Situations, or markets, such as the market potentials for a product or the demographics and attitudes of consumers.

- Experiment research involves the test of various kinds to determine the customers' reaction to new services or products to avoid the risk of failure. It can be a concept test (simple) or full blown test (complex and expensive).

- Mechanical observation (Observational research): Mechanical or electronic observation devices are used to provide the quantitative information accurately (e.g. Bar code technology and related scanning devices use in the retail shopping).

- Survey research: It is usually done by using the questionnaire. There are 4 ways to distribute the survey:

. Mail surveys: Survey done by mail. It has low response rate (about below 40 pct) but it is inexpensive and convenient about the time and the ways to answer (can reach a large number of respondents by mail, can choose the suitable time, may answer in a relaxed way because respondents can remain anonymous).

. Telephone surveys: They are more flexible than mail surveys since the researcher can reword questions for greater clarification and skip questions if not applicable. Information can be gathered quickly and inexpensive for the local call.

. In-house, self-administered: Surveys that are distributed to customers by the researcher or researching team.

. On-line: Email or the Web-site questionnaires are used to collect customers' information because it has the relative speed and flexibility of on-line surveys.

- Simulation involves using computers to stimulate marketing situations. The mathematical model can be used to predict sale volumes, customer counts, or others to management.

• Qualitative primary research method (or exploratory method)

It gathers preliminary information that will help define problems and suggest hypotheses.

- Focus groups: It is a method in which the researcher directs questions to a small group of people and widely used to explore the people image of specific products. This is a versatile research method and can provide an in-depth knowledge of the customer.

- Individual depth interviews (IDI): It consists of one interviewer and one interviewee. It is favored over the focus groups when the topic being discussed is confidential or sensitive, or when logistical problems make focus groups impractical.

- Human observation (Observational research): It is a technique for watching our own or competitor's customers and is inexpensive and rich supply of data for decision making including: count, tally, watch, add up, calculate. . .

- Case study is to get information from one or more information that are similar to the organization. It is used when an organization is investing the addition of new services or facilities and when the potential new target markets and marketing mix approaches are being evaluated.

4.3.2. Sampling Plan

Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of the total consumer population.

Sampling techniques requires 3 decisions:

- First, who is to be surveyed. (Sampling Unit)

- Second, How many people should be surveyed? (Sample size)

- Third, How should the people in the sample be chosen? (Sampling procedure)

4.3.3. Research instruments

In collecting primary data, marketing researchers can use the questionnaires and mechanical devices.

• Questionnaires: They are very flexible, including closed-end questions (multiple choice or scale questions) and open-end questions that allow respondents to answer in their own words.

• Mechanical devices: They measure subjects' physical responses.

4.4. Advantages and Disadvantages of Primary and Secondary research

• Advantages

Secondary Research: inexpensive, easily accessible, immidiately avaible

Primary research : Applicable and useable, accurate and reliable, up-to-date

• Disadvantages

Secondary Research : may not be applicable, potentially unreliable, frequently outdated

Primary research : expensive, not as readily accessible, not available immediately.