http://www.marketing91.com/mismarketing-information-system/ MIS – Marketing information system November 25, 2010 By Hitesh Bhasin 1 Comment A marketing information system (MIS) is a set of procedures and methods designed to generate, analyze, disseminate, and store anticipated marketing decision information on a regu regula lar, r, cont contin inuo uous us basi basis. s. An info inform rmat atio ion n syst system em can can be used used oper operat atio iona nall lly, y, managerially, and strategically for several aspects of marketing.
A mark market etin ing g info inform rmat atio ion n syst system em can can be used used oper operat atio iona nall lly, y, manag manager eria iall lly, y, and and strategically for several aspects of marketing. We all know that no marketing activity can be carried out in isolation, know when we say it doesn’t work in isolation that means there are various forces could be external or internal, controllable or uncontrollable which are working on it. Thus to know which forces are acting on it and its impact the marketer needs to gathering the data through its own resources which in terms of marketing we can say he is trying to gather the market information or form a marketing information system. system. This collection of information is a continuous process that gathers data from a variety of sources synthesizes it and sends it to those responsible for meeting the market places needs. The effectiveness of marketing decision decision is proved if it has a strong strong informati information on system system offering offering the firm a Competitive Competitive advantage. Marketing Information should not be approached in an infrequent manner. If research is done this way, a firm could face these risks: 1. Opport Opportuni unitie tiess may be misse missed. d. 2. There There may be a lack lack of awarenes awarenesss of enviro environme nmental ntal change changess and competito competitors’ rs’ actions. 3. Data collect collection ion may be be difficult difficult to to analyze analyze over several several time time periods. periods. 4. Marketing Marketing plans plans and and decisions decisions may not be properly properly reviewed. reviewed. 5. Data Data colle collecti ction on may may be be disj disjoin ointed ted.. 6. Previous Previous studies studies may may not be stored stored in an easy to use use format. format. 7. Time Time lags may may result result if if a new study study is is requir required. ed. 8. Actions Actions may may be reactionary reactionary rather rather than than anticipat anticipatory. ory. The total information needs of the marketing department can be specified and satisfied via a marketing intelligence network, which contains three components. 1. Contin Continuous uous monitori monitoring ng is the procedu procedure re by which which the changing changing enviro environme nment nt is regularly viewed. 2. Market Marketing ing resear research ch is used used to obtain obtain inform informati ation on on partic particula ularr market marketing ing issues issues..
3. Data warehousing involves the retention of all types of relevant company records, as well as the information collected through continuous monitoring and marketing research that is kept by the organization. Depending on a firm’s resources and the complexity of its needs, a marketing intelligence network may or may not be fully computerized. The ingredients for a good MIS are consistency consistency,, completeness completeness,, and orderlines orderliness. s. Marketing Marketing plans should should be implemente implemented d on the basis of information obtained from the intelligence network. An Marketing Information System offers many advantages: 1. Organized data collection. 2. A broad perspective. 3. The storage of important data. 4. An avoidance of crises. 5. Coordinated marketing plans. 6. Speed in obtaining o btaining sufficient information to make decisions. 7. Data amassed and kept over several time periods. 8. The ability to do a cost-benefit analysis. The disadvantages of a Marketing information system are high initial time and labor costs and the complexity of setting up an information system. Marketers often complain that they lack enough marketing information or the right kind, or have too much of the wrong kind. The solution is an effective marketing information system . The information needed by marketing managers comes from three main sources: 1) Internal company information – E.g. sales, orders, customer profiles, stocks, customer service reports etc 2) Market Marketing ing intell intellige igence nce – This This can be inform informati ation on gather gathered ed from from many many source sources, s, including suppliers, customers, and distributors. Marketing intelligence is a catchall term to include all the everyday information about developments in the market that helps a business prepare and adjust its marketing plans. It is possible to buy intelligence informati information on from outside suppliers suppliers (e.g. IDC, ORG, MARG) who set up data gathering gathering systems to support commercial intelligence products that can be profitably sold to all players in a market. (3) Market research – Management cannot always wait for information to arrive in bits and pieces from internal sources. Also, sources of market intelligence cannot always be relied upon to provide relevant or up-to-date information (particularly for smaller or niche niche market market segmen segments) ts).. In such such circum circumsta stances nces,, busine businesse ssess often often need need to underta undertake ke specific studies to support their marketing strategy – this is market research.
8 Advantages of Marketing Information Systems August 6, 2011 By Hitesh Bhasin 1 Comment With an increasingly competitive and expanding market, the amount of information needed daily by an organization is profound. Thus they have to establish a Marketing Information system. There are several advantages of Marketing information systems 1) Organized Data collection – Lots of data can be collected from the market. But the main word here is “Organized”. Organizing data is very important else the data is meaningless. Thus MIS helps you to organize your database thereby improving productivity. 2) A broad perspective – With a proper MIS in place, the complete organization can be tracked which can be used to analyse independent processes. This helps in establishing a broader perspective which helps us know which steps can be taken to facilitate improvement. 3) Storage of Important Data – Several times in pharmaceuticals, when one drug is being produced they may need data of another drug which was produced years back. Similarly in Media, photographs are stored in archives. This storage of important data plays a crucial role in execution and thus proves again that MIS is not important only for information but also for execution. 4) Avoidance of Crisis – The best way to analyse a stock (share market) is to see its past performance. Top websites like moneycontrol thrive on MIS. Similarly MIS helps you keep tracks of margins and profits. With an amazing information system established, you can know where your organization is moving and probably avert a crisis long before it has taken place. Ignoring hints received from MIS reports is foolhardy. 5) Co-ordination – Consumer durables and FMCG companies have huge number of processes which needs to be co-ordinated. These companies depend completely on MIS for the proper running of the organization. There are dedicated people for marketing information systems in such organizations. This is mainly because of the speed required to access information and implement it. 7) Analysis and Planning – MIS is critical for planning. You cannot do planning without information. For planning, the first thing which is needed is the organizations capabilities, then the business environment and finally competitor analysis. In a proper MIS, all these are present by default and are continuously updated. Thus MIS is very important for planning and analysis.
Control – Just like MIS can help in a crisis, in normal times it provides control as you have information of the various processes going on and what is happening across the company. Thus it provides you with a sense of control. Disadvantages – Maintenance, complexity and setting up a MIS are one of the major hindrances to Marketing information systems. Furthermore, wrong information being fed in MIS can become cumbersome and appropriate filters need to be established.
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Before we discuss about use of Management Information System in marketing we must first be familiar with the term ‘Management Information System’ . It is defined as a system or process that provides the information necessary to manage an organization effectively. MIS and the information it generates are generally considered essential components of prudent and reasonable business decisions. Management Information Systems are distinct from Regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems. MIS should have a clearly defined framework of guidelines, policies or practices, standards, and procedures for the organization. These should be followed throughout the institution in the development, maintenance, and use of all MIS. It is viewed and used at many levels by management. It should be supportive of the institution’s longer term strategic goals and objectives. MARKETING INFORMATION SYSTEMS
Marketing is one of the major factors for the sustenance of any business as revenues are a direct outcome of it. Information systems in marketing process include technologies that allow managers to access important and updated information about the customer wants and preferences and current market demands so that they can offer prompt and apt services. Information Systems also aid in determining and implementing effective marketing strategy.
The Marketing Information System focuses on only the marketing aspects of the management information system. It is an organized way of continually collecting, accessing and analyzing information that marketing managers need in order to make better decisions. To understand the proper role of information systems one must examine what managers do and what information they need for decision making. We must also understand how decisions are made and what kinds of decision problems can be supported by formal information systems. One can then determine whether information systems will be valuable tools and how they should be designed. COMPONENTS OF A MARKETING INFORMATION SYSTEM
A marketing information system (MIS) is intended to bring together disparate items of data into a coherent body of information. An MIS is more than raw data or information suitable for the purposes of decision making. An MIS also provides methods for interpreting the information.
The MIS model consists of four main parts: the internal reporting system, the marketing research system, the marketing intelligence system and the marketing models. IMPORTANCE OF MIS IN MARKETING
The marketing function identifies consumer needs and develops products based on such market needs. It matches the product offering with the consumer needs and ensures ready buyers for the products of company. Marketing is a crucial activity for business firms and this function is a major user of information system facilities. Some of the areas of applications of MIS in marketing are as given below: •
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Order Processing System : Computerized order processing system captures sales orders from customers and processes the orders for further action. It checks the inventory availability, pending orders, production details etc., before accepting the customer order. Computerized sales order processing generates control report daily on orders processed, details of back orders, etc. Sales Management System : Computerized sales management system uses the data from sales order processing system to generate various sales related reports. This system supports accounts management, direct marketing, sales forecasting and sales Presentations. Logistics Management : The physical distribution is a major activity of marketing function. It uses computer based OR models to find optimum location of warehouses, shipment routes, quantity to be transported and stocked etc. Consumer Research : Computerized transaction processing systems capture huge quantity of data about customers and their buying patterns etc. It is used to generate vital information about consumer behaviour. Sales Forecasting : Computer based mathematical and operations research models are used to forecast sales and marketing expenses.
Sources of marketing information •
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Transaction data: The transaction data includes data about marketing activities such as sales data and sales expense data. Marketing research data: This includes data about consumers, product promotion, prices, and packaging distribution agents. Corporate strategy and corporate plans : Corporate strategy and corporate plans based on detailed analysis of the company’s capabilities are useful sources of marketing information. Marketing research agencies : Marketing research agencies regularly collect data about markets and make such database available to companies at a fee.
Need for marketing Information System Kishore C.S. (Dec 1999)
Marketing feedback is important for any organization. Changing customer needs, evolving technology trends, increasing competition necessitate the need to process market feedback and communicate to other departments of the organization. Currently very few information systems provide a features needed by a marketing department. Enterprise applications focus on functions like sales, production, purchase, and inventory. But market information is becoming crucial. This document hints at conceptual framework that marketing information system. Such a system can be very useful to any organization. Top Management is interested in knowing the following from marketing department: 1. How much was our marketing budget and what is the actual expenditure? 2. Towards which type of marketing maximum budget was spent? What should be future marketing budget? 3. How many prospects contacted our marketing department and how many prospects materialized finally? 4. What is the market feedback about current quality, technology, and price of the product? What strategy should be adopted to improve the same? 5. How effective is our communication with prospects? 6. What is the future potential of the market? 7. What trends are happening in market which should change our product strategy? Typically all this information is available with Marketing department which needs to be processed and passed on to top management. Besides this the marketing department also needs effective information system to manage their own functions. The following are the needs of marketing department 1. What are the future marketing events the company can participate in? What are the events in which the company participated? 2. How effective are our current marketing efforts? What are the areas of improvement? Which marketing type can be taken up new or which can be discontinued? 3. What are the pending ‘prospects’ that can be followed up? 4. What are the various communications sent to the prospect and what is the status of the prospect? 5. What are the various marketing materials available and how effective are they? 6. What is the number of inquiries received in last few months for each product? Which product needs more marketing efforts? 7. What are the pending demos: who is doing what? 8. Who is the contact person(s) for each prospect? Typical Processes that may be captured by Marketing Information System Example 1:
1. A Prospect sends an e-mail to marketing department asking for more information on a product. 2. The person who receives the mail logs information about the prospect into the system 3. Sends relevant information to the prospect 4. In Information system mark a follow-up activity for the prospect at a future date and responsibility also. 5. Transfer queries by prospect into repository (Product – Question – Category). Others can use this in future. Example 2:
Someone in marketing department comes to know of an exhibition that focuses on the market segment the company is in. 1. The marketing person logs the information in the repository 2. Similar events can be queried and see the effectiveness of participation in such events. 3. Plan and participate in the event 4. If stall is put up in the exhibition and lot of prospects turned up – log the complete information into repository.
The marketing information system (MIS) Introduction In order to make good marketing decisions, marketing managers require high qua lity information about the market. It is not sufficient to rely on hearsay or hunches. Poor information never led to a successful marketing decision except by sheer chance. There are numerous methods of marketing research ranging from educated guesswork to hard facts. You need to be aware of the assumptions and limitations in order to know when to use a particular one and how to interpret and apply the information generated. The marketing research process is only one of the sources of information for the MIS. It is worth remembering that it is all the sources of information which contribute to the MIS which help us understand our customer's needs and wants; that information does not come just from our marketing research activities. The MIS is part of the larger information system in a n organisation ¾ the management information system. The distinction between the MIS and management information system is important. The management information system focuses on information relevant to all aspects of an organisation's operation: for example, personnel records,
payroll data, financial ratios, financial investment analyses, inventory records, sales and market data, market share, buying trends, and so on. The MIS focuses on only the marketing aspects of the management information system. Quester et al. (2004, p. 136) defines the MIS as: an organised way of continually collecting, accessing and analysing information that marketing managers need in order to make better decisions. Similarly, your textbook's (Kotler et al. 2004, p. 207) definition of an MIS is a system that: consists of people, equipment and procedures to gather, sort, analyse, evaluate and distribute needed, timely accurate information to marketing d ecision-makers. Consider this
Read the above definition again. What does it identify as the k ey characteristics of an MIS? What makes an MIS a 'system' as distinct from a haphazard collection of different pieces of data? How would you explain the distinctive characteristics of an MIS to someone else? Figure 3.1 provides reasons why we need to have an MIS to help us become effective managers. However, designing and implementing an MIS so that it performs the way it should is not always an easy task. After all, an MIS has to meet the needs of its customers (users) and, to do that, those needs must first be assessed. Kotler et al. (2004) make the useful distinction between: • • •
identifying what information managers would LIKE to have identifying the information they actually NEED identifying what information it is FEASIBLE to offer them.
Figure 3.1 Reasons for obtaining information Source: Evans and Berman (1992, p. 85)
Turn now to the reading to expand on what an MIS can provide for a marketing manager and to review some of its key features. In your text
Kotler et al. (2004) Chapter 6, pp. 204-215, 'Information management and marketing research' and 'The marketing information system'.
Marketing research Marketing research tends to generate a lot of attention because it focuses on solving problems and is a complex process. When you add to this the systematic nature of marketing research, you find that it is sometimes eve n presented as being the entire MIS rather than a subsystem. To help you remember that marketing research is only part of the MIS, the following table summarises the differences between them.
Table 3.1 Contrasting characteristics of a marketing information system and marketing research Marketing information system 1. Handles both internal and external data 2. Is concerned with preventing as well as solving problems. 3. Operates continuously ¾ is a system.
4. Tends to be future-oriented. 5. Is a computer-based process. 6. Includes other subsystems besides marketing research.
Marketing research 1. Emphasises the handling of external information. 2. Is concerned with solving problems. 3. Operates in a fragmented, intermittent fashion ¾ on a projectto-project basis. 4. Tends to focus on past information. 5. Need not be computer-based. 6. Is one source of information input for a marketing information system.
Source: Adapted from Stanton et al. (1994, p. 69) Many organisations, particularly smaller ones, are disinclined to und ertake marketing research. The cost and time involved in the exercise is only part of the reason for this. If you think about it, the only alternative to marketing research is intuition. The following table spells out the difference between the two for you. Table 3.2 Distinctions between research and intuition in marketing decision-making Research Intuition Formal planning, Preference based on Nature predicting based on personal feelings scientific approach Logic, systematic methods, Experience and Methods statistical inference demonstration Contributions General hypotheses for Minor problems solves making predictions, quickly through classifying relevant consideration of variables, carrying out experience, practical systematic description and consequences classification
Source: Pride and Ferrell (1993)
Scope of research
Marketing research includes a variety of activities. Kotler et al. (2004, p. 213) note that the ten most common types of marketing research activity include: • • • • • • • • • •
measurement of market potentials market share analysis determination of market characteristics sales analysis studies of business trends short range forecasting competitive product studies long range forecasting marketing information systems studies pricing studies.
A more detailed picture of what is involved in marketing research can be found in Table 6.1 on page 214 of your textbook, which shows the result of research activities of 599 companies
Activity 3.1 To what extent could marketing research be used in port and shipping services (ad hoc, systematically or never), and for what purposes (service, pricing, promotion)?
Marketing Information Systems Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Marketing information systems integrate the information flow required by many marketing activities. Marketing information systems provide information for: Internet/intranet websites and services make an interactive • marketing process possible where customers can become partners in creating, marketing, purchasing, and improving products and services. Sales force automation systems use mobile computing an d Internet • technologies to automate many information processing activities for sales support and management. Other marketing systems assist marketing managers in product • planning, pricing, and other product management decisions, advertising and sales promotion strategies, and market research and forecasting. Figure 23-1 illustrates how marketing MIS provide information technologies that support major components of the marketing function.
Figure 23-1 AN OVERVIEW OF A MARKETING MIS
Interactive Marketing Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 The explosive growth of Internet technologies has had a major impact on the marketing function. The term interactive marketing has been coined to describe a type of marketing that is based on using the Internet, intranets, and extranets to establish two-way interaction between a business and its customers or potential customers. The goal of interactive marketing is to enable a company to profitably use those networks to attract and keep customers who will become partners with the business in creating, purchasing, and improving products and services. Customers are not passive participants, but are actively engaged in a network-enabled proactive and interactive process. • Encourages customers to become involved in product development, delivery, and service issues. • Enabled by various Internet technologies, including chat and • discussion groups, Web forms and questionnaires, and e-mail correspondence.
Expected outcomes are a rich mixture of vital marketing data, new • product ideas, volume sales and strong customer relationships.
Targeted Marketing Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Targeted marketing has become an important tool in developing advertising and promotion strategies for a company`s electronic commerce websites. Target marketing is an advertising and promotion management concept that includes five targeting components: •Community - companies can customize their web advertising messages and promotion methods to appeal to people in specific communities. These can be communities of interest, such as virtual communities of online sporting enthusiasts or arts and crafts hobbyists, or geographic communities formed by the websites of a city or other local organizations. •Content - advertising such as electronic billboards or banners can be placed on various website pages, in addition to a company`s home page. These messages reach the targeted audience. •Context - advertising appears only in Web pages that are relevant to the content of a product or service. So advertising is targeted only at people who are already looking for information about a subject matter that is related to a company`s products. •Demographic/Psychographic - marketing efforts can be aimed only at specific types or classes of people: unmarried, twenty-something, middle income, male college graduates. •Online Behavior - advertising and promotion efforts can be tailored to each visit to a site by an individual. This strategy is based on "web cookie" files recorded on the visitor`s disk drive from previous visits. Cookie files enable a company to track a person`s online behavior at a website so marketing efforts can be instantly developed and targeted to that individual at each visit to their website.
Sales Force Automation Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Increasingly, computers and networks are providing the basis for sales force automation. In many companies, the sales force is being outfitted with notebook computers that
connect them to Web browsers, and sales contact management software that connect them to marketing websites on the Internet, extranets, and their company intranets. Characteristics of sales force automation include: Increases the personal productivity of salespeople. • Dramatically speeds up the capture and analysis of sales data from the field to marketing managers at company headquarters. • • Allows marketing and sales management to improve the delivery of information and the support they provide to their salespeople. Many • companies view sales force automation as a way to gain a strategic advantage in sales productivity and marketing responsiveness.
Inputs to the Marketing MIS Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Among the other functional areas, the marketing MIS relies more heavily on external sources of data. These sources include commercial intelligence, competition, customers, trade shows, trade journals and magazines, and other publications. There are also important internal company information sources. An overview of these inputs is presented below. 1. The corporate strategic plan or policies. Marketing depends on the company`s strategic plan for sales goals and projections. For instance, a strategic plan might show sales are expected to grow by a stable 5 percent for the next three years. A marketing MIS report for this company might detail current sales performance in terms of this strategic target. In addition to sales projections, the strategic plan c an spell out detailed information about anticipated needs for the sales force, pricing, distribution channels, promotion, and new product features. The strategic plan can provide a framework in which to integrate marketing information and make appropriate marketing decisions. 2a. The transaction processing system (TPS). The TPS encompasses a huge amount of sales and marketing data on products or services, customers, and the sales force. Technology is revolutionizing the selling process. Most firms collect an abundance of information on a regular basis that can also be used in making marketing decisions. Sales data on products can expose which products are selling at high volumes, which ones are slow sellers, and how much they are contributing to profits. The marketing MIS might synthesize this information in such a way as to be useful in formulating promotional plans. It can also be used to activate product development decisions. Analysis of sales by customers may display which customers are contributing to profits. This data can also be disseminated to determine the products specific customers are buying to help the sales force with their promotional efforts. The performance of the sales force can also be monitored from data captured in the TPS, which can help develop bonus and incentive programs to reward well-performing salespeople.
2b. Internal Company Information. Internal company information includes routinely collected accounting records, such as daily sales receipts, weekly expense records and profit statements, production and shipment schedules, inventory records, orders, monthly credit statements, and quarterly and biennial reports. Field salespeople are increasingly likely to have portable personal computers, pagers, and personal digital assistants (PDAs) to log in data for immediate transmission back to the company or customers, and to receive information from the company and customers. Technology is revolutionizing the selling process. Most companies collect an abun dance of information on a regular basis that can also be used in making marketing decisions. External sources: the competition and the market. 3. In most marketing decisions it is important to determine what is happening in the business`s external environment, particularly anything that involves the competition, the economy, the market, and consumers. External information can be obtained from many sources. Some of the most commonly used sources are commercial intelligence, trade shows, trade journals, the government, private publications, commercial data suppliers, and the popular press. Many companies purchase their competition`s products and then perform "autopsies" to find out what makes them tick so they can improve on them. Marketing managers attend trade shows and read trade journals to keep an eye on the competition.
Figure 23-2 lists some trade journals and publications. Information can be purchased from information brokers-individuals and companies who help businesses by electronically searching information bases for useful data. Valuable information can be obtained by training salespeople to listen to and observe customers, suppliers, members of the distribution system, and the competition, and then contributing this intelligence to the MIS. The intent should be to obtain usable marketing intelligence (information that is available to the public) and not to conduct industrial espionage (stealing information not available to the public). The latter is unethical and illegal. Marketers should be savvy enough to realize that as they are collecting information about their competition, the competition is probably collecting information about them. An additional external source of important information for the marketing MIS is the market for a company`s products. A large amount of useful data can be obtained from the TPS for markets already being served by the company, but insights into buyer behaviors and preferences in new markets can only be obtained from sources outside the firm. The Internet may become the ultimate information source for both the competition and the market. It already provides access to information provided by government (.gov), for profit business (.com), nonprofits (.org), universities (.edu), and individuals. Figure 23-2 TRADE JOURNALS AND PUBLICATIONS
Air Conditioning, Heating & Refrigeration News Airline Executive
American Banker American Druggist American Gas Association Monthly Automotive Industries Aviation Week & Space Technology The Banker Best`s Industry Report Broadcasting Brewers Digest Chain Store Age Executive Chemical Week Computer Decisions Computers and People Credit and Financial Management Datamation Drug & Cosmetic Industry Electronic News Fleet Owner Food Management Food Processing Forest Industries Fuel Oil & Oil Heat and Solar Systems Housing
Industry Week Iron Age Leather and Shoes Paper Trade Journal Journal of Retailing Labor Law Journal Merchandising Modern Plastics National Petroleum News Oil and Gas Journal Paper Trade Journal PC World Personnel Pipeline & Gas Journal Polk`s National New Car Sales Printer`s Ink Progressive Grocer Public Utilities Fortnightly Pulp & Paper Quick Frozen Foods Television Digest Textile World Transportation Journal
Ward`s Auto World World Oil
Marketing MIS Subsystems and Outputs Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Subsystems for the marketing MIS include forecasting, marketing research, product, place, promotion, and price subsystems. These subsystems and their outputs help marketing managers and executives increase sales, reduce marketing expenses, and develop plans for future products and services to meet the changing needs of customers.
Forecasting Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Forecasts are needed for marketing, production, purchasing, manpower, and financial planning. Further, top management needs forecasts for planning and implementing long term strategic objectives and planning for capital expenditures. Based on the firm`s projected sales, the production function determines the machine, personnel, and material resources needed to produce its products or services. Marketing managers use sales forecasts to determin: 1) optimal sales force allocations, 2) set sales goals, and 3) plan promotions and advertising. Other things such as market share, prices, and trends in new product development are required. As soon as the company makes sure that it has enough capacity, the production plan is developed. If the company does not have enough capacity, it will require planning and budgeting decisions for capital spending for capacity expansion. Production planners need forecasts in order to schedule production activities, order materials, establish inventory levels, and plan shipments. Some other areas which need forecasts include material requirements (purchasing and procurement), labor scheduling, equipment purchases, maintenance requirements, and plant capacity planning. The personnel department requires a number of forecasts in planning for human resources in the business. Workers must be hired and trained, and for these personnel there must be benefits that are competitive with those available in the firm`s labor market. Also, trends that affect such variables as labor turnover, retirement
age, absenteeism, and tardiness need to be forecast as input for planning and decision making in this function. On this basis, the financial manager must estimate the future cash inflow and outflow. He must plan cash and borrowing needs for the company`s future operations. Forecasts of cash flows and the rates of expenses and revenues are needed to maintain corporate liquidity and operating efficiency. In planning for capital investments, predictions about future economic activity are required so that returns or cash inflows accruing from the investment may be estimated. There are many forecasting methods in use, one of which is regression analysis. It is illustrated below, using Excel. EXAMPLE 1
A firm wishes to develop a sales forecasting model, by relating sales to price and advertising.
USING REGRESSION ON EXCEL To utilize Excel for regression analysis, the following procedure needs to be followed:
Click the 1. Tools menu. Click 2. Add-Ins. Click 3. Analysis ToolPak .
(If Analysis ToolPak is not listed among your available add-ins, exit Excel , double-click the MS Excel Setup icon, click Add/Remove, double-click Add-Ins, and select Analysis ToolPak . Then restart Excel and repeat the above instruction.) After ensuring that the Analysis ToolPak is available, you can access the regression tool by completing the following steps: Click the 1. Tools menu. Click 2. Data Analysis. Click 3. Regression.
Marketing Research Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Marketing research is essentially a twofold activity. It involves (1) collecting current data describing all phases of the marketing operations, and (2) presenting the findings to marketing managers in a form suitable for decision making. The focus is on the timeliness of the information. The goal of marketing research is to conduct a systematic, objective, bias-free inquiry of the market and customer preferences. A variety of tools such as surveys, questionnaires, pilot studies, and in-depth interviews are used for marketing research. Marketing research can identify the features that customers really want in a product or from a service. Important attributes of products or services -- style, color, size, appearance, and general fit-- can be investigated through the use of marketing research. Marketing research broadly encompasses advertising research and consumer behavior research. Advertising research is research on such a dvertising issues as ad and copy effectiveness, recall, and media choice. Consumer behavior research answers questions about consumers and their brand selection behaviors and preferences in the marketplace. Research results are used to make marketing mix decisions and for pricing, distribution channels, guarantees and warranties, and customer service. Inexpensive software and statistical analysis software are used to analyze the data collected from marketing research endeavors. These software packages can determine trends, test hypotheses, compute statistical values, and more. This data is then often input into the marketing MIS so that marketing managers can be better informed and can better make their planning and resource allocation decisions.
Product Development Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1
Product development is one of "the four Ps" in the marketing mix -- product, place, promotion, and price, each of which was explained earlier. Product development involves the transformation of raw materials into finished goods and services, and primarily focuses on the physical attributes of the product. Many factors, including materials, labor skills, plant capacity, and technical factors are important in product development decisions. In many cases, a computer program for mathematical programming and simulations can be utilized to analyze these various factors and to select the appropriate mix of labor, materials, plant and equipment, and engineering designs. Make-or-outsource decisions can also be made with the assistance of computer software. A framework, called the product life cycle guides the manager in making product development decisions. It takes into account four stages in the life cycle -- introduction, growth, maturity, and decline.
Place Planning Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Place planning involves planning on the means of physically distributing the product to the customer. It includes production, transportation, storage, and distribution on both the wholesale and retail levels. Where to deliver the product to the customer and how to get the product to this location are the principal concerns of place analysis subsystems. Typically, a distribution chain starts at the manufacturing plant and ends at the final consumer. In the middle is a network of wholesale and retail outlets employed to efficiently and effectively bring goods and services to the final consumer. But where are the best places to locate manufacturing facilities, wholesale outlets, and retail distribution points? Factors such as manufacturing costs, transportation costs, labor costs, and localized demand levels become factors that are critical to answering this issue. Today, marketing MIS subsystems can analyze these factors and determine the least-cost placement of manufacturing facilities, wholesale operations, and retail outlets. The purpose of these locational analysis programs is to minimize total costs while satisfying product demand. Digital maps combined with customer database information in computer mapping software can be used to pinpoint locations for new retail outlets. For example, Yamaha Motor Corporation, USA has made decisions as to where to locate the dealership by blending computer graphics with behavioral demographics. Behavioral demographics links psychological, life-style, and family-expenditure data to geog raphic locations, often by zip code.
Promotion Planning
Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 One of the most important functions of any marketing effort is promotion. Promotion is concerned with all the means of marketing the sale of the product, including advertising and personal selling. Product success is a direct function of the types of advertising and sales promotion done. The size of the promotions budget and the allocation of this budget to various promotional mixes are important factors in deciding the type of campaigns that will be launched. Television coverage, newspaper ads and coverage, promotional brochures and literature, and training programs for salespeople are all components of these promotional and advertising mixes. Because of the time and scheduling savings they offer, computer software is widely used to establish the original budget and to monitor expenditures and the overall effectiveness o f various promotional campaigns. Promotional effectiveness can be monitored through the TPS, or it may be monitored through a specialized functional system focusing e xclusively on sales activity. For example, a significant proportion of many marketing managers` compensation is determined by the results of their promotional campaigns through specialized sales activity subsystems. Such systems often use data from retail outlet bar-code scanners to compile information on how effective certain promotions were within the promotional period. Without such sales activity, the time delay between wholesale shipments and retail sales would prevent the promotion`s effectiveness from being accurately measured.
Sales Analysis Save More on your class textbooks - Take 5% eTextbooks at CourseSmart.com! Use code JFXYSAA. Valid 3/10 - 6/1 Sales analysis assists managers in identifying those products, sales personnel, and customers that are contributing to profits and those that are not. Several reports can be generated to help marketing managers make good sales decisions. The sales-by-product report lists all major products and their sales for a period of time, such as a month. This report shows which products are doing well and which ones need improvement or should be discarded altogether. The sales-by-salesperson report lists total sales for each salesperson for each week or month. This report can also be subdivided by product to show which products are being sold by each salesperson. The sales-by-customer report is a useful way to identify high-and low-volume customers.
