functions of marketing research system

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Marketing research: Definition, steps, uses & advantages

What is marketing research?

Marketing research is defined as any technique or a set of practices that companies use to collect information to understand their target market better. Organizations use this data to improve their products, enhance their UX, and offer a better product to their customers. Marketing research is used to determine what the customers want, and how they react to products or features of a product.

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Four standard marketing research methods

The four most common marketing research methods are surveys, interviews, customer observations, and focus groups. You can research various ways without limiting yourself to just one way. Let’s dive deeper into each of these marketing research techniques.

Researchers collect responses by deploying surveys and managing data via online questionnaires or on-screen surveys at the POS. These surveys contain closed-ended and open-ended questions. They are popular and are the most widely used research techniques.

Why are online surveys popular?

Surveys are inexpensive, simple to set-up, deploy, and gather responses. It gets easy to collect multiple answers from a tailored audience group using surveys. Researchers rely on quantitative data, and online surveys provide quick responses compared to the more traditional offline methods. You can collect large amounts of data within minutes from anywhere in the world.

2. Interviews

Face-to-face or personal interviews are a more traditional way of doing marketing research. It is a slow and more expensive way of collecting responses. Researchers doing large scale marketing research do not prefer this method to collect a large number of responses. Interviews are conducted both in-person and on the telephone (CATI). 

Why are interviews important?

Personal interviews may not be widely used but play a significant role in understanding precisely what the respondent feels. You can record more than just verbal responses and understand the customer better. Often, when two humans interact with each other, more information is shared because of the dialogue. Personal interviews are useful in small-scale studies, where the researcher wants to interview a specific group of local respondents. CATI’s are helpful when the respondent base is more expansive.

3. Focus groups

Focus groups or online focus groups involve several respondents who participate in discussions about a particular topic. A researcher conducts focus groups to obtain richer information. The main reason for a focus group is to hold a dialogue between various people on a particular topic of interest. Unlike interviews, focus group members are allowed to interact with each other and influence one another.

Why are focus groups impactful?

It is no secret that focus groups are hugely impactful in decision making. Researchers gain a lot of information by organizing focus groups. Often, focus groups bring up issues not foreseen by researchers. Online or video focus groups have a broad reach, and many organizations have now started creating and nurturing research communities for better respondent handling and data gathering. Direct interaction of business groups and customers positively impacts users because they feel that their voices are heard.

4. Observation

Observation, though not popular and widely used, gives intuitive feedback. Research companies organize customer observation sessions to gather information on how they engage with the product or service (or a similar competitor product or service). Feedback from people’s behavioral attitudes is a powerful tool for researchers looking to improve their products and services.

What makes observation so powerful?

Observational market research is an excellent alternative to focus groups. It’s not only an inexpensive research tool, but you will also witness people interacting with and using your product in a natural environment. The downside is that you will have to make inferences about their feelings and reactions.

LEARN ABOUT: market research trends

How to conduct marketing research

Follow these four marketing research steps to help you understand what your users think and feel about your product, service, or business.

LEARN ABOUT: Behavioral Research

1. Create simple user personas

A user persona is nothing more than a fictional character that represents a user or a customer. Understanding user personas will help you gauge how different persons react to other products and services to understand their needs. To create a persona, your questions must answer these types questions about the user or customer:

• Who are they?
• What’s their primary goal?
• What stops them from achieving that goal?

2. Conduct observational research

Use both overt and covert observation methods to observe and take notes while users use your products or a similar one.

Overt vs. covert observation

• Overt observation asks users if they will allow you to watch them use your product. 
• Covert observation studies users in a natural environment without them knowing. This type of observation generally works only if you sell a product that consumers buy and use regularly. It brings in the purest observational research data as people act naturally while using the products. 

3. Conduct personal interviews

One-on-one conversations with your target population allow you to explore and dig deep into their concerns, revealing answers to many questions. Here are a few tips for conducting personal interviews.

• Be a journalist and not a salesperson. Ask users about their frustrations, needs, and areas where they think they need an improvement in the product. 
• Pose the ‘why’ question to dig deeper. Dive into the details to know more about their past behavior.
• Recording the conversation helps you focus on it rather than take notes simultaneously.

4. Analyze the data

The idea of conducting lean marketing research is to receive quick, actionable insight data. Analyze the information you have collected using various techniques to draw patterns into what customers like and dislike, what they want, and what they do not need. Create a simple visual representation of how people will interact with each other and the product to assess their needs in a better way.

LEARN ABOUT: Marketing Insight

Why is research so valuable?

Without research, it is impossible to gauge and understand your customers. Of course, you will have an idea of what they need and who they are and, but you must dive deeper to win their loyalty. Here is why marketing research matters:

• Attract potential customers: The primary aim of marketing research is to find ways to attract potential customers. It also helps to keep current happy and coming back for more. Understanding your customers entirely is the only way to progress. You’ll lose potential customers if you stop caring about improving your user experience.
• Answer the why’s: Marketing research gives you the answer to the ‘why.’ Make use of user analytics, big data, and reporting dashboards in marketing research to tell you what your users are thinking and why they think and act that way. For example, only marketing research can explain why customers leave you.
• Data-backed decisions: Research beats trends, assumptions, and so-called best business practices. Bad decisions are often taken due to emotional reasoning and guesswork. Focusing on customer experience by listening to your customers directs you in the right direction.
• Better planning: Research keeps you from making absurd decisions by planning in a vacuum. You might not fully gauge what your customers experience and feel while using your product. Customers may use products in a way that surprises you, and they may get confused by features that seem obvious to you. Conducting too much planning but not testing your assumptions will waste your money, time, efforts, and resources. Research helps you save up on all these factors.

LEARN ABOUT: 12 Best Tools for Researchers

Advantages of MKT research

Marketing research and user experience (UX) design help you continuously improve your product by acting on your feedback. Here are the advantages of conducting marketing research:

• Improved efficiency: Efficiency draws you closer to your users. You can improve the efficiency of delivering the product to the market and also increase its usability.
• Cost-effective: Marketing research helps you make the right decisions based on consumer demand, thus saving you costs in creating something that customers do not like or want.

LEARN ABOUT:  Test Market Demand

• Competitive edge: Quicker, more robust insights can help you place your services and products strategically, gaining a competitive advantage over others.
• Build strategies: You can quickly build, alter, or design new approaches to attract your users and consumers.
• Improved communication: Bridge the communication gap by interacting with consumers and hearing them out. This helps consumers feel wanted and special.
• LEARN ABOUT: Market research vs marketing research

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5 Functions of Marketing Research You Should Know

Marketing research is like a thrilling adventure where we try to understand how the market works. It’s like being a detective, solving the mysteries of consumer behavior and industry trends. Imagine a market researcher wearing a Sherlock Holmes hat, using surveys and data analytics to navigate the complex world of commerce. Marketing research is not just about curiosity; and it’s a strategic tool that helps businesses navigate through the changing landscapes of demand, competition, and innovation. In this exciting journey, there are five important functions that help us understand the market. Let’s explore the fascinating world of marketing research!

Table of Contents

What is Marketing Research?

Marketing research is an essential and methodical procedure that holds immense significance in influencing critical business decisions. Through the collection, examination, and interpretation of data, this systematic approach offers invaluable perspectives on different facets of the market, consumer patterns, and competitive environments. The functions of marketing research encompass a wide range of areas and can be classified into distinct categories.

Functions of Marketing Research

The Functions of Marketing Research are essential for businesses to navigate the ever-changing and competitive business landscape, enabling effective decision-making.

1. Description

Within the field of marketing research, the task of description entails a thorough investigation and depiction of market attributes. This encompasses the identification and elaboration of consumer preferences, market trends, and the overall panorama. Descriptive analysis serves as the fundamental basis for comprehending the present condition of the market.

2. Evaluation

The evaluation process extends beyond simple description and instead emphasizes the critical assessment of collected data. It involves examining market trends, consumer behavior, and competitive strategies in order to draw significant conclusions. By conducting evaluative analysis, businesses can develop a more comprehensive understanding of the efficacy of their existing strategies and identify potential avenues for enhancement.

3. Explanation

Understanding the intricacies of the market is an essential aspect of conducting marketing research. This entails investigating the underlying reasons and motivations behind observed trends and consumer behaviors. By offering explanatory insights, businesses can unveil the root causes of specific market phenomena, thereby facilitating better-informed decision-making.

4. Prediction

Marketing research plays a proactive role in anticipating future market trends. Through the use of predictive analysis, businesses can accurately predict shifts in consumer behavior, market demands, and competitive landscapes. This forward-looking approach enables organizations to strategically position themselves, ensuring they remain ahead of the curve in the ever-changing market.

5. Aid in Decision Making

Marketing research plays a crucial role in guiding decision-making processes. It provides businesses with a deep understanding of the market, consumer behavior, and competitive landscape, making it an invaluable tool. By relying on data-driven insights, marketing research helps businesses make informed decisions, minimize risks, and increase their chances of achieving success.

FAQS on Functions of Marketing Research

What is the function of research in marketing.

Research in marketing plays a vital role in equipping businesses with valuable knowledge about different facets of their market, customers, and competitors. It entails the methodical gathering, analysis, and interpretation of data to support decision-making. Through comprehending consumer behavior, market trends, and competitive landscapes, businesses can devise impactful strategies and make well-informed decisions, thereby driving their success and fostering growth.

Which functions of marketing research are the most important?

Marketing research serves a multitude of purposes, with one crucial role being the deciphering of consumer behavior. By delving into the mindset of customers, companies can customize their offerings, services, and marketing approaches to cater to the distinct requirements and preferences of their intended audience. This particular function entails the utilization of cutting-edge analytics, as well as quantitative and qualitative analysis, to unravel intricate patterns and acquire valuable insights that steer strategic decision-making.

What are the 4 main purposes of market research?

The 4 main purposes of market research are-  1. Market research plays a crucial role in helping businesses understand the needs and wants of their target audience. By conducting thorough research, companies can gain valuable insights into consumer preferences, ensuring that their products and services are tailored to meet customer expectations.

2. In addition to understanding consumer needs, market research also allows businesses to identify and analyze market trends. By staying up-to-date with the latest industry developments, companies can proactively adapt their strategies and offerings to stay ahead of the competition.

3. Another important aspect of market research is assessing the competitive landscape. By studying competitors, their strategies, and their market positioning, businesses can gain a competitive edge by effectively differentiating themselves in the market.

4. Lastly, market research supports decision-making processes by providing data-backed insights. By gathering and analyzing relevant data, businesses can make informed decisions, reduce risks, and increase their chances of success. Market research serves as a valuable tool in strategic decision-making, ensuring that businesses have a solid foundation on which to base their actions.

What are the three functions of marketing research?

The three functions of marketing research are- 1. The core pillars of marketing research encompass various crucial functions. Firstly, it involves delving deep into the intricate realm of consumer behavior, unraveling their thoughts and preferences through cutting-edge analytics and qualitative analysis techniques.

2. Additionally, marketing research plays a pivotal role in deciphering market trends and dynamics. By staying ahead of the curve and navigating the constantly evolving market landscape, businesses can proactively anticipate shifts, adapt their strategies, and seize emerging opportunities.

3. Moreover, marketing research serves as a compass for strategic decision-making. Armed with valuable insights, businesses can make informed choices, crafting tailored strategies that resonate with their target audience and pave the way for success. With marketing research as their guiding light, businesses can confidently navigate the ever-changing business landscape and thrive in their respective industries.

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10.1 Marketing Information Systems

Learning objectives.

• Describe the components of a marketing information system and each component’s purpose.
• Explain the situations in which marketing research should be used versus market intelligence.
• Describe the limitations of market intelligence and its ethical boundaries.
• Explain when marketing research should and should not be used.

A certain amount of marketing information is being gathered all the time by companies as they engage in their daily operations. When a sale is made and recorded, this is marketing information that’s being gathered. When a sales representative records the shipping preferences of a customer in a firm’s customer relationship management (CRM) system, this is also marketing information that’s being collected. When a firm gets a customer complaint and records it, this too is information that should be put to use. All this data can be used to generate consumer insight. However, truly understanding customers involves not just collecting quantitative data (numbers) related to them but qualitative data, such as comments about what they think.

Interview with Joy Mead

http://app.wistia.com/embed/medias/c89771530a

Recall from Chapter 3 “Consumer Behavior: How People Make Buying Decisions” that Joy Mead is an associate director of marketing with Procter & Gamble. Listen to this clip to hear Mead talk about the research techniques and methods Procter & Gamble uses to develop consumer insight. You will learn that the company isn’t just interested in what consumers want now but also years in the future.

The trick is integrating all the information you collect so it can be used by as many people as possible in your organization to make good decisions. Unfortunately, in many organizations, information isn’t shared very well among departments. Even within departments, it can be a problem. For example, one group in a marketing department might research a problem related to a brand, uncover certain findings that would be useful to other brand managers, but never communicate them.

A marketing information system (MIS) is a way to manage the vast amount of information firms have on hand—information marketing professionals and managers need to make good decisions. Marketing information systems range from paper-based systems to very sophisticated computer systems. Ideally, however, a marketing information system should include the following components:

• A system for recording internally generated data and reports
• A system for collecting market intelligence on an ongoing basis
• Marketing analytics software to help managers with their decision making
• A system for recording marketing research information

Internally Generated Data and Reports

As we explained, an organization generates and records a lot of information as part of its daily business operations, including sales and accounting data, and data on inventory levels, back orders, customer returns, and complaints. Firms are also constantly gathering information related to their Web sites, such as clickstream data. Clickstream data is data generated about the number of people who visit a Web site and its various pages, how long they dwell there, and what they buy or don’t buy. Companies use clickstream data in all kinds of ways. They use it to monitor the overall traffic of visitors that a site gets, to see which areas of the site people aren’t visiting and explore why, and to automatically offer visitors products and promotions by virtue of their browsing patterns. Software can be used to automatically tally the vast amounts of clickstream data gathered from Web sites and generate reports for managers based on that information. Netflix recently awarded a $1 million prize to a group of scientists to plow through Web data generated by millions of Netflix users so as to improve Netflix’s predictions of what users would like to rent (Baker, 2009). (That’s an interesting way to conduct marketing research, don’t you think?)

Being able to access clickstream data and other internally generated information quickly can give a company’s decision makers a competitive edge. Remember our discussion in Chapter 9 “Using Supply Chains to Create Value for Customers” about how Walmart got a leg up on Target after 9/11? Walmart’s inventory information was updated by the minute (the retailer’s huge computing center rivals the Pentagon’s, incidentally); Target’s was only updated daily. When Walmart’s managers noticed American flags began selling rapidly immediately following the terrorist attacks on 9/11, the company quickly ordered as many flags as possible from various vendors—leaving none for Target.

Click on the following link to watch a fascinating documentary about how Walmart, the world’s most powerful retailer, operates: http://www.hulu.com/watch/103756/cnbc-originals-the-new-age -of-walmart .

Many companies make a certain amount of internal data available to their employees, managers, vendors, and trusted partners via intranets. An intranet looks like the Web and operates like it, but only an organization’s employees have access to the information. So, for example, instead of a brand manager asking someone in accounting to run a report on the sales of a particular product, the brand manager could look on her firm’s intranet for the information.

However, big companies with multiple products, business units, and databases purchased and installed in different places and at different times often have such vast amounts of information that they can’t post it all on an intranet. Consequently, getting hold of the right information can be hard. The information could be right under your nose and you might not know it. Meet people like Gary Pool: Pool works for BNSF Railway and is one of BNSF’s “go-to” employees when it comes to gathering marketing data. Pool knows how to access different databases and write computer programs to extract the right information from the right places at BNSF, a process known as data mining . Combining data into one location is called data warehousing , and makes Pool’s analysis easier. He then captures the information and displays it in dashboards , screens on the computer that make the data easily understood so that managers can detect marketing trends. While a dashboard may display a piece of information, such as the number of carloads sold in West Virginia, the manager can click on the number and get more detail.

Figure 10.2

Gary Pool is an expert at data mining—hunting up information for decision makers at BNSF Railway. And no, he doesn’t wear a headlamp. Nor does he wear a pocket protector! Pool’s title: Manager, Marketing Systems Support & Marketing Decision Support & Planning.

Michael Kappel – Metra BNSF Railway 149 – CC BY-NC 2.0.

Analytics Software

Increasingly, companies are purchasing analytics software to help them pull and make sense of internally generated information. Analytics software allows managers who are not computer experts to gather all kinds of different information from a company’s databases—information not produced in reports regularly generated by the company. The software incorporates regression models, linear programming, and other statistical methods to help managers answer “what if” types of questions. For example, “If we spend 10 percent more of our advertising on TV ads instead of magazine ads, what effect will it have on sales?” Oracle Corporation’s Crystal Ball is one brand of analytical software.

The camping, hunting, fishing, and hiking retailer Cabela’s has managed to refine its marketing efforts considerably using analytics software developed by the software maker SAS. “Our statisticians in the past spent 75 percent of their time just trying to manage data. Now they have more time for analyzing the data with SAS, and we have become more flexible in the marketplace,” says Corey Bergstrom, director of marketing research and analysis for Cabela’s. “That is just priceless” (Zarello, 2009).

Figure 10.3

Cabela’s’ analytics software has helped the outdoor sporting retailer reach the right customers with the right catalogs.

Echo9er – Cabela’s – CC BY-NC-SA 2.0.

The company uses the software to help analyze sales transactions, market research, and demographic data associated with its large database of customers. It combines the information with Web browsing data to gain a better understanding of the individual customers marketing channel preferences as well as other marketing decisions. For example, does the customer prefer Cabela’s’ one-hundred-page catalogs or the seventeen-hundred-page catalogs? The software has helped Cabela’s employees understand these relationships and make high-impact data-driven marketing decisions (Zarello, 2009).

Market Intelligence

A good internal reporting system can tell a manager what happened inside his firm. But what about what’s going on outside the firm? What is the business environment like? Are credit-lending terms loose or tight, and how will they affect what you and your customers are able to buy or not buy? How will rising fuel prices and alternate energy sources affect your firm and your products? Do changes such as these present business obstacles or opportunities? Moreover, what are your competitors up to?

Not gathering market intelligence leaves a company vulnerable. Remember Encyclopedia Britannica, the market leader in print encyclopedia business for literally centuries? Encyclopedia Britannica didn’t see the digital age coming and nearly went out of business as a result. (Suffice it to say, you can now access Encyclopedia Britannica online.) By contrast, when fuel prices hit an all-time high in 2008, unlike other passenger airline companies, Southwest Airlines was prepared. Southwest had anticipated the problem, and early on locked in contracts to buy fuel for its planes at much lower prices. Other airlines weren’t as prepared and lost money because their fuel expenses skyrocketed. Meanwhile, Southwest Airlines managed to eke out a profit. Collecting market intelligence can also help a company generate ideas or product concepts that can then be tested by conducting market research.

Gathering market intelligence involves a number of activities, including scanning newspapers, trade magazines, and economic data produced by the government to find out about trends and what the competition is doing. In big companies, personnel in a firm’s marketing department are primarily responsible for their firm’s market intelligence and making sure it gets conveyed to decision makers. Some companies subscribe to news service companies that regularly provide them with this information. LexisNexis is one such company. It provides companies with news about business and legal developments that could affect their operations. Other companies subscribe to mystery shopping services, companies that shop a client and/or competitors and report on service practices and service performance. Let’s now examine some of the sources of information you can look at to gather market intelligence.

Search Engines and Corporate Web Sites

An obvious way to gain market intelligence is by examining your competitors’ Web sites as well as doing basic searches with search engines like Google. If you want to find out what the press is writing about your company, your competitors, or any other topic you’re interested in, you can sign up to receive free alerts via e-mail by going to Google Alerts at http://www.google.com/alerts . Suppose you want to monitor what people are saying about you or your company on blogs, the comment areas of Web sites, and social networks such as Facebook and Twitter. You can do so by going to a site like WhosTalkin.com, typing a topic or company name into the search bar, and voilà! All the good (and bad) things people have remarked about the company or topic turn up. What a great way to seek out the shortcomings of your competitors. It’s also a good way to spot talent. For example, designers are using search engines like WhosTalkin.com to search the blogs of children and teens who are “fashion forward” and then involve them in designing new products.

WhosTalkin.com and Radian6 (a similar company) also provide companies with sentiment analysis. Sentiment analysis is a method of examining content in blogs, tweets, and other online media (other than news media) such as Facebook posts to determine what people are thinking at any given time. Some companies use sentiment analysis to determine how the market is reacting to a new product. The Centers for Disease Control (CDC) uses sentiment analysis to track the progress of flu; as people post or tweet how sick they are, the CDC can determine where the flu is increasing or decreasing.

Figure 10.4

Type a company’s name (or anything else you want) into the search bar and see what comes up. (Note: It takes a little while for all of the results to show up.)

Source: http://www.whostalkin.com .

Publications

The Economist , the Wall Street Journal , Forbes , Fortune , BusinessWeek , the McKinsey Report , Sales and Marketing Management , and the Financial Times are good publications to read to learn about general business trends. All of them discuss current trends, regulations, and consumer issues that are relevant for organizations doing business in the domestic and global marketplace. All of the publications are online as well, although you might have to pay a subscription fee to look at some of the content. If your firm is operating in a global market, you might be interested to know that some of these publications have Asian, European, and Middle Eastern editions.

Other publications provide information about marketplace trends and activities in specific industries. Consumer Goods and Technology provides information consumer packaged-goods firms want to know. Likewise, Progressive Grocer provides information on issues important to grocery stores. Information Week provides information relevant to people and businesses working in the area of technology. World Trade provides information about issues relevant to organizations shipping and receiving goods from other countries. Innovation: America’s Journal of Technology Commercialization provides information about innovative products that are about to hit the marketplace.

Trade Shows and Associations

Trade shows are another way companies learn about what their competitors are doing. (If you are a marketing professional working a trade show for your company, you will want to visit all of your competitors’ booths and see what they have to offer relative to what you have to offer.) And, of course, every field has a trade association that collects and disseminates information about trends, breakthroughs, new technology, new processes, and challenges in that particular industry. The American Marketing Association, Food Marketing Institute, Outdoor Industry Association, Semiconductor Industry Association, Trade Promotion Management Association, and Travel Industry Association provide their member companies with a wealth of information and often deliver them daily updates on industry happenings via e-mail.

Salespeople

A company’s salespeople provide a vital source of market intelligence. Suppose one of your products is selling poorly. Will you initially look to newspapers and magazines to figure out why? Will you consult a trade association? Probably not. You will first want to talk to your firm’s salespeople to get their “take” on the problem.

Salespeople are the eyes and ears of their organizations. Perhaps more than anyone else, they know how products are faring in the marketplace, what the competition is doing, and what customers are looking for.

A system for recording this information is crucial, which explains why so many companies have invested in customer relationship management (CRM) systems. Some companies circulate lists so their employees have a better idea of the market intelligence they might be looking for. Textbook publishers are an example. They let their sales representatives know the types of books they want to publish and encourage their representatives to look for good potential textbook authors among the professors they sell to.

Suppliers and Industry Experts

Your suppliers can provide you with a wealth of information. Good suppliers know which companies are moving a lot of inventory. And oftentimes they have an idea why. In many instances, they will tell you, if the information you’re looking for is general enough so they don’t have to divulge any information that’s confidential or that would be unethical to reveal—an issue we’ll talk more about later in the book. Befriending an expert in your industry, along with business journalists and writers, can be helpful, too. Often these people are “in the know” because they get invited to review products (Gardner, 2009).

Lastly, when it comes to market intelligence don’t neglect observing how customers are behaving. They can provide many clues, some of which you will be challenged to respond to. For example, during the latest economic downturn, many wholesalers and retailers noticed consumers began buying smaller amounts of goods—just what they needed to get by during the week. Seeing this trend, and realizing that they couldn’t pass along higher costs to customers (because of, say, higher fuel prices), a number of consumer-goods manufacturers “shrank” their products slightly rather than raise prices. You have perhaps noticed that some of the products you buy got smaller—but not cheaper.

Can Market Intelligence Be Taken Too Far?

Can market intelligence be taken too far? The answer is yes. In 2001, Procter & Gamble admitted it had engaged in “dumpster diving” by sifting through a competitors’ garbage to find out about its hair care products. Although the practice isn’t necessarily illegal, it cast P&G in a negative light. Likewise, British Airways received a lot of negative press in the 1990s after it came to light that the company had hacked into Virgin Atlantic Airways’ computer system 1 .

Gathering corporate information illegally or unethically is referred to as industrial espionage . Industrial espionage is not uncommon. Sometimes companies hire professional spies to gather information about their competitors and their trade secrets or even bug their phones. Former and current employees can also reveal a company’s trade secret either deliberately or unwittingly. Microsoft recently sued a former employee it believed had divulged trade secrets to its competitors 2 . It’s been reported that for years professional spies bugged Air France’s first-class seats to listen in on executives’ conversations (Anderson, 1995).

Spying at Work—Espionage: Who, How, Why, and How to Stop It

(click to see video)

To learn more about the hazards of industrial espionage and how it’s done, check out this YouTube video.

Figure 10.5

Don’t get caught doing this—unless you work for the natural-cosmetics maker Burt’s Bees. To get across to employees the amount of material being wasted, Burt’s Bees had its employees put on hazmat suits and sort through garbage for a couple of weeks. (No, employees weren’t engaging in industrial espionage.) The recycling opportunities they spotted as part of the exercise ended up saving the natural-cosmetics maker $25,000 annually (Nemes, 2009).

Halturg Skanser – dumpster diving leap – CC BY-NC 2.0.

To develop standards of conduct and create respect for marketing professionals who gather market intelligence, the Society of Competitive Intelligence Professionals has developed a code of ethics. It is as follows:

• To continually strive to increase the recognition and respect of the profession.
• To comply with all applicable laws, domestic and international.
• To accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.
• To avoid conflicts of interest in fulfilling one’s duties.
• To provide honest and realistic recommendations and conclusions in the execution of one’s duties.
• To promote this code of ethics within one’s company, with third-party contractors and within the entire profession.
• To faithfully adhere to and abide by one’s company policies, objectives and guidelines 3 .

Marketing Research

Marketing research is what a company has to resort to if it can’t answer a question by using any of the types of information we have discussed so far—market intelligence, internal company data, or analytics software applied to data. As we have explained, marketing research is generally used to answer specific questions. The name you should give your new product is an example. Unless your company has previously done some specific research on product names—what consumers think of them, good or bad—you’re probably not going to find the answer to that question in your internal company data. Also, unlike internal data, which is generated on a regular basis, marketing research is not ongoing. Marketing research is done on an as-needed or project basis. If an organization decides that it needs to conduct marketing research, it can either conduct marketing research itself or hire a marketing research firm to do it.

So when exactly is marketing research needed? Keep in mind marketing research can be expensive. You therefore have to weigh the costs of the research against the benefits. What questions will the research answer, and will knowing the answer result in the firm earning or saving more money than the research costs?

Marketing research can also take time. If a quick decision is needed for a pressing problem, it might not be possible to do the research. Lastly, sometimes the answer is obvious, so there is no point in conducting the research. If one of your competitors comes up with a new offering and consumers are clamoring to get it, you certainly don’t need to undertake a research study to see if such a product would survive in the marketplace.

Alex J. Caffarini, the president and founder of the marketing research firm Analysights, believes there are a number of other reasons companies mistakenly do marketing research. Caffarini’s explanations (shown in parentheses) about why a company’s executives sometimes make bad decisions are somewhat humorous. Read through them:

• “We’ve always done this research .” (The research has taken on a life of its own; this particular project has continued for years and nobody questioned whether it was still relevant.)
• “Everyone’s doing this research .” (Their competitors are doing it, and they’re afraid they’ll lose competitive advantage if they don’t; yet no one asks what value the research is creating.)
• “The findings are nice to know .” (Great—spend a lot of money to create a wealth of useless information. If the information is nice to know, but you can’t do anything with it, you’re wasting money.)
• “If our strategy fails, having done the research will show that we made our best educated guess .” (They’re covering their butts. If things go wrong, they can blame the findings, or the researcher.)
• “We need to study the problem thoroughly before we decide on a course of action .” (They’re afraid of making a tough decision. Conducting marketing research is a good way to delay the inevitable. In the meantime, the problem gets bigger, or the window of opportunity closes.)
• “The research will show that our latest ad campaign was effective .” (They’re using marketing research to justify past decisions. Rarely should marketing research be done after the fact) (Caffarini).

Is Marketing Research Always Correct?

To be sure, marketing research can help companies avoid making mistakes. Take Tim Hortons, a popular coffee chain in Canada, which has been expanding in the United States and internationally. Hortons recently opened some self-serve kiosks in Ireland, but the service was a flop. Why? Because cars in Ireland don’t have cup holders. Would marketing research have helped? Probably. So would a little bit of market intelligence. It would have been easy for an observer to see that trying to drive a car and hold a cup of hot coffee at the same time is difficult.

That said, we don’t want to leave you with the idea that marketing research is infallible. As we indicated at the beginning of the chapter, the process isn’t foolproof. In fact, marketing research studies have rejected a lot of good ideas. The idea for telephone answering machines was initially rejected following marketing research. So was the hit sitcom Seinfeld , a show that in 2002 TV Guide named the number-one television program of all time. Even the best companies, like Coca-Cola, have made mistakes in marketing research that have led to huge flops. In the next section of this chapter, we’ll discuss the steps related to conducting marketing research. As you will learn, many things can go wrong along the way that can affect the results of research and the conclusions drawn from it.

Key Takeaway

Many marketing problems and opportunities can be solved by gathering information from a company’s daily operations and analyzing it. Market intelligence involves gathering information on a regular, ongoing basis to stay in touch with what’s happening in the marketplace. Marketing research is what a company has to resort to if it can’t answer a question by using market intelligence, internal company data, or analytical software. Marketing research is not infallible, however.

Review Questions

• Why do companies gather market intelligence and conduct marketing research?
• What activities are part of market intelligence gathering?
• How do marketing professionals know if they have crossed a line in terms of gathering marketing intelligence?
• How does the time frame for conducting marketing intelligence differ from the time frame in which marketing research data is gathered?

1 “P&G Admits to Dumpster Diving,” PRWatch.org , August 31, 2001, http://www.prwatch.org/node/663 (accessed December 14, 2009).

2 “Microsoft Suit Alleges Ex-Worker Stole Trade Secrets,” CNET , January 30, 2009, http://news.cnet.com/8301-10805_3-10153616-75.html (accessed December 14, 2009).

3 “SCIP Code of Ethics for CI Professionals,” Society of Competitive Intelligence Professionals, http://www.scip.org/About/content.cfm?ItemNumber=578&navItemNumber=504 (accessed December 14, 2009).

Anderson, J., “Bugging Air France First Class,” Ellensburg Daily News , March 25, 1995, 3, http://news.google.com/newspapers?nid=860&dat =19950320&id=ddYPAAAAIBAJ&sjid=F48DAAAAIBAJ&pg=4554,2982160 (accessed December 12, 2009).

Baker, S., “The Web Knows What You Want,” BusinessWeek , July 24, 2009, http://www.businessweek.com/magazine/content/09_30/b4140048486880.htm (accessed December 14, 2009).

Caffarini, A. J., “Ten Costly Marketing Mistakes and How to Avoid Them,” Analysights, LLC.

Gardner, J., “Competitive Intelligence on a Shoestring,” Inc ., September 24, 2001, http://www.inc.com/articles/2001/09/23436.html (accessed December 14, 2009).

Nemes, J., “Dumpster Diving: From Garbage to Gold,” Greenbiz.com , January 16, 2009, http://www.businessgreen.com/bg/analysis/1805796/dumpster-diving-from-garbage-gold (accessed December 14, 2009).

Zarello, C., “Hunting for Gold in the Great Outdoors,” Retail Information Systems News , May 5, 2009, http://www.risnews.com/ME2/dirmod.asp?sid=&nm=&type=MultiPublishing&mod=PublishingTitles&mid =2E3DABA5396D4649BABC55BEADF2F8FD&tier=4&id =7BC8781137EC46D1A759B336BF50D2B6 (accessed December 14, 2009).

Principles of Marketing Copyright © 2015 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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3.7: The Value of marketing research

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It is important to point out that it is not always necessary to conduct research before attempting to solve a problem in marketing management. The manager may feel that he already knows enough to make a good decision. In a few instances, there may be no choice among alternatives and hence no decision to make. It is rather pointless to study a problem if there is only one possible solution. But in most business situations, the manager must make a choice among two or more courses of action. This is where fact-finding enters in to help make the choice.

Even if a manager would like more information in order to make a decision, it is not always wise for him or her to conduct the research that would be required. One reason is that the time involved may be too great. Another more compelling reason is that the cost of the research may exceed its contribution. In principle, it is easy to understand how such a cost test might be applied. If the cost of conducting the research is less than its contribution to the improvement of the decision, the research should be carried out. If its cost is greater, it should not be conducted. The application of this principle in actual practice is somewhat more complex. Finally, good research should help integrate marketing with the other areas of the business.

➢ How can marketing research help managers create successful product lines and customer relationships?

➢ Most people conduct research when buying certain "big ticket" items like cars or computers. How do you conduct marketing research for these types of items?

➢ How has the Internet impacted consumers and their purchase decisions? What about the impact on companies?

Capsule 7: Review

1. [1] Sources : John W. Verity, "Coaxing Meaning out of Raw Data," Business Week , February 3, 1997, pp. 134-138; "Researchers Integrate Internet Tools in Their Work," R&D Magazine , June 2000, vol. 24, No.6, p. E13; "Smarter Kids. Com Chooses Quadstons–The Smartest Customer Data Mining Solution," Business Week , July 31, 2000.

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Marketing Research System - Definition & Meaning

What is marketing research system.

Marketing research relates to information and data collection methods which provide a coherent representation of a need and its potential solutions. The system may be used for ongoing monitoring of the marketplace or on a step by step evaluation of a product concept.

According to American Marketing Association (AMA), “Marketing Research relates to the systematic collection, recording and carefully analyzing the data about problems related to the marketing of goods and services.” According to Philip Kotler, “Marketing research is a systematic problem analysis, model building and fact finding for the purpose of improved decision-making and control in the marketing of goods and services.”

Features of Marketing Research

• Wide and comprehensive scope - Marketing research has a very wide scope. It includes product research, pricing research, market research, packaging research, sales research, etc. It is used to solve marketing problems and to take marketing decisions. It is used to make marketing policies. It is also used to introduce new products in the market and to identify new markets. Marketing research is used to identify channels of distribution and select them, in advertising strategy as in for sales promotion measures.

• Systematic and scientific - Marketing research follows a step-by-step process. It is conducted in an ordered manner. Therefore, it is systematic. Marketing research uses scientific methods. Hence, it is also scientific.

• Science and art: A Science collects knowledge (data) while an Art uses this knowledge for solving problems. Marketing research first collects data. It then uses this data for solving marketing problems. Therefore, it is both, a Science and an Art.

• Collects and analyzes data - Marketing research gathers data accurately and objectively. It first collects reliable data and then analyses it systematically and critically.

• Continuous and dynamic process - The Company faces marketing problems throughout the year. So, marketing research is conducted continuously. It continuously collects up-to-date data for solving the marketing problems. Therefore, marketing research is a continuous process. It is a dynamic process because it goes on changing according to market related information. It does not remain static (the same). It uses new methods and techniques for collecting, recording and analyzing the data.

• Tool for decision-making - The marketing manager has to take many decisions. For this, he requires a lot of data. Marketing research provides correct and up-to-date data to the marketing manager. This helps him to take quick and correct decisions. Therefore, marketing research is an important tool for decision-making.

Functions of marketing research

The various functions of marketing research are as follows -

Hence, this concludes the definition of Marketing Research System along with its overview.

This article has been researched & authored by the Business Concepts Team . It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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Home » Marketing Management » Marketing Research – Definition, Importance and Process

Marketing Research – Definition, Importance and Process

Definition of marketing research.

Marketing research is a key to the evolution of successful marketing strategies and programmes. It is an important tool to study buyer behavior, changes in consumer lifestyles and consumption patterns, brand loyalty and forecast market changes. Research is also used to study competition and analyze the competitor product’s positioning and how to gain competitive advantage . Recently, marketing research is being used to help create and enhance brand equity .

According to Philip Kotler , Marketing research is systematic problem analysis, model building and fact finding for the purposes of important decision making and control in the marketing of goods and services.

The important decision making related to market strategy and other tasks related to marketing depends on findings or marketing research. Marketing research process reduces the chances of errors, miss conceptions and uncertainty from decision making process . It is therefore very important to conduct marketing research to identify any changes in market environment, and understand customers and market. It means that this is the process of strategically importance.

Importance of Marketing Research

Marketing research is a systematic collection and analysis of data about market and the important quality of market. Therefore, Market research is an extremely part of any business that wants to offer products or service that are focused and well targeted. It also affects the profit of a business and makes the best return on marketing investment. For example, a product’s price elasticity research can help you to find out the true or correct information that impact of an increased price on the sales and the profits of a product. This special importance give on profitability also helps the company’s focus to shift from widen the sales to increase the profits of a company and helps the company to survive longer.

Research is about finding and gathers the information to learn about something that is not fully known. Marketing research is allows company to discover the facts whether customers or consumers is satisfy with it. And it also provides crucial information that may be affecting the business. In addition, Market research will also minimize the risk as it can help to shape a new product or service, and identifying what is needed and ensure that the development of a product is high level focused towards needs and wants.

Furthermore, market research also helps to identify opportunities. For example, if there is a plan to operate a new service and would like to have enough information or experience of the people’s attitudes then the market research can give not only evaluating new idea but also identify the areas where a marketing needs to develop and improve. To survive in competition of markets is not easily especially markets has been throughout the world. Marketing research helps to find out the true or correct information and understand the competitor such as their identity, the marketing network, what is customer focus on and the range of level operations. Other than that, with market research can also helps to understand the consumer needs that have not been met. Target markets is also one of the important points that marketers should take notes with, from marketing research it helps to decide the target markets and provide customer information in terms of their location, age, gender and buying behavior.

Besides that, marketing research helps to create benchmarks and prepare the plans carefully and take necessary measures and give opinion of the amount, value or quality for its performance. Moreover, marketing research is system that has been give devise more effective strategies. The most useful of marketing research is help to identify the potential problems and give ample time to discover the facts and to calculate an effective solution.

Marketing Research Process

There are seven steps in marketing research process: define the research problem, determine the research design, choose the method for collecting primary data, design the sample, collect the data, analyze and interpret the data, prepare the research report. Though those steps, marketers will make conversant decisions or reduce the risk of their decisions.

1. PROBLEM DEFINITION

This is the starting point in the marketing research exercise. Invariably, in any enterprise, there are several marketing issues that may require examination, and invariably every decision maker perceives his information need as being the most important. In problem definition it is important to be specific, avoiding ambiguities and generalities. Care should also be taken, not to define problems in too narrow a field as that may distract the researcher’s perspective. This may even affect creativity in the research.

2. RESEARCH OBJECTIVES

Once the problem is defined, the next logical step is to state what the researcher wants to achieve. This statement is called objectives. To be meaningful and help focus the researcher’s attention, these objectives should be specific, attainable & measurable. The purpose of these objectives is to act as a guide to the researcher and help him in maintaining a focus all through the research.

3. RESEARCH DESIGN

The third stage in the marketing research process is deciding on the research design. There are three types of research designs, namely:

• Exploratory: This kind of research is conducted when the researcher does not know how & why a certain phenomenon occurs, for example, how does the consumer evaluate the quality of a bank or a hotel or an airline? Since the prime goal of an exploratory research is to know the unknown, this research is unstructured. Focus groups, interviewing key customer groups, experts and even search for printed or published information are some common techniques.
• Descriptive: This research is carried out to describe a phenomenon or market characteristics. For example, a study to understand buyer behavior & describe characteristics of the target market is a descriptive research. Continuing the above example of service quality, a research done on how consumers evaluate the quality of competing service institutions can be considered as an example of descriptive research.
• Causative:  This kind of research is done to establish a cause and effect relationship, for example the influence of income & lifestyle on purchase decision. Here the researcher may like to see the effect of rising income & changing lifestyle on consumption of select products.

4. SOURCES OF DATA

Once the research design has been decided upon, the next stage is that of selecting the sources of data. Essentially there are two sources of data or information- secondary & primary

• Secondary data: This refers to the information that has been collected earlier by someone else. Often this includes printed or published reports, news items, industry or trade statistics etc. this also includes internal documents like invoices, sales reports, payment history of customers etc. these are important to the researcher as they provide an insight to the problem. Often the preliminary investigation is restricted to secondary data.
• Primary data: To overcome the limitations of incompatibility, obsolescence and bias, the researcher turns to the primary data. This is also resorted to when the secondary data is incomplete. Primary sources refer to data collected directly from the market place- customers, traders & suppliers often are the major sources. They are often reliable data sources and help in overcoming limitations of secondary data. The problem in primary data is its cost, both In terms of money & time, and often a researcher bias also creeps in.

5. DATA COLLECTION

The researcher is now ready to take the plunge. But still he or she needs to be clear about the following.

Procedure for data collection.

Data can be collected through any or combination of the following techniques.

• Observation: This technique involves observing how a customer behaves in the shopping area, how he or she dresses up & what does the customer say when he or she sees the product.
• Experimentation: This is a technique that involves experimenting new product ideas, advertising copies & campaigns, sales promotion ideas & even pricing & distribution strategies with the target customer group. These experiments can be conducted in an uncontrolled environment or in a controlled & simulated market environment.

Tools for data collection

The researcher has to decide on the appropriate tool for data collection. These tools are:-

• Questionnaire — used for the survey method
• Interview schedule — used mainly for exploratory research
• Association test — primarily used in qualitative research, also called as TAT (Thematic   Apperception Test)

6. DATA ANALYSIS

The next stage is that of data analysis .It is important to understand raw data has no usage in marketing research .hence appropriate analytical tools must be used. The most elementary is the arithmetic analysis using percentile and ratios. Statistical analysis like mean, median, mode, percentages, standard deviation and coefficient of correlations should be used wherever applicable

7. REPORT & PRESENTATION

The last stage is that of writing out a report and making a presentation to the Decision —maker. It is important that the report has summary, called the executive summary, giving a bird’s-eye view of the research. This is because most senior managers have little time for going through the entire report in depth. The executive summary can direct the reader’s attention to specific issues by turning to the relevant sections in the report and should not exceed thousand words.

The report should be structured and pages chronologically numbered generally, the structure of a good repot is somewhat like the following:

• Introduction to the problem
• Marketing research finding or survey findings
• Interpretation of research finding
• Policy implications

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• Role and Functions of Advertising Agencies
• Strategic Considerations in the Product Life Cycle Concept
• Concept of Brand Equity
• Event Marketing - Using Events as a Business Marketing Tool
• Brand Tribalism
• Importance of Strong Brands in Marketing Strategy
• Does Marketing of Brand Help?
• Different Approaches to the Study of Marketing

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17.1 The Use and Value of Marketing Channels

Learning outcomes.

By the end of this section, you will be able to:

• 1 Describe the use of marketing channels.
• 2 Identify the different types of marketing channels.
• 3 Discuss how marketing intermediaries add value to products.

What Are Marketing Channels?

In addition to identifying ways to create value for consumers, marketers must also decide how to distribute market offerings. In this section, you’ll explore the important role that marketing channels play in delivering value to targeted customers.

A marketing channel is a system of people, organizations, and activities that work together to make goods and services available to consumers to purchase. Along the marketing channel, ownership of these goods and services is transferred from one channel member to the next. The goal is to create and deliver value to the final consumer by distributing these goods and services. The final consumer is the end user of a good or service. It includes grocery store shoppers, movie stream viewers, app users, vacation-takers, and many more.

Link to Learning

Distribution.

To learn more about how the distribution of products works and the decisions marketers must consider when choosing the right marketing channel, watch the Channels of Distribution in Marketing: 8 Distribution Channels to Consider video.

Marketing Channels (Distribution Channels) Defined

It’s not enough for companies to create, price, and promote products and services that deliver value. A company must also decide where and how consumers can access and purchase the company’s market offering. Market offerings can include tangible goods, services, experiences, digital products, ideas, and information. All market offerings require a marketing or distribution channel to reach consumers.

Think of a channel like a stream or a river that carries a market offering to the consumer. Distribution describes how a company makes its market offering accessible for purchase. Local companies that sell to a smaller, more geographically concentrated set of consumers have a more simplified marketing or distribution channel compared to global companies.

The film industry provides a great example of the distribution decisions that marketers must make. Before a production company releases a new movie, it must decide which channels are best for distributing the movie to consumers. In today’s market, movie producers have a slew of distribution options, including Netflix , HBOMax , and YouTube , to name a few. They also have the option of distributing through traditional movie theaters, such as AMC or Regal . Regardless of the marketing channel they pursue, their goal is to distribute their movie to the right customers at the right place and at the right time. Production companies will choose the marketing channel that is most efficient at helping them achieve this goal.

Marketing Channels for Consumer Products

Companies that use intermediaries to deliver value to consumers have a variety of marketing channel options. There are four major types of intermediaries: agents or brokers, distributors, wholesalers, and retailers (see Figure 17.2 ).

An agent or broker is someone who acts as an extension to the manufacturer. While they never take possession of the product or service they represent, they earn a commission or collect a fee for facilitating the transaction between the customer and the manufacturer. Auto insurance agents, for example, may sell Geico or Allstate auto insurance policies to consumers. The agent serves as a representative who answers questions, gathers information, and provides a quote on behalf of the insurance company.

A distributor takes ownership of the product and tends to align itself closely with a manufacturer. For example, Coca-Cola uses distributors who contract to distribute only Coca-Cola products, not PepsiCo products.

Wholesalers are similar to distributors in that they take ownership of products; however, they buy a variety of products in large quantities and bulk-break for the purpose of distributing an assortment of products to retailers in a quantity aimed at meeting the needs of end users or consumers. Let’s examine how the different types of intermediaries depend on one another. AstraZeneca manufactures prescription medications that are made available to consumers by way of pharmacies such as CVS and Walgreens . Pharmacies are retailers in the marketing channel because they sell a wide variety of consumer products, from toothpaste to milk to medications.

Before AstraZeneca’s medications reach retail pharmacies, they are purchased in bulk by wholesalers who partner directly with AstraZeneca. Wholesalers are an integral part of the marketing channel because they package and handle medications and manage the logistics of delivery to retail pharmacies. This creates value for the customer in that the right quantity of medications arrives at retail pharmacies safely and in good condition.

The fourth type of intermediary is the retailer . Retailers also take ownership of the product, and their sole focus is on reaching the end user or customer directly. They purchase a wide variety of products in smaller amounts that meet the wants and needs of consumers. Retailers include companies like Rite Aid , Walmart , Target , and Hallmark .

Intermediary Functions

The intermediaries’ role is critical, and they perform a variety of functions (as shown in Table 17.1 ) that create value for other members in the marketing channel.

Let’s examine the three functions: transactional, logistical, and facilitating.

Transactional Functions

Intermediaries perform a variety of transactional functions that improve the efficiency of the channel. Transactional functions involve the buying, selling, and risk-bearing that accompany the movement of products along the marketing channel. Companies share the risk of ownership by temporarily possessing products before selling them to another channel member.

Imagine if a small bakery made the best oatmeal raisin cookies and decided to distribute them to consumers using local restaurants in the city. The bakery sells to the restaurant, who then sells to the customer. Temporary risk-sharing, in this scenario, means that at first the bakery assumes the risk in the making, storing, and transporting of the cookies, but that risk transfers to the restaurant once the restaurant buys the cookies. The restaurant then assumes ownership and responsibility for selling the cookies, which may involve placing them someplace customers can see them.

The transactional functions of buying, selling, and risk-bearing help add value in the marketing channel because the system allows for channel members to work together to move a product offering to consumers in an efficient and effective way.

Logistical Functions

In addition to transactional functions, intermediaries also perform logistical functions , which involve handling, packing, inventorying, transporting, warehousing, and ensuring the security of products as they make their way to the customer. In the earlier bakery example, the bakery must ensure the cookies are fresh and tasty in order to continue supplying restaurants with a product that consumers desire. In order to ensure that cookies meet the wants and needs of customers, both the bakery and the restaurant must ensure the product is handled safely in the marketing channel. That might mean selecting a trucking company that secures the cookies during transport to restaurants as well as packaging them so that freshness is sealed and quality is maintained.

Facilitating Functions

In addition to transactional and logistical functions, intermediaries also help in the facilitation of the purchase of products and services. Facilitating functions involve activities such as financing and sharing information with members of the marketing channel. Intermediaries may provide financing to one another and to the end user to help move the product along the channel. Financing involves one channel member allowing another channel member to pay over time.

In the bakery example, pretend that the restaurant purchases $12,000 in cookies each year. Instead of the bakery requiring the restaurant to pay for the order in full at the beginning of each year, it allows the restaurant to pay $1,000 a month over a 12-month period. This benefits the restaurant in that a large amount of capital isn’t tied up in its cookie order payment but instead is spread out over time. While some companies require payment in full, others permit payment installments over time. The terms of payment are explicitly stated at the start of the buying and selling relationship between companies.

Intermediaries also share information that can be used to improve marketing decisions. Intermediaries often share key data such as consumer feedback on a product or service, the shopping behavior surrounding that product or service, and historical purchase trends. The facilitating functions that intermediaries perform ultimately help marketing channel members make better distribution decisions and, in some cases, financially support the movement of these products and services in the name of delivering value to customers.

How Intermediaries Add Value to Customers

Intermediaries play a critical role in adding value to customers. They specialize in aspects of distribution that manufacturers don’t wish to specialize in. They create efficiencies in the marketing channel by reducing transactions, sharing important information among partners, and matching the right quantity of the right product to customer demand. While manufacturers focus on creating value for customers, intermediaries focus on delivering that value.

Dove manufactures millions of units of body wash, bar soap, dry spray antiperspirant, and hair products. In turn, it sells large quantities of these products to wholesalers, who after buying in bulk, break these large quantities down into smaller assortments that are then sold to retailers. This allows consumers to buy a variety of products in smaller amounts. They can visit a Target, a CVS, or the Amazon website and purchase three bars of soap, one bottle of shampoo, and one bottle of conditioner.

Without intermediaries, customers would need to buy directly from every manufacturer producing the desired product. Imagine grocery shopping without intermediaries. Instead of shopping at one or two grocery retailers for bread, milk, cereal, fruit, and ice cream, shoppers would need to buy from individual manufacturers, making shopping extremely time consuming and difficult.

Intermediaries add value by reducing the number of transactions between companies and customers. As illustrated in Figure 17.3 , there are nine transactions without intermediaries and five transactions with the use of intermediaries. Consider the inefficiencies if companies had to directly transact with individual consumers.

Providing Needed Information about Products and Services

Intermediaries share pertinent information about the products and services that move through the distribution channel. More specifically, intermediaries gather, analyze, and communicate information to other distribution partners to improve the effectiveness and efficiency of the channel. This flow ultimately helps marketers plan and optimize the distribution channel so that consumers get the right products and services at the right place and at the right time.

Adjusting for Discrepancy of Quantity

As intermediaries move products and services from manufacturers to consumers, they offer the valuable service of accumulating and bulk-breaking. Bulk-breaking is when an intermediary takes a large quantity of a manufacturer’s product and breaks it down into smaller units to be distributed to retailers based on the consumer demand. Consumers desire to purchase in smaller quantities from retailers. Wholesalers buy in bulk from producers and break the bulk into the right size quantity for retailers, who ultimately meet the needs of consumers who want an assortment of products in small quantities.

Accumulating relates to intermediaries buying in bulk from different manufacturers. When buying in bulk, it is beneficial to the manufacturers because the risk is passed from manufacturers to intermediaries. The United States produces hundreds of millions of bushels of apples, oranges, and peaches each year. 2 These types of produce require different types of climates and care and are therefore grown in different states across the country. Wholesalers play a critical role in buying an assortment of this product in bulk from these producers and ensure that they are sold to retailers in the right quantity to meet the needs of consumers.

Together these activities allow intermediaries to offer retailers the right number of products to offer consumers, based on demand.

Adjusting for Discrepancy of Assortment

Intermediaries also add value by adjusting for the discrepancies of assortment between the manufacturer and the consumer. Discrepancy of assortment is the difference between the variety of products that a manufacturer produces and the variety that consumers want to purchase. Adjusting for discrepancy of assortment occurs when an intermediary buys from manufacturers, then regroups products into different assortments based on what consumers are demanding from retailers.

While manufacturers generally produce large quantities of one or a few types of products, consumers demand small quantities of an assortment of products. For example, when visiting the grocery store, consumers demand an array of different products in small quantities. Depending on the size of their household, consumers are generally shopping to meet the needs of one or a few people; therefore, they value the ability to buy a variety of products in smaller quantities. Intermediaries mitigate these differences by matching supply assortment to demand assortment.

Providing Credit to Customers

Intermediaries also provide credit to customers. Consumers can hardly check out at a cash register without being asked if they would like to sign up for a credit card. By extending credit to customers, retailers from Dick’s Sporting Goods to furniture retailer Wayfair give customers the chance to spend now and pay over a period of time with interest.

While providing credit to customers is often accompanied by special email offers and direct mail coupon codes, the corresponding interest rates are often high. Nevertheless, providing credit to customers can create brand loyalty and provide retailers with insight into consumer purchases. 3

Careers In Marketing

Distribution management.

Distribution managers determine when, where, and how much of a product is distributed. Learn more about the job role and what it entails in this video.

Michigan State University provides insightful information on this career, including a sample job description, roles and responsibilities, salary, education, and training. When looking at your skill development and what you may need in order to obtain a job, check out ZipRecruiter’s website. It indicates that while there are several skills needed in this job role, compliance and customer service are the most common. Read more about the needed skills on the Zip Recruiter website.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

• manufacturer
• intermediary
• marketing channel
• distributor
• stay the same
• decrease temporarily
• They perform important activities that manufacturers are not experts at performing.
• They increase the price of products and services for customers.
• They increase the amount of time it takes for products and services to reach consumers.
• They make improvements to the product so that it functions better.
• Pricing and promoting across geographical areas
• Surveying customers to ensure they are satisfied with their product or service experience
• Competing with one another to reduce prices for consumers
• Accumulating, bulk-breaking, adjusting for assortment discrepancies, and providing financing

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• Authors: Dr. Maria Gomez Albrecht, Dr. Mark Green, Linda Hoffman
• Publisher/website: OpenStax
• Book title: Principles of Marketing
• Publication date: Jan 25, 2023
• Location: Houston, Texas
• Book URL: https://openstax.org/books/principles-marketing/pages/1-unit-introduction
• Section URL: https://openstax.org/books/principles-marketing/pages/17-1-the-use-and-value-of-marketing-channels

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The 7 Functions of Marketing: A Field Guide (Infographic)

The 7 functions of marketing are promotion, selling, product/service management, marketing information management, pricing, financing and distribution.

Understanding the core functions of marketing can help you better focus your efforts and strategies to support your business. Not to mention, it’s a whole lot easier to show ROI and relevant KPIs if you know exactly what the marketing department is expected to deliver.

Without further ado, let’s dig into the 7 functions of marketing and take a look at how they align with overarching business objectives.

• Product/Service Management.
• Marketing Information Management.
• Distribution.

1. Promotion

When people map out their marketing goals, promotion is usually at or near the top of that list. Getting your name in front of prospective customers, building brand awareness and raising your company’s profile are major priorities for every marketing department.

Promotional strategies often overlap with other business units and awareness-building activities, such as advertising and public relations . From a marketing perspective, promotion can include everything from digital marketing services (like content marketing , email marketing and social media), to text marketing , influencer marketing and, of course, traditional marketing tactics.

We don’t need to tell you how important these efforts are to inbound marketing and generating qualified leads . It’s no wonder promotion has long been considered an essential component of the marketing mix.

We’ve often cautioned readers about the dangers of coming on too strong and salesy with your marketing content. You risk alienating your target audience by consistently delivering overt sales pitches in your content and making it seem like your only goal is to get people to buy something from you.

The truth is part of every marketer’s job is to sell their products to customers —  ideally, though, it’s done with more nuance. Every marketing decision, from your brand messaging to your campaign themes, should support the ultimate goal of increasing sales. Once you’ve grabbed the attention of a potential customer, whether that’s a consumer or B2B prospect, marketers need to go to work nurturing that lead and guiding them through the sales funnel so they’re primed to make a purchase when they finally make contact with your sales team . Use technology to your advantage by including an  online catalog maker  in your must-have list of digital tools when it comes to showcasing your products or services.  

That means continually making the case for your brand and gradually incorporating more product-centric talking points in your marketing communications. By the time they’re ready to speak with a sales associate, prospects should know how your goods or services stack up against competing products.

3. Product/Service Management

Designing a new product that better meets customer needs and fills a gap in the marketplace doesn’t happen by coincidence or sheer luck. It takes a lot of thorough market research to figure out product-market fit or what people want and how to deliver the best product possible. Marketing teams may identify new growth opportunities when:

• Speaking with prospects.
• Running competitor analysis.
• Incorporating feedback gleaned from customer support services into marketing strategies.

In those cases, marketing research is the fire that fuels product development. Who better understands your target market than your marketing team?

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4. Marketing Information Management

Strategic marketing is driven by data. Every good marketer knows that the more information you can gather about your target customer, industry competitors and market trends, the more successful your marketing efforts will be.

All of that juicy info is as good as gold, so there’s no reason to keep it locked away in some silo. One of the core (yet sometimes overlooked) functions of marketing is to collect this valuable data, distill it down to action items and useful takeaways and share it with other departments that might find it useful. Usually, the marketing team stores all this information in a marketing CRM .

Sales teams, for instance, can always use more in-depth marketing insights to help them refine their pitches to:

• Address the latest industry trends.
• Respond to competitor messaging.
• Speak directly to the pressing customer concerns.

Marketing research can also inform how brands set the price of a product. Effective pricing is as much art as it is science, and brands need to find that sweet spot that balances how customers value your goods or services with the cost of production and delivery as well as accounting for the current price of competing products.

The perceived value of your brand directly impacts your pricing strategy — just look at the price difference between a luxury fashion brand like Hermès and more budget-conscious retailers like Old Navy. The several thousand dollar price tag disparity for a single handbag can’t be chalked up to production costs and quality control alone. Hermes customers are paying as much for the brand as they are the product itself.

Marketing research sheds light on your brand’s reputation and helps you better understand how much your target audience values your brand. That’s on top of all the competitor analysis and industry research critical to setting a fair asking price for your wares.

6. Financing

Now we’re digging into some of the less-discussed functions of marketing, although they’re still very important to overarching business objectives. Financing may not initially seem like a top concern for your marketing team to worry about, but think about it this way: If your department can’t secure space in the budget to fully support your next marketing campaign, how are you going to meet your goals?

When people think about financing, they often focus on the up-front costs of getting a new business off the ground. But, in reality, financing is an ongoing concern for business owners and company leaders, who need to make difficult budgeting decisions year after year and quarter after quarter.

By helping generate more revenue, expand into new markets and reach more potential customers, marketing teams can demonstrate their value to the organization at large. And that makes it easier to secure the financing they need on a departmental level. Effective marketing management is key in that regard. A marketing program that gets the most value out of available resources and applies the right strategies to engage and nurture qualified leads can show undeniable ROI.

Successful marketing activity also helps businesses secure funding from third parties — say getting a loan from a bank or an investment from a venture capital firm. Any organization, whether it’s an independent firm or a financial institution, wants to see that businesses have a comprehensive marketing plan that will help build the brand , tap into markets and produce healthy revenue over the long run.

7. Distribution

“Distribution?” you may be asking yourself, “isn’t that supply chain management’s problem?”

Yes, but where you sell your products or services and how you get them into your customer’s hands is also a marketing problem, whether you’re talking about digital or physical distribution.

Choosing the right distribution channels comes down to understanding who your target customer is, how they view your brand and where they expect to find you — all marketing-centric issues. You would never expect to find a Rolex watch for sale at the Dollar Store, after all. Those brands represent two very different market demographics.

Marketing managers and their supply chain counterparts need to be aligned whenever a new product, promotion or campaign is launched so companies can have all of their distribution ducks in a row. If marketers do their job well, they will generate a ton of buzz leading up to that product release or promotional event, pushing customer demand to the limit. That marketing win can quickly turn into a PR nightmare if the supply chain isn’t prepared to meet demand.

Remember the feeding frenzy surrounding the release of Popeye’s chicken sandwich toward the end of 2019? The marketing team did everything right: building awareness through social media and digital channels and getting target customers unreasonably excited about what was, in the end, just a fast-food chicken sandwich (albeit, a pretty tasty one).

Unfortunately, the company’s food distributors failed to anticipate that high level of demand, and many stores quickly sold out, leaving frustrated customers to search far and wide to get a taste of the new menu item. Reports of exhausted employees working long hours without breaks as they struggled to keep up with long lines and angry customers left Popeye’s with a black eye during what should have been the brand’s finest hour.

Moral of the story: Don’t leave your distributors or supply chain managers in the dark when you’re planning your next big marketing campaign. If it’s half as good as you think it is, you’ll want to prep your distribution channels accordingly.

When you get right down to it, marketing touches pretty much every part of your business. The insights gathered from your marketing efforts can inform and improve any number of day-to-day operations while guiding long-term strategic decision-making. That’s before you even consider how much revenue is generated thanks to your marketing activity.

So, to go back to the original question, “what’s the point of all this?” It’s to make your business successful. As these seven marketing functions show, you can go about that goal in a lot of different ways, but the end result is the same.

Editor’s note: Updated July 2022.

By Jeff Keleher

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What are the 4 stages of the inbound marketing methodology (infographic).

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Marketing Research: Definition, Process, Scope, Objectives, Types, Classification

In this article we will discuss about marketing research of products & services! Learn about:- 1. Definition of Marketing Research 2. Scope of Marketing Research 3. Features 4. Objectives 5. Functions 6. Importance 7. Types 8. Process 9. Areas 10. Activities 11. Suppliers 12. Instruments 13. Organising Research Function 14. Classification Research Tasks (Problems) 15. Benefits 16. Limitation 17. Ethical Issues.

Everything you need to know about Marketing Research

1. definition of marketing research:.

Marketing research is the systematic collection and analysis of data relating to sale and distribution of financial products and services. Market research is an early step in the marketing process, and includes an analysis of market demand for a new product, or for existing products, as well as appropriate methods of distributing those products.

Techniques in market research include telephone polling and focus group interviews to determine customer attitudes, pricing sensitivity, and willingness to use delivery alternatives. Most large banks have their own market research departments that evaluate not only products, but their Brick and Mortar branch banking networks through which most banking products are sold.

Marketing research refers to gathering and analysis of information about the moving of goods or services from producer to consumer. Marketing research covers three wide areas: market analysis, which yields information about the marketplace; product research, which yields information about the characteristics and desires for the product; and consumer research, which yields information about the needs and motivations of the consumer.

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Marketing research is nothing but gathering and analysis of information about the moving of goods or services from producer to consumer. Marketing research covers three wide areas: market analysis, which yields information about the marketplace; product research, which yields information about the characteristics and desires for the product; and consumer research, which yields information about the needs and motivations of the consumer.

The results of marketing research will supply facts needed to make marketing decisions and will determine the extent and location of the market for a product or service.

Accelerating product cycles, easy access to information on products and services, highly discerning consumers, and fierce competition among companies are all a reality in the world of business. Too many companies are chasing too few consumers. In his book Kotler on Marketing- “How to Create, Win, and Dominate Markets,” Philip Kotler, marketing guru and a professor at Northwestern University’s Kellogg Graduate School of Management, discusses what a business has to do to be successful. He wrote, “The premium will go to those companies that invent new ways to create, communicate and deliver value to their target markets”.

Knowing, understanding, and responding to your target market is more important than ever. And this requires information good information. Good information can lead to successful products and services. Good information is the result of market research.

According to the Marketing Research Association (2000), Marketing’ Research is defined as follows- “Marketing Research is the function which links the consumer, customer, and public to the marketer through information- information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.”

“Marketing Research specifies the information required to address these issues; designs the method of collecting information; manages and implements the data collection process; analyzes the results; and communicates the findings, recommendations and their implications.”

Marketing research is a $1.3-billion-dollar-a-year industry. The industry is growing at over 10 percent a year, with profits running at a similar level. Marketing Research provides, analyzes, and interprets information for manufacturers on how consumers view their products and services and on how they can better meet consumer needs. The ultimate goal is to please the consumer in order to get, or keep, the consumer’s business.

Marketing Research evolved as the U.S. economy shifted from a production-driven one to a market-driven one. As the American production of goods and services, plus imports, was beginning to satiate American demand, marketers needed to learn how to tailor their products to the needs and likes of an increasingly discerning public.

This tailoring resulted in increased market demand and, for successful companies, increased market share.

Marketing research is the systematic gathering, recording, and analysis of data about issues relating to marketing products and services. The term is commonly interchanged with market research; however, expert practitioners may wish to draw a distinction, in that market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes.

Market research is different from marketing research. Market research is a systematic study if facts about market only – who, what, where, when, why and how of actual and potential buyers.

On the other hand the scope of marketing research is so wide that it includes all functional areas of marketing including market.

2. Scope of Marketing Research:

The scope of marketing research stretches from the identification of consumer wants and needs to the evaluation of consumer satisfaction. It comprises of research relating to consumers, products, sales, distribution, advertising, pricing and sales forecasting. A clear view of the scope marketing research may be obtained by the following classification of marketing research activity.

The whole approach of marketing pivots around the tenet of meeting the consumer wants. It is essential to understand what the consumer wants, how he/she perceives the product (service), what exactly (ideally) does he/she wants to derive out of the product (service), how does he/she make the brand choice decision, what are the sources of information and influence processes, etc.

In order to take decisions any marketer would constantly monitor such information and obtain a continuous feedback of the trends in the market. As such, marketing research is an effective tool for measuring the consumers’ aspirations, trade channel behaviour, competitive actions etc.

It provides a linkage between the corporate environment and the marketing organization. Marketing research, thus, may be viewed as an important tool used as an aid for tackling problems in marketing.

3. Features of Marketing Research :

(1) Intensive Study- It involves systematic and intensive study of a marketing problem.

(a) Planned Process- We have planned procedure of investigation and analysis.

(b) Orderly Investigation- The procedure of marketing research has clearly-defined steps in proper sequence or order.

(c) Intensive Investigation- All the relevant factors involved in a marketing problem are observed closely.

(2) Scientific Approach- Marketing research adopts scientific method and objectivity in the solution of a marketing problem.

(a) Rational Outlook- Researcher or analyst has an objective attitude — rational outlook based on reason and logic.

(b) Defined Purpose- The purpose of inquiry and the problem under investigation are clearly defined.

(c) Accuracy- Accuracy (exactness) in calculation, in observation and in reporting is strictly ensured.

(d) Standardised Process- Marketing research process is standardised and can be repeated exactly in solving all problems.

(e) Scientific Attitude- The researcher has an open mind, critical attitude, creativity, absolute honesty and integrity — the hallmarks of scientific attitude and approach.

(3) Decision Tool- Marketing research is a tool for decision-making and control in the marketing of goods.

Marketing managers face numerous pressing problems from time to time during the conduct of marketing activities. They need information upon which they may take proper decisions. Manager is by profession a decision-maker. Decision-making involves a perpetual choice-making activity.

From the given alternatives one alternative is selected as the most promising course of action or behaviour. In a sense, decision-making is the essence of management. Manager needs information in planning as well as evaluating the plans in action.

Marketing manager calls upon a skilled analyst to examine the problem or question, break it up into its elements, get the needed data, analyse it and work out desirable conclusions based on facts and figures.

With the emergence of the marketing concept, marketing research has recorded fast growth and development. We should remember that marketing concept emphasises customer orientation. We have integrated plans built up around customer need and desires and designed to produce customer satisfaction.

4. Objectives of Marketing Research :

Marketing research helps the marketing executive in the formulation of all marketing plans, policies, programmes and procedures, to attain the marketing goals. When the above said plans, policies and programmes are translated into action, marketing research is used for evaluation purposes.

Since the main thrust of marketing research is on selling, promotion, advertising and distribution, it is used in minimizing all wasteful and unnecessary marketing cost. Further, the function of marketing research acts as an insurance cover for the survival and growth of the firm. Marketing research finds out for the produces.

(i) Where are his consumers?

(ii) What they want?

(iii) When they want it and?

(iv) Where and how much they are willing to pay for it?

Hence, through marketing research, marketing management can sell the right product through right channels of distribution to right consumers at right places and at right price by formulating right plans, policies and programmes with the help of right personnel.

In short, marketing research helps producers, distributors and advertisers to avoid mistakes either in manufacturing or marketing or to that extent, it can minimize business failures.

5. Functions of Marketing Research:

The basic task of marketing management is that of preparing plans, executing them and controlling operations to achieve the most profitable allocation of company resources to current and future market opportunities. Market research aids the management in these efforts.

The need for such assistance in decision making stems mainly from the constant changes characteristic of markets. If they were static or changed very slowly the marketing of product lines and marketing methods to market opportunities would not pose difficult problems.

Executives could learn from past experiences and avoid repeating past errors. But markets are constantly thus have impact on the market. As a result, the marketing executive are frequently faced with marketing problems, unknown in their previous experience, that pose major uncertainties, marketers are well aware of these risks, and many of them have organized marketing research departments together and analyse information that enables them to reduce the reliance they must place on institution- based decision.

i. The emergence of buyer’s market requires continuous need of marketing research to identify consumers’ need and ensure their satisfaction.

ii. The ever expanding markets require large number of middlemen and intensive distribution. Marketing research could help identify and solve the problems of middlemen and distribution.

iii. There is always a change in the market conditions and the requirements of consumers. Marketing research enables to anticipate and meet any such changes.

iv. Marketing research can help bring about prompt adjustments in product design and packaging.

v. It can help find out effectiveness of pricing.

vi. It can help find out the effectiveness of sales promotion and advertisement.

vii. It can help identify the strength and weakness of sales force.

viii. The impact of economic and taxation policies on marketing could also know through marketing research.

In short, marketing research enables the management to identify and solve any problem in the area of marketing and help better marketing decisions.

6. Importance of Marketing Research:

Marketing research has become so important in nowadays competitive context that today almost all the companies are either having their independent research and development departments or they are outsourcing this function to professionals in the said field.

The increasing importance of marketing research is based on the below mentioned three trends:

1. Expansion of Business from National to Global Market:

Nowadays in order to sustain in the market place, it is impossible for companies to continue their operations in the same manner as they were earlier doing, they have to improve their products and services as per the expectations of global market. For expansion either in new market place or in case of launch of new products, the required information can be gathered by marketing research.

2. Transition from Consumer Needs to Consumer Wants:

Now customers are expecting value with the purchase of products. Products and services should be modified according to the change in economic environment. For customer retentions and development of high brand loyalty, it is essential to obtain information related to changing behaviour of customers with the help of marketing research.

3. Shift from Price Competition to Non-Price Competition:

Purchasing power of customers is increasing with the increase in the income level therefore they want high quality products at right price. Sales promotion tools are very much helpful to attract customers for particular brand but it need information about product attributes and buying behaviour of customers. The marketer can collect the required information relating to these tools with the help of marketing research.

7. Types of Market Research:

1. Audience Research:

Research on who is listening, watching, and reading is important to marketers of television and radio programs and print publications—as well as to advertisers who wish to reach a certain target audience with their message.

Television and radio ratings demonstrate the popularity of shows and determine how much stations can charge for advertising spots during broadcasts. Publication subscription lists, which are audited by tabulating companies to ensure their veracity, are important in determining the per page rate for advertising.

2. Product Research :

This looks at what products can be produced with available technology, and what new product innovations near-future technology can develop.

Product research includes simple, in-person research such as taste tests conducted in malls and in the aisles of grocery stores, as well as elaborate, long-term “beta testing” of high-tech products by selected, experienced users. The objective of product research can be simple; For example- a company may tweak the taste of an existing product, then measure consumers’ reactions to see if there is room in the market for a variation. It can also be more extensive, as when a company develops prototypes of proposed new products that may be intended for market introduction months down the road.

In product research, as in all market research, there is a danger to paying too much attention to the wrong things. For instance, the introduction of New Coke was based on the outcome of taste tests that showed the public wanted a sweeter product.

But later an angry public, outraged that Coca-Cola was planning to change the familiar formula, forced the company to ignore its taste tests and leave the original Coke on the market. The company had put too much stock in the results of the taste test studies, and had failed to factor in research that showed consumers were happy with the product as it was.

The purpose of this research is to find out all aspects of product which include:

i. Reviewing product line, product quality, product features, product design etc.

ii. Study on new uses of an existing product

iii. Testing of new products

iv. Study of related products

v. Study of packaging design

vi. Study of brand name/brand mark/its impact.

3. Brand Research :

Brands, the named products that advertising pushes and for which manufacturers can charge consumers the most money, are always being studied. Advertisers want to know if consumers have strong brand loyalty (“I’d never buy another brand, even if they gave me a coupon”); if the brand has any emotional appeal (“My dear mother used only that brand”); and what the consumer thinks could be improved about the brand (“If only it came in a refillable container”).

Brand research, too, has its perils. Campbell’s Soup once convened a focus group comprised of its best soup customers. One of the findings was that those customers saw no need for a low-salt alternative soup Campbell’s wanted to market.

Concerned that the general public seemed to want low-sodium products, Campbell’s retested groups other than their best customers. This research found a market interested in a low-sodium soup. The loyal Campbell’s customers loved the saltier product, while a larger group of potential customers preferred the low-salt alternative.

4. Psychological Research :

Perhaps the most controversial type of market research is psychological research. This type of research tries to determine why people buy certain products based on a profile of the way the consumers live their lives. One company has divided all Americans into more than 60 psychological profiles.

This company contends the lifestyles these people have established, based upon their past buying habits and their cultural upbringing, influences their buying decisions so strongly that individual differences can sometimes be negated.

Psychological research is controversial because it measures attitudes about buying rather than the buying itself. Critics point to conflicting information uncovered through other market research studies.

In one series of research projects, researchers asked people what they were planning to buy before they entered a store. After the people surveyed left the store, the same researcher examined what was actually in their shopping carts. Only 30 percent of the people bought what they had said they planned to buy just a half hour earlier.

Insurance market research of reviewing an agent’s sales trends, and individual sales analysis of performance is a remarkable time and data evaluation to accomplish. Only an insurance list compiler with prior marketing and sales management can perform this market research. The resulting correct list of brokers is gold to an insurance marketing sales company.

5. Scanner Research :

In contrast, there is no fooling the checkout scanner at the supermarket or the department store: it records what was actually purchased. This is valuable information an advertiser can use to help plan an ongoing marketing strategy.

Scanner technology has changed the way advertisers track the sale of consumer products. Before scanners, advertisers received sales information only when retailers reordered stock, generally every two weeks.

This meant that the advertisers had no way to quickly measure the effect of national advertising, in-store sales promotions, or the couponing of similar products by their competitors. Now, computer technology can send scanner information to advertisers within days or even hours.

Data Sources :

The researcher can gather secondary data, primary data, or both. Secondary data are data that were collected for another purpose and already exist somewhere. Primary data are data gathered for a specific purpose or for a specific research project.

Researchers usually start their investigation by examining secondary data to see whether their problem can be partly or wholly solved without collecting costly primary data. Secondary data provide a starting point for research and offer the advantages of low cost and ready availability.

The Internet, or more particularly, the World Wide Web, is now the greatest repository of information the world has seen. In an incredibly short span of time, the Web has become a key tool for sales and marketing professionals to access competitive information or conduct demographic, industry, or customer research.

When the needed data do not exist or are dated, inaccurate, incomplete, or unreliable, the researcher will have to collect primary data. Most marketing research projects involve some primary data collection.

The normal procedure is to interview some people individually or in groups to get a sense of how people feel about the topic in question and then develop a formal instrument, debug it, and carry it into the field.

When stored and used properly, the data collected in the field can form the back bone of later marketing campaigns. Direct marketers such as record clubs, credit-card companies, and catalog houses have long understood the power of database marketing.

A customer or prospect database is an organized collection of comprehensive data about individual customers, prospects, or suspects that is current, accessible, and actionable for marketing purposes such as lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships.

Some techniques that are becoming increasingly popular are data warehousing and data mining – but they are not without risks.

Approaches :

Primary data can be collected in five ways: observation, focus groups, surveys, behavioural data, and experiments.

i. Observational Research:

Fresh data can be gathered by observing the relevant actors settings. The American Airlines researchers might meander around airports, airline offices and travel agencies to hear how travelers talk about the different carriers.

The researchers can fly on American and competitors planes to observe the quality of in-flight service. This exploratory research might yield some useful hypothesis about how travelers choose air carriers.

ii. Focus Research:

A focus group is a gathering of six to ten people who are invited to spend a few hours with a skilled moderator to discuss a product, service, organization, or other marketing entity.

The moderator needs to be objective, knowledgeable on the issue, and skilled in group dynamics. Participants are normally paid a small sum for attending. The meeting is typically held in pleasant surroundings and refreshments are served.

In the American Airlines research, the moderator might start with a broad question, such as “How do you feel about air travel?” Questions then move to how people regard the different airlines, different services, and in-flight telephone service.

The moderator encourages free and easy discussion, hoping that the group dynamics will reveal deep feelings and thoughts. At the same time, the moderator “focuses” the discussion”. The discussion recorded through note taking or on audiotape or videotape, is subsequently studied to understand consumer beliefs, attitudes and behaviour.

Focus Group research is a useful exploratory step. Consumer-goods companies have been using focus groups for many years, and an increasing number of newspapers, law firms, hospitals and public-service organization are discovering their value.

However, researchers must a avoid generalization the reported feelings of the focus- group participants to the whole market, because the sample size is too small and the sample is not drawn randomly.

With the development of the World Wide Web. Many companies are not conducting on-line focus groups.

iii. Survey Research:

Surveys are best suited for descriptive research. Companies undertake surveys to learn about people’s knowledge, beliefs, preferences, and satisfaction, and to measure these magnitudes in the general population. American Airlines researches might want to survey how many people know American, have flown it, and would like telephone availability.

iv. Behavioural Data:

Customers leave traces of their purchasing behaviour in store scanning data, catalog purchase records and customer databases. Much can be learned analyzing this data. Customer’s actual purchase reflect revealed preferences and often are more reliable than statements they offer to market researchers.

People often report preferences for people popular brands and yet the data show that high-income people do not necessarily buy the more expensive brands, contrary to what they might state in interview; and many low-income people buy some expensive brands. Clearly American Airlines can learn many useful things about its passengers by analyzing ticket purchase records.

v. Experimental Research:

The most scientifically valid research is experimental research. The purpose of experimental research is to capture cause and effect relationships by eliminating competing explanations of the observed findings.

To the extent that the design ad execution of the experiment eliminate alternative hypotheses that might explain the results, the research and marketing managers can have confidence in the conclusions.

It calls for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant. To the extent that extraneous factors are eliminated or controlled, the observed effects can be related to the variations in the treatments.

American Airlines might introduce in-flight phone service on one of its regular flights from New York to Los Angeles at a price of $25 a phone call. On the same flight the following day, it announces the availability of this service at $15 a phone call.

If the plane carried the same number and type of passengers on each flight, and the day of the week made no difference, any significant difference in the number of calls made could be related to the price charged.

The experimental design could be elaborated further by trying other prices, replicating the same prices on a number of flights and including other air routes in the experiment.

6 . Database Research :

Virtually every type of consumer- credit card holders, smokers, drinkers, car buyers, video buyers- shows up on thousands of lists and databases that are regularly cross- referenced to mine nuggets of marketing research.

Database research is growing in popularity among marketers because the raw data has already been contributed by the purchaser. All the marketer has to do is develop a computer program to look for common buying patterns.

Database research can be thought of as the ultimate tool in market segmentation research. For example- from zip code lists, marketers may determine where the wealthy people live in a city. That list can be merged with a list of licensed drivers.

The resulting list can be merged with another list of owners of cars of a certain make older than a certain year. The resulting list can be merged with another list of subscribers to car enthusiast magazines.

The final list will deliver a potential market for a new luxury car soon to be introduced and profiled in the car magazines. The people on the potential buyers’ list could then be mailed an invitation to come see the new car.

Database research also allows companies to build personal relationships with people who have proven from past purchases that they are potential customers. For example- a motorcycle manufacturer such as Harley Davidson may discover from database research that a family with a motorcycle has a teenage son.

That son is a potential new customer for everything from clothes to a new motorcycle of his own. Maintaining a personal relationship with customers also provides businesses with a basis for more detailed and economical market research than might be possible through random sampling.

Survey research a research method involving the use of questionnaires and/or statistical surveys to gather data about people and their thoughts and behaviours. This method was pioneered in the 1930s and 1940s by sociologist Paul Lazarsfeld.

The initial use of the method was to examine the effects of the radio on political opinion formation of the United States. One of its early successes was the development of the theory of two- step flow of communication. The method was foundational for the inception of the Quantitative research tradition in sociology.

7 . Post-Sales or Customer Satisfaction Research :

Most companies no longer believe that a sale ends their relationship with a customer. Nearly one-third of the research revenues generated by the leading American market research firms concern customer satisfaction.

Many companies now wait a few days or weeks, then contact customers with survey questionnaires or telephone calls. Companies want reassurance that the customer enjoyed the buying experience and that the product or service has met the buyer’s expectations.

The reason behind post-sales research is to ensure that current customers are happy, will consider themselves future customers, and will spread positive word-of-mouth messages about the product and company.

One study found that 70 percent of customers believed it was important for companies to stay in contact with them, but less than one- third of those same customers reported that they had heard from companies whose products they purchased.

Nearly 90 percent of those surveyed said they would be more likely to choose a company’s products if it stayed in touch with them and sought their satisfaction.

The aim of this research is to develop an understanding about present and potential consumers and the level of satisfaction expected and derived by them from company’s products.

The broad areas of consumer research are:

i. Study of consumer profile.

ii. Study of consumer brand preferences, tastes and reactions

iii. Study of consumer satisfaction/dissatisfaction, reasons, etc.

iv. Study of shifts in consumption patterns.

8 . Advertising Research :

Is a specialized form of marketing research conducted to improve the efficacy of advertising. Copy testing, also known as “pre-testing,” is a form of customized research that predicts in-market performance of an ad before it airs, by analyzing audience levels of attention, brand linkage, motivation, entertainment, and communication, as well as breaking down the ad’s flow of attention and flow of emotion. Pre-testing is also used on ads still in rough (ripomatic or animatic) form.

9 . Business to Business (B2B) Market Research :

Business to Business (B2B) research is inevitably more complicated than consumer research. The researchers need to know what type of multi-faceted approach will answer the objectives, since seldom is it possible to find the answers using just one method.

Finding the right respondents is crucial in B2B research since they are often busy, and may not want to participate. Encouraging them to “open up” is yet another skill required of the B2B researcher.

Last, but not least, most business research leads to strategic decisions and this means that the business researcher must have expertise in developing strategies that are strongly rooted in the research findings and acceptable to the client.

There are four key factors that make B2B market research special and different to consumer markets:

i. The decision making unit is far more complex in B2B markets than in consumer markets.

ii. B2B products and their applications are more complex than consumer products.

iii. B2B marketers address a much smaller number of customers who are very much larger in their consumption of products than is the case in consumer markets.

iv. Personal relationships are of critical importance in B2B markets.

10. Distribution Research :

The purpose of this research is to identify the appropriate distribution channels for intermediaries, storage, transport problems etc.

The broad areas include:

i. Measuring relative effectiveness of different types of distribution intermediaries

ii. Measuring dealer reaction to company and its products

iii. Measuring warehouse efficiency

iv. Distribution cost analysis

v. Determining optimum inventory levels

vi. Determining the location of distribution centers.

11. Pricing Research :

The purpose of this research is to find out the price expectations of consumers and their reactions to them.

i. Assessing the general pattern of pricing followed by the industry

ii. Measuring price elasticity of demand

iii. Evaluating the price strategy of the firm.

12. Advertising and Promotion Research :

The purpose of this research is to develop most appropriate advertisement and promotion schemes and evaluate their effectiveness.

i. Advertising copy research

ii. Media research

iii. Assessing the effectiveness of advertising

iv. Assessing the efficacy of sales promotional measures.

13. Sales Research :

i. Testing new sales techniques

ii. Analyzing of salesmen’s training

iii. Measuring salesman’s effectiveness

iv. Study of sales compensation

v. Analyzing methods of setting sales quota and sales territories.

14. Research on Competition:

The purpose of this research is to find out the intensity and effect of competition to the firm.

i. Study on competitive structure of the industry and individual competitors.

ii. Study of competitors marketing strategies.

The scope of marketing research describes above is only indicative and not exhaustive. Further, the above research areas are not watertight compartments. They are closely interrelated. The actual scope depends on the needs of a company and the marketing situations.

8. Marketing Research Process:

Marketing research helps in arriving at the decision or solutions for various marketing problems.

The research process involves different stages which are:

1. Problem Formulation:

Formulation of the problem is the first step in the marketing research process. Unless and until the problem is well defined, there is no use of the research work. Well defined and formulated problems can be solved very easily and appropriately. The problem should be defined neither too broadly nor too narrowly. Problems may be of different type i.e. operating (recurring) problem or non-operating (non­recurring) problem.

Recurring problems includes problems relating to sales expenses, sales forecasting, sales volume, product quality, product line, price policy etc. Non-recurring or non-operating problems relate to problems such as change in consumption pattern, price changes, product innovation, changes in competitive forces etc.

2. Research Design:

A research design is the framework or blue print for conducting the market research project. Once the specific research objective has been defined, it is essential to arrive at the correct hypothesis, data collection method, sampling plan and research design instrument.

Formulating a research design involves following steps:

i. Define the information which is required.

ii. Analysis of the secondary data.

iii. Qualitative research.

iv. Method of collecting data.

v. Measurement and scaling procedure.

vi. Questionnaire design.

vii. Sampling process and sample size.

viii. Plan of data analysis.

3. Data Collection:

Data can be collected from both primary and secondary sources. Primary data is the data which is collected for the first time with research purpose in mind. It is the first hand information. Secondary data is the data already collected by some other person for some other research problem. Primary data can be collected through different method – observation method or communication method. Interviews may be conducted either personal or through telephone or any other method to collect the required information.

4. Data Analysis:

Analysis of the raw data is very essential to arrive at the conclusion.

This analysis involves three phases, they are:

i. Classifying the data

ii. Data summarization

iii. Advanced data analysis tools and techniques to highlight inter­relationship and quantitative significance.

i. Classifying the Data:

Classification of data includes editing, coding, transcription and verification of data. The most commonly used techniques here are quantitative, qualitative, geographical and chronological.

Quantitative classification are for quantitative data like number of units, number of respondents. Qualitative classification is for qualitative data like occupation, types of family etc. Geographical classification is the one where geographical location is used to classify the data. Chronological classification is on the basis of the time period when event took place.

ii. Data Summarization:

For summarization of data various techniques are there like mean, median, mode, range, variance, standard deviation, mean deviation.

iii. Advanced Data Analysis Tools and Techniques:

This includes advanced method for analysing the data like factor analysis, discriminate analysis, correlation, regression, multiple regression.

5. Report Presentation and Recommendations:

A normal report includes the following:

(1) Title of the report

(2) Summary of conclusion

(3) Sample and characteristics

(4) Findings and observations

(5) Questionnaire

(6) Appendices

(7) Recommendation made may be accepted or rejected.

9. Main Areas of Marketing Research:

The main areas of marketing research can be summarized as given below:

1. Research in Product Planning and Development.

2. Market Research to get information on-

(a) Market segmentations

(b) Market demand

(c) Market competition

(d) Market share.

3. Consumer Research on:

(a) Consumer needs, wants and preferences

(b) Buying motives and buying behaviour

(c) Change in demand

(d) Customer response to sales promotion and advertising

(e) Linking need and brand name.

4. Pricing Research – Policies Regarding:

(b) Discounts

(c) Allowances.

5. Research in Brand and Package Design – Brand image surveys.

6. Research in channel choice.

7. Research in physical distribution and distribution cost-transport stages and insurance.

8. Planning and evaluation of various promotion devices.

9. Planning and evaluation of advertising-copy and media research.

10 . Sales Analysis and Research sales forecast, sales quotas and sales territories.

11. Policy Research – Planning and Evaluation of:

(a) Sales policy;

(b) Advertising policy;

(c) Sales promotional policy;

(d) Inventory policy;

(e) Distribution policy;

(f) Credit policy;

(g) Sales force policy; and

(h) After sales, service policy etc.

12. Dealer’s Research to gather information on the wants, attitudes and preferences of dealers.

In U.S.A., Marketing research departments have been steadily expanding their activities and techniques. The following list gives out the various types of marketing research undertaken by firms in U.S.A., as quoted in Philip Kotler’s book on “Marketing Management”.

10. Marketing Research Activities:

1. Advertising Research:

(a) Motivation research;

(b) Copy research;

(c) Media research; and

(d) Studies on Advertising effectiveness.

2. Business Economic and Corporate Research:

(a) Short-range forecasting (up to one year);

(b) Long-range forecasting (over one year);

(c) Studies of business trends;

(d) Pricing studies;

(e) Plant and warehouse location studies;

(f) Product mix studies;

(g) Acquisition studies;

(h) Export and international studies; and

(i) Internal company employees studies.

3. Corporate Responsibility Research:

(a) Consumers “right to know” studies;

(b) Ecological impact studies;

(c) Studies on legal constraints on advertising and promotion; and

(d) Social values and policies studies.

4. Product Research:

(a) New product acceptance and potential;

(b) Competitive product studies;

(c) Testing of existing products; and

(d) Packaging research-design or physical characteristics.

5. Sales and Market Research:

(a) Measurement of market potentials;

(b) Market-share analysis;

(c) Determination of market characteristics;

(d) Sales analysis;

(e) Establishment of sales quotas, territories;

(f) Distribution channel studies;

(g) Test markets, store audits;

(h) Consumer-Panel operations;

(i) Sales compensation studies; and

(j) Promotional studies of premiums, coupons sampling etc.

Some of the Special Problems Faced by Corporate Organisations in India:

As long as marketers in India did not face much difficulty in selling their products (services) they did not find much value in marketing research. Formal use of marketing research in the India Corporate sector began sometime in mid-1970’s.

In recent times there is further momentum in the practice as the business environment in the country is now characterized by many diversities like:

i. High degree of competition – The memories of long waiting time to get delivery of a product, limited choice and sometimes shabby products and unusually high prices have dimmed a great deal. The heat of competition is not restricted to the upper echelons of urban markets. Even the rural markets have begun to benefit from the impact of these changes.

ii. Large number of consumers with wide variations of requirements, tastes and preferences for different products and services.

iii. Change in the socio-economic conditions of the market. Specially the consumer goods manufactures today encounter a sizeable middle income population, and moreover, rise in the number of working women and educational level have significantly affected consumer behaviour.

iv. Growth in the communication facilities has led to greater awareness and more choice option to advertise through.

v. Consumers, by and large, are found to have more discretionary income. But they have at the same time much concern about their value for money.

vi. Since 1985 liberal licensing and import policy of the Indian Government has brought about many changes in the corporate environment. Changes have taken place both, in the scale and in the nature of problems which the management must tackle.

Recent development in the Indian market bear a similarity to traditional free market, where primary determinant of success is keeping the customers happy. Managing product (service) in tune with such market forces assumes a critical role.

Historically, in the shortage prone economy, marketing was found to be a luxury that did not seem relevant to the needs of the Indian consumer. This view is now rapidly changing.

Expenditure on unsuccessful product launches, wrong product positioning, improper distribution system etc., can whittle away the vitals of an organization in the absence of a sound, professional marketing management and high quality marketing research.

Thus corporate world in India has now realized the utility of data based marketing decision making rather than only intuition and hunch. So to derive an edge over the competition in today’s dynamic business environment, any marketer finds it essential to evolve marketing programmes based on proper marketing research.

11. Suppliers of Marketing Research :

A company can obtain marketing research in a number of ways.

Most large companies:

i. Procter & Gamble P & G assigns marketing researchers to each product operating division to conduct research for existing brands. There are two separate in-house research groups, one in charge of overall company advertising research and other in charge of marketing testing.

Each group’s staff consists of marketing research managers, supporting specialists (survey designers, statisticians, behavioral scientists) and in-house field representatives to conduct and supervise interviewing. Each year, Proctor & Gamble calls or visits over 1 million people in connection with about 1,000 research projects.

ii. Hewlett-Packard at HP, marketing research is handled by the Market Research and Information Center (MRIC), located at HP headquarters. The MRIC is a shared resource for all HP divisions worldwide and is divided into three groups.

The market Information Center provides background information on industries, markets and competitors using syndicated and other information services. Decision support teams provide research consulting services. Regional satellites in specific locales worldwide support regional HP initiatives.

Small companies can hire the services of a marketing research firm or conduct research in creative and affordable ways, such as:

i. Engaging Students or Professors to Design and Carry Out Projects:

One Boston University MBA project helped American Express develop a successful advertising campaign geared toward young professionals.

ii. Using the Internet:

A company can collect considerable information at very little cost by examining competitors’ Web sites, monitoring chat rooms, and accessing published data.

iii. Checking Out Rivals:

Many small companies routinely visit their competitors. Tom Coolhill, a chef who owns Atlanta restaurants, gives managers a food allowance to dine out and bring back ideas. Atlanta jeweler Frank Maier Jr. Who often visits out-of-town rivals, spotted and copied a dramatic way of lighting displays.

iv. Syndicated-Service Firms:

These firms gather consumer and trade information, which they sell for a fee. Examples- Nielsen Media Research, SAMI/ Burke.

v. Custom Marketing Research Firms:

These firms are hired to carry out specific projects. They design the study and report the findings.

vi. Specialty-Time Marketing Research Firms:

These firms provide specialized research services. The best example is the field-service firm, which sells field interviewing services to other firms.

12. Marketing Research Instruments :

Marketing researchers have a choice of two main research instruments in collecting primary data- questionnaires and mechanical devices.

1. Questionnaires:

A questionnaire consists of asset of questions presented to respondents for their answers. Because of its flexibility, the questionnaire is by far the most common instrument used to collect primary data. Questionnaires need to be carefully developed, tested and debugged before they are administrated on a large scale.

In preparing a questionnaire, the professional marketing researcher carefully chooses the questions and their form, wording, and sequence. The form of the question asked can influence the response.

Marketing researchers distinguish between closed-end and open-end questions. Closed-end questions specify all the possible answers. Open-end questions allow respondents to answer in their own words. Closed-end questions provide answers that are easier to interpret and tabulate.

Open-end questions often reveal more because they do not constrain respondents answers Open-end questions are especially useful in exploratory research, where the researcher is looking for insight into how people think rather than in measuring how many people think a certain way

Finally the questionnaire designer should exercise care in the wording and sequencing of questions. The questionnaire should use simple, direct, unbiased wording and should be pretested with a sample of respondents before it is used.

The lead question should attempt to create interest. Difficult or personal questions should be asked toward the end so that respondents do not become defensive early. Finally, the questions should flow in a logical order.

2. Mechanical Instruments:

Mechanical devices are occasionally used in marketing research. Galvanometers measure the interest or emotions aroused by exposure to a specific ad or picture.

The tachistoscope flashes an ad to a subject with an exposure interval that may range from less than one hundredth of a second to several seconds. After each exposure, the respondents eye movements to see whether their eyes land first, how long they linger on a given item, and so on. A sudiometer is attached to television sets in participating homes to record when the set is on and to which channel it is tuned.

3 . Sampling Plan :

After deciding on the research approach and instruments the marketing researcher must design a sampling plan.

This plan calls for these decisions:

I. Sampling Unit:

Unit who is to be surveyed? The marketing researcher must define the target population that will be sampled. In the American Airlines survey, should the sampling unit be business travelers, vacation travelers, or both? Should travelers under age 21 be interviewed? Should both husbands and wives be interviewed?

Once the sampling unit is determined, a sampling frame must be developed so that everyone in the target population has an equal or known chance of being sampled.

II. Sample Size:

How many people should surveyed? Large samples give more reliable results than small samples. However it is not necessary to sample the entire target population or even a substantial portion to achieve reliable results. Samples of less than 1 percent of a population can often provide good reliability, given a credible sampling procedure.

III. Sampling Procedure:

How should the respondents be chosen? To obtain a representative sample, a probability sample of the population should be drawn. Probability sampling allows the calculation of confidence limits for sampling error. Thus one could conclude after the sample id taken that “the interval 5 to 7 trips per year has 95 chances in 100 of containing the true number of trips taken annually by air trailers in the South west”.

The types of probability sampling are described. When the cost of time involved in probability sampling is too high. Marketing researchers will take non-probability samples. Some marketing researchers feel that non-probability samples are very useful in many circumstances, even though they do not allow sampling error to be measured.

4 . Contact Methods :

Once the sampling plan has been determined, the marketing researcher must decide how the subject should be contacted- mail, telephone, personal, or on-line interviews.

The mail questionnaire is the best way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviewers. Mail questionnaires require simple and clearly worded questions.

Unfortunately the response rate is usually low or slow. Telephone interviewing is the best method for gathering information quickly, the interviewer is also able to clarify questions if respondents do not understand them.

The response rate is typically higher than in the case of mailed questionnaires. The main drawback is that the interviews have to be short and not too personal. Telephone interviewing is getting more difficult because of answering machines and people becoming suspicious of telemarketing.

5 . Personal Interviewing :

It is the most versatile method. The interviewer can ask more questions and record additional observations about the respondent, such as dress and body language. Personal interviewing is the most expensive method and requires more administrative planning and supervision than the other three.

It is also subject to interviewer bias or distortion. Personal interviewing takes two forms. In arranged interviews, respondents are contacted for an appointment. Often a small payment or views, respondents are contacted for an appointment. Often a small payment or incentive is offered.

Intercept interviews involves stopping people at a shopping mall or busy street corner and requesting an interview. Intercept interviews have the drawback of being non-probability samples, and the interviews must not require too much time.

There is increased use of online interviewing. A company must not require too much time.

There is increased use of on-line interviewing. A company can include a questionnaire at its web page and offer an incentive to answer the questions.

13. Organising Marketing Research Function :

Several options are open to company for organizing its marketing research activity. For example- in some companies like Hindustan Lever, ITC there is a separate marketing research department who undertakes research on its own.

Alternatively, there are many organization who assign the responsibility of conducting marketing research to an outside specialist, individual, or an organization. Medium and small sized companies usually prefer second option, whereas the large firms set up a marketing research department consisting of full specialists.

Also many a time, companies in India subscribe to a syndicate research work, done by some marketing research on consultancy firm. The latter arrangement would involve paying some subscription fee for obtaining the findings of some research studies at a regular interval.

Such services are particularly available in the spheres or readership survey, the movement of consumer or pharmaceutical goods through retail outlet, TV viewing etc. As syndicated research services are normally designed to meet the requirements of many companies, they do not provide any tailor made information. Its major advantage lies in cost effectiveness.

Marketing Manager and Researcher Interaction :

In India, research based decision making has just made a beginning. There are still a lot of gaps in understanding between the two sets of people involved in these activities. It should be reiterated that marketing research is an aid to decision making, not a substitute for it. Unfortunately, sometimes marketing managers view marketing research reports as the final answer to their problems.

Marketing managers usually complain that:

1. Research is not problem oriented, it provides a number of facts, but not actionable results.

2. Researchers are too pre-occupied with techniques and they are often reluctant to get involved in solving the management’s problems.

3. Research is not executed with the proper sense of urgency. It is sometimes vague, and of questionable validity.

4. Researchers are generally poor communicators. They do not talk the language of the management. They lack the sense of accountability.

Likewise, researchers have complaints about marketing managers that:

1. Marketing managers do not include research in the overall problem or total decision context. They tend to ask for only specific information about partial issues.

2. Marketing managers pay lip service to research and do not really appreciate its value/problems.

3. Marketing managers do not allow adequate time and budget for research. They tend to draw conclusion based on early or incomplete results. Good research requires sufficient lead time for thorough reporting documentation.

4. Marketing managers rely more on intuition and judgment rather than on formal research. Research is used to confirm or excuse past actions or as a fire fighting device, not as an aid in decision making.

The key factor underlying the mutual distrust between marketing managers and researchers, seems to be the understanding of the mutual role and responsibility of both parties.

To be effective, researchers must understand the decision contexts and views of the marketing managers, likewise marketing managers must recognise that decisions should be evolved in the light of their own experience, and knowledge and other factors that are not explicitly considered in the research project.

Thus, it is most essential that both marketing managers and researchers must be equally involved and interact with each other as much as possible.

14. Classification of Marketing Research Tasks (Problems) Based on the Subject of Research:

Research on Product:

i. Reviewing product line, product quality, product features, product design and rationalisation of product lines.

ii. Study on the actual uses of a given product.

iii. Study on new uses of an existing product.

iv. Testing of new products.

v. Study of the competitive position of a product/brand.

vi. Study on related products and the nature of the relationship.

vii. Study of packaging/packing design, packing material, package size, etc.

viii. Study on servicing requirements.

Marketing Research in Small Businesses and Non-Profit Organizations :

Marketing research does not only occur in huge corporations with many employees and a large budget. Marketing information can be derived by observing the environment of their location and the competitions location. Small scale surveys and focus groups are low cost ways to gather information from potential and existing customers.

Most secondary data (statistics, demographics, etc.) is available to the public in libraries or on the internet and can be easily accessed by a small business owner.

Below some steps that could do by SME (Small Medium Enterprise) to analyze the market:

1. Provide secondary and or primary data (if necessary);

2. Analyze Macro and Micro Economic data (e.g., Supply and Demand, GDP, Price change, Economic growth, Sales by sector/industries, interest rate, number of investment/ divestment, I/O, CPI, Social analysis, etc.);

3. Implement the marketing mix concept, which is consist of: Place, Price, Product, Promotion, People, Process, Physical Evidence and also Political and social situation to analyze global market situation;

4. Analyze market trends, growth, market size, market share, market competition (e.g., SWOT analysis, B/C Analysis, channel mapping identities of key channels, drivers of customers loyalty and satisfaction, brand perception, satisfaction levels, current competitor-channel relationship analysis, etc.)

5. Determine market segment, market target, market forecast and market position;

6. Formulating market strategy and also investigating the possibility of partnership/ collaboration (e.g., Profiling and SWOT analysis of potential partners, evaluating business partnership);

7. Combine those analysis with the SME’s business plan/ business model analysis, e.g., Business description, Business process, Business strategy, Revenue model, Business expansion, Return of Investment, Financial analysis, Company History, Financial assumption, Cost/Benefit Analysis, Projected Profit and Loss, Cash-flow, Balance sheet and business Ratio, etc.

Note as important:

Overall analysis is should be based on 6W+1H (What, When, Where, Which, Who, Why and How) questions.

Based on Observations:

1. Ethnographic Studies:

By nature qualitative, the researcher observes social phenomena in their natural setting observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time-periods) – examples include product-use analysis and computer cookie traces.

2. Experimental Techniques:

By nature quantitative, the researcher creates a quasi- artificial environment to try to control spurious factors, then manipulates at least one of the variables – examples include purchase laboratories and test markets.

Marketing research involves conducting research to support marketing activities, and the statistical interpretation of data into information. This information is then used by managers to plan marketing activities, gauge the nature of a firm’s marketing environment and attain information from suppliers.

Marketing researchers use statistical methods such as quantitative research, qualitative research, hypothesis tests, Chi-squared tests, linear regression, correlations, frequency distributions, poisson distributions, binomial distributions, etc. to interpret their findings and convert data into information.

The marketing research process spans a number of stages including the definition of a problem, development of a research plan, collecting and interpretation of data and disseminating information formally in form of a report. The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information.

A distinction should be made between marketing research and market research. Market research pertains to research in a given market. As an example, a firm may conduct research in a target market, after selecting a suitable market segment. In contrast, marketing research relates to all research conducted within marketing. Thus, market research is a subset of marketing research.

Research on Competition :

ii. Study of competitor’s products, prices, promotion programmes, channel policies and sales methods.

Marketing research serves two main functions viz. – (i) it provides information for decisions making and (ii) it develops new knowledge. It is concerned with all those factors which have a direct bearing upon the marketing of products.

It focuses on the study of:

(a) Market characteristics;

(b) Measurement of market potentials;

(c) Market share analysis;

(e) Competitive-product studies;

(f) New-product acceptance;

(g) Short-range forecasting;

(h) Low-range forecasting; and

(i) Business trends.

Marketing research is aimed in offering sound alternative solution to all marketing problems relating, to exchange of goods. In fact, marketing research is the beginning of marketing management.

But the term ‘marketing research’ is always used as a synonym to marketing research. In fact, market research is only one branch of the marketing research. Market research is primarily concerned with the investigation, analysis and measurement of market demand.

Market research answers the following question- “Who, what, where, when, why and how of actual and potential buyers?” But marketing research has wider meaning and scope.

15. Benefits of Marketing Research :

It is apparent that the scope of marketing research activity is very wide. It covers almost all aspects of marketing. The major contribution of marketing research is that it augments the effectiveness of marketing decisions.

Marketing research uncovers facts from both outside and within the company relevant to marketing decisions and provides a sustainable and logical base for making decisions.

The specific contributions of marketing research to the effectiveness of the marketing programme of a firm are as follows:

1. With the guidance of research, products should be better suited to the demand and priced reasonably.

2. Specific markets having the greatest sales potentialities could be identified.

3. Research can help to identify the best sales appeal of the products, the best way of reaching the potential buyers and the most suitable timing promotion etc.

4. Research can also help minimize marketing costs by making marketing efforts more efficient and effective.

5. Research can also help find out the effectiveness of sales force management such as right selection procedure, effective training programmes, scientific compensation schemes and effectives control mechanisms.

The contribution of marketing research are considerable. It facilitates both the decision-making and the operational tasks of marketing management effective and efficient and thereby contributes to consumer’s satisfaction and organization’s efficiency.

16. Limitations of Marketing Research :

Despite the proven value of MR, it must be borne in mind that it cannot provide a complete answer to any marketing problem. MR consists of systematic collection of data for predicting the future. It is a tool which helps the marketing executive in avoiding guess work, but they cannot predict with certainty.

Moreover to yield satisfactory results following shortcomings should be recognised and accepted:

1. MR projects may require a considerable time lag between their inception, completion and implementation. Collection of data, their checking, presentation, formulation of policy and execution involves considerable time. In that interval period customer’s tastes and preferences are subject to frequent change. Marketing is a very dynamic affair so its problems must be treated with quick solutions. Otherwise, if MR involves time delays then suggested solutions by MR may be irrelevant to the changed conditions. So it is essential that MR projects should be completed in time and executed promptly in terms of time element.

2. Some MRs deal with a wide variety of condition which are highly dynamic and since it involves numerous variables, it is extremely difficult to assemble accurate data or to interpret them with absolute exactness. The findings of MR has no universal acceptance. In fact the subject of study for marketing researcher is consumer behaviour, so MR cannot be accepted as exact science.

Study of human behaviour precludes absolute mathematical accuracy. Due to errors in sampling procedure, field study, analysis etc., MR cannot always be accurate and purely authentic. It cannot measure as chemical experiments. MR is far from perfect.

3. MR does not solve any problem. It is simply a tool in hands of management for efficient decision making. It provides necessary inputs such as data, and vital information which may be helpful for intelligent decision. MR may point out several possible solutions for any problem, but it can never be used by management as a substitute for good decisions.

Decision making is ultimately done by marketing executive, using his mind with the support of MR findings. Research is only a vital ‘arm’ in the hands of management. It can only suggest various alternatives and appropriate solutions.

4. One serious point has been raised by Stanton. According to him possibly the fundamental reason for the modest status of MR has been the failure of researchers to communicate adequately with management. Admittedly, there are poor researchers and poor research.

Moreover, sometimes the mentality of the quick acting, programmatic, decision making executive may be at odds with the conditions, complex hedging all bets mentality of a marketing researcher. However researchers, like manufacturers, are often product oriented when they should be market oriented.

They concentrate on research methods and techniques rather than on showing management how these methods can aid in making better marketing decisions. Executives are willing to invest heavily in technical research because they are convinced there is a payoff in this activity.

5. It is difficult to appraise the actual rupee value of MR results. In most instances it is impossible to translate the rupee value received from MR. Many business houses hesitate to make expenditure, when the results are so intangible. The management does not meet MR as a continuous process. It is treated as a medicine of some diseases.

Management realises the need of MR when it has a marketing problem. So management must put attention on current flow of information through Mr. Newman observed, “Reflecting Executives” lack of understanding of research and its potential contribution to decision making is the fact that research departments have tended to be technical job shops to which operating people could bring results if they chose to do so.

The weakness of this system is that it depends on the initiative of executives who are unfamiliar with research and who typically are unable to identify their problems well enough to ask for the help they need. Thus MR cannot be effective unless it is viewed as a continuous process and not as a onetime activity.

6. Another constraint that is lack of trained, well equipped and well directed research personnel who may improve the quality and utility of MR. The successful performance of MR requires that it must be carried out by qualified individuals. Many research projects have pre-occupied techniques which fail to grasp the complete picture. Many research project are carried out by operating executives. These men frequently have little time to devote in MR.

7. MR may be too expansive in some cases. MR is treated as luxury to small units. Its expense can be afford only by large business organisations. In seller’s market the manage­ment has apathetic approach towards MR. However with the growth of buyers’ market and increasing competition the value of MR are being increasing competition the value of MR are being increasingly recognised by marketing management.

Marketing research is an integral part of scientific marketing management, but the marketing research findings can only provide indications and not conclusions to any problem. These research projects are based on certain assumptions, so findings are made with reference to a certain marketing environment and the validity of MR is affected to that extent.

17. Ethical Issues in Marketing Research :

Ethics in Latin language is called Ethicus and in Greek it is called Ethicos. The word has origin from the Greek Ethos meaning character or manners. Another term that is considered synonym of ethics is morality. However, they are different. The word morality means behaviour and therefore Ethico-moral actions pertains to actions initiated by the character and expressed through behaviours.

Ethics focuses on Standards, rules and codes of conduct that govern the behaviour of individuals or groups. It is the science of morals, which is concerned with human character and conduct. It also refers to the code of conduct that guides an individual while dealing with a situation.

The way marketing research is conducted and the reasons for conducting research could raise many ethical issues.

Data collection could become an invasion of privacy. People are observed using hidden cameras, purchase behaviour studied using scanner data and credit card use data, and Internet activity is tracked using ‘cookies’. There is always strong temptation for some managers to misuse access to private information. Similarly, customer databases provide lots of personal information about customers. This information will be very valuable to other businesses and could be sold for a profit.

Collection of information could be annoying and inconvenient for the respondents. Often, interviews, both personal and over telephone, become intrusive.

Occasionally, researchers use deception to collect data. Acting as a potential customer falsely, some persons collect data from businesses. Other researchers pretend to be shoppers and ask fellow shoppers their opinions of products or brands.

False Representation:

Practices called “sugging”, i.e., selling under the guise of research and “frugging”, i.e., fund-raising under the guise of research are very common, which tarnish the image of legitimate researchers.

We can look at ethical issues in marketing research from the point of view of- (a) Respondents (b) Clients, and (c) Researchers.

(1) Ethics in the Treatment of Respondents:

Respondents include individuals, organizations or group of persons whom the agency approaches to collect information for research studies. The respondents should have the right to privacy, i.e., no telephone calls, e-mail or personal visit without the consent of the respondent. The consumer has a right to choose. That is whether he wants to participate or not in the studies.

The consumer has to be protected against physical and psychological harm. He may be uncomfortable to answer questions regarding income, health, business, relationship with members of the family, etc. The consumer has the right to be informed, i.e., the consumers must be informed regarding the objective of the research and the benefits if any to the consumers arising out the research findings.

(2) Ethics in the Treatment of Clients:

Client refers to any individual organization, private or public institution or department of such organization which has agreed to subscribe to a marketing research project.

The obligations of researchers are:

(a) The method of research and the results should be accurately presented in the report.

(b) The information obtained must be held in confidence and should not be shared with other clients and competitors.

(c) The researcher should not undertake unethical research.

(d) The limitations of the study should be informed to the client.

(e) Should not collect data in a biased manner to support the client’s views.

(f) The researcher is obliged to inform the client the unbiased results of the research irrespective of whether it is liked by the management or not.

(3) Ethics in the Treatment of Researchers:

Researchers include any individual, organization, private or public institution that is acting as consultant on marketing research project.

The obligations of clients towards researchers are:

(a) If the research project requires some information on company sales, profitability, etc., the client has to be provide same to the researchers. Otherwise the report will not be complete.

(b) After finalizing the terms and conditions for undertaking the project, the company should not ask for additional information at original project cost. The client has to pay for collecting extra information over and above the original proposal.

(c) If the firm has already decided to assign the project to a particular researcher, it should not invite proposals from other parties also. It goes against the interest of competing researchers.

(d) After finalizing a large project, the firm should not change the scope of the project to reduce the cost.

Related Articles:

• Industrial Marketing Research: Concept and Nature and Scope| Business Marketing
• Marketing Research: Process and Importance | Marketing Management
• Marketing Planning: Definition, Types, Process, Steps and Importance
• Marketing Research: Procedure for doing Marketing Research for your Business

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A Deep Dive into the Marketing Information System (MIS)

A Marketing Information System (MIS) is a management information system designed to support marketing decision-making. It brings together many different kinds of data, people, equipment, and procedures to help an organization make better decisions.

In the ever-evolving world of business , staying ahead of the curve is paramount for survival and growth. The key to this competitive edge lies in a well-structured Marketing Information System (MIS). This blog post will unravel the intricacies of MIS, its components, and its role in transforming business strategies

The role of a company’s marketing information system (mis) is important because it aids in decision-making, marketing research, validating internal records, and most importantly acts as a marketing decision support system.

Understanding the Marketing Information System (MIS)

This section will provide a comprehensive overview of what a Marketing Information System is. We’ll delve into its definition, purpose, and why it’s a game-changer in the modern business landscape.

Definition of Marketing Information System : A Marketing Information System (MIS) is a strategic tool used by businesses to collect, analyze, and present data related to their market environment. It encompasses a structured set of procedures and methods designed to generate, analyze, disseminate, and store anticipated marketing decision information on a regular, continuous basis.

The initial function of a marketing information system is to asses the business landscape and provide recommendations that help in the recommendation of various business processes specifically related to marketing

Purpose : The primary purpose of an MIS is to support the decision-making process within a business. It provides managers with the necessary information to make informed marketing decisions and create effective marketing strategies. The data collected through an MIS can include information about customer demographics, buying habits, sales trends, competitor analysis, and market research.

The initial function of a marketing information system is that It balances the information that a firm wishes to have with the information a firm needs.

Importance in the Modern Business Landscape

The importance of an MIS lies in its ability to help businesses stay competitive in today’s rapidly changing market environment. It enables businesses to:

Identify Market Opportunities : An MIS can help businesses identify new market opportunities, track market trends, and understand customer needs and preferences. This can lead to the development of new products or services, expansion into new markets, or improvement of existing offerings.

Improve Decision-Making : By providing accurate and timely information, an MIS supports better decision-making at all levels of the organization. This can lead to improved operational efficiency, cost savings, and increased profitability.

Enhance Customer Satisfaction : An MIS can help businesses understand their customers better, leading to improved customer service, personalized marketing efforts, and ultimately, higher customer satisfaction and loyalty.

Game-Changer Aspect : In the era of big data and digital transformation, an MIS is indeed a game-changer. It allows businesses to harness the power of data and use it to drive strategic decision-making. According to a report by McKinsey, companies that leverage customer behavior data to generate behavioral insights outperform their peers by 85 percent in sales growth and more than 25 percent in gross margin.

The Pillars of Marketing Information System (MIS)

Internal Records:

Internal records are the backbone of any Management Information System (MIS). They provide a historical context, allowing decision-makers to analyze past performance and make informed predictions about future trends. This data typically includes sales records, inventory details, financial statements, and other operational data. 

The effectiveness of internal records can be measured using data accuracy, completeness, and timeliness. A formula commonly used to assess data quality is:

 Data Quality Score = (Completeness + Accuracy + Timeliness) / 3

High-quality internal records can significantly improve decision-making efficiency and accuracy, leading to better business outcomes. 

Marketing Intelligence:

Marketing intelligence refers to the external data that a company gathers about the market in which it operates. It includes information about competitors, market trends, customer behavior, and economic indicators.

An example of a formula used in marketing intelligence is the Market Growth Rate:

Market Growth Rate = (Current Market Size – Previous Market Size) / Previous Market Size * 100%

This formula helps businesses understand the growth potential of their market and make strategic decisions accordingly.

Marketing Research:

Marketing research involves systematic gathering, recording, and analysis of data about issues relating to marketing products and services. It involves conducting surveys, interviews, focus groups, and other research methods to gather information about customer needs, preferences, and attitudes.

A commonly used statistic in marketing research is the Confidence Interval, which gives an estimated range of values that is likely to include an unknown population parameter. The width of the confidence interval gives us some idea about how uncertain we are about the unknown parameter.

Confidence Interval = Sample Mean ± (Z-score * Standard Deviation / √Number of Observations)

Marketing Decision Support System (MDSS):

An MDSS is a computerized information system that supports business and organizational decision-making activities. It utilizes data, models, and user-friendly software to support the formulation of marketing strategies.

The effectiveness of an MDSS can be measured using the Decision Quality Metric:

Decision Quality = (Relevance + Reliability + Timeliness + Completeness) / 4

This metric provides a quantitative measure of the quality of the decisions made using the MDSS, with higher scores indicating better decision-making.

Each of these pillars plays a crucial role in the functionality and effectiveness of an MIS. By understanding and optimizing each component, businesses can significantly enhance their decision-making capabilities, drive growth, and gain a competitive edge in the market.

The Role of Marketing Information System (MIS) in Decision Making

This part will focus on the practical implications of an MIS in a business setting. We’ll explore how it aids in strategic decision-making, forecasting, and problem-solving.

Strategic Decision-Making

An MIS provides critical data that can be analyzed and used for strategic decision-making. This data can include everything from sales reports to customer behavior data, which can help businesses understand their market and make informed decisions.

For instance, an MIS can help identify trends in sales data that might indicate a need for a new marketing strategy or product development. It can also help identify areas where costs could be reduced without negatively impacting product quality or customer satisfaction.

The MIS can use a formula like the Decision Tree Analysis, which helps to evaluate the potential outcomes of a decision. The formula is as follows:

Expected Monetary Value (EMV) = ∑ (Payoff x Probability)

Here, the payoff is the potential outcome of the decision, and the probability is the chance of that outcome occurring.

Forecasting

An MIS can also be used for forecasting, which is essential for planning and budgeting. It can analyze historical data to predict future trends, helping businesses prepare for what’s to come.

One common forecasting method used is Time Series Analysis. This method uses historical data to identify patterns and trends that can predict future outcomes. The formula for a simple linear regression time series forecast is:

  Y = a + bt

Where Y is the forecasted value, a is the Y-intercept, b is the slope of the trend line, and t is the period.

Problem-Solving

An MIS can be a valuable tool in problem-solving. It can provide data that helps identify problems, analyze their causes, and evaluate potential solutions.

The MIS can use a variety of problem-solving models, such as the Cause and Effect Diagram, also known as the Fishbone Diagram. This diagram helps to identify, explore, and display the possible causes of a specific problem or quality characteristic.

To sum up, an MIS plays a crucial role in decision-making, forecasting, and problem-solving within a business. It provides valuable data that can be analyzed and used to make strategic decisions, predict future trends, and solve problems. It’s an indispensable tool for any business that wants to stay competitive in today’s data-driven marketplace.

Advantages of Using a Marketing Information System

Improved Decision-Making : The primary advantage of using a MIS is that it can significantly improve the decision-making process. With a robust MIS, marketing managers can access real-time, accurate data that allows them to make informed decisions. For example, a survey by Adobe found that 76% of marketers believe measurement and analytics are crucial to their business growth. Enhanced Marketing Planning : The MIS can help in creating more effective marketing plans. It provides data about customers’ preferences, market trends, and competitors’ strategies, enabling managers to devise more targeted and competitive marketing plans. According to the 2020 CMO Survey, companies that use data-driven marketing have an edge over their competitors, with a 16% to 20% increase in marketing ROI. Target Market Identification : With a MIS, companies can easily identify their target market. It provides demographic, geographic, psychographic, and behavioral data that can help a business reach its ideal customer. According to a report by McKinsey, businesses that leverage customer behavior data to generate behavioral insights achieve an 85% increase in sales growth and a 25% increase in gross margin. Reduced Costs : The MIS can also lead to significant cost savings. By automating data collection and analysis, MIS reduces labor costs. Moreover, its ability to improve the efficiency and effectiveness of marketing campaigns can also decrease marketing expenses . An IBM study found that incorporating AI (part of MIS) into marketing can cut costs by as much as 30%. Competitive Advantage : Lastly, an effective MIS can provide a competitive advantage. It gives marketers insights into the strategies and performances of their competitors, enabling them to adjust their strategies accordingly. According to a Harvard Business Review report, companies using analytics and data (elements of MIS) to inform decision-making are more productive and experience higher returns than their competition.

Implementing MIS: A Step-by-Step Guide

Transitioning from theory to action, this section will provide a roadmap for businesses looking to implement an MIS. We’ll discuss the stages of implementation, potential challenges, and tips for success.

Planning : The first step in implementing an MIS is careful planning. This involves defining the scope of the system, setting goals, and identifying key stakeholders. An effective plan should also include a detailed timeline, budget, and risk management strategy. 

Design : Once the plan is in place, the next step is to design the MIS. This involves deciding on the software, hardware, and network infrastructure that will be used. The design phase also includes creating a detailed blueprint of the system’s architecture and user interface.

Development : The development stage involves building the MIS based on the design blueprint. This includes coding, testing, and debugging the system. It’s crucial to ensure the system is user-friendly and meets the organization’s needs.

Deployment : After the MIS has been developed, it’s time to deploy it. This involves installing the system, training users, and transitioning from the old system to the new one.

Maintenance : The final stage of implementation is maintenance. This involves regularly checking the system for errors, making necessary updates, and providing ongoing user support.

Potential Challenges of Implementing a Marketing Information System 

Implementing an MIS can be a complex process, and there are several potential challenges to be aware of. These include:

Resistance to Change : Employees may be resistant to adopting a new system, especially if they are comfortable with the old one.

Technical Difficulties : There may be technical issues during the development and deployment stages, such as software bugs or hardware malfunctions.

Budget Overruns : The cost of implementing an MIS can be high, and it’s not uncommon for projects to go over budget.

Tips for Success while Implementing MIS

Involve Stakeholders : Ensuring that all stakeholders are involved in the planning and design stages can help to ensure the MIS meets everyone’s needs.

Provide Training : Offering comprehensive training can help to overcome resistance to change and ensure users are comfortable with the new system.

Regularly Review and Update : Regularly reviewing and updating the MIS can help to keep it running smoothly and ensure it continues to meet the organization’s needs.

The Future of Marketing Information Systems (MIS)

As we gaze into the crystal ball, we’ll discuss the future trends in MIS. This will include the role of artificial intelligence, machine learning, and big data in shaping the future of MIS.

Role of Artificial Intelligence in the Future of MIS

Artificial Intelligence (AI) is rapidly revolutionizing the field of Management Information Systems (MIS). AI can automate routine tasks, provide predictive analysis, and improve decision-making processes. 

Automation : AI can automate routine tasks, freeing up time for employees to focus on more complex tasks. For example, AI can automate data entry, reducing errors and improving efficiency. 

Predictive Analysis : AI can analyze large amounts of data to identify trends and patterns. This can help businesses predict future outcomes and make informed decisions. For example, AI can predict customer behavior, helping businesses to tailor their marketing strategies.

Improved Decision-Making : AI can provide insights and recommendations based on data analysis. This can improve the decision-making process, leading to better business outcomes. For example, AI can provide recommendations on how to optimize operations, reduce costs and improve productivity.

Role of Machine Learning in the Future of MIS

Machine Learning (ML), a subset of AI, is also playing a crucial role in the future of MIS. ML can analyze data and learn from it, improving its performance over time.

Data Analysis : ML can analyze large amounts of data to identify trends and patterns. This can help businesses to make informed decisions. For example, ML can analyze customer behavior, helping businesses to tailor their marketing strategies .

Continuous Learning : ML can learn from data, improving its performance over time. This can help businesses to adapt to changing circumstances. For example, ML can learn from customer feedback, helping businesses to improve their products or services.

Predictive Modeling : ML can build predictive models based on data analysis. This can help businesses to predict future outcomes and make informed decisions. For example, ML can predict sales trends, helping businesses to plan their inventory.

Role of Big Data in the Future of MIS

Big Data is transforming the field of MIS by providing businesses with access to vast amounts of data. This can improve decision-making processes and provide businesses with a competitive advantage.

Improved Decision-Making : Big Data can provide businesses with access to large amounts of data, improving the decision-making process. For example, Big Data can provide insights into customer behavior, helping businesses to tailor their marketing strategies .

Competitive Advantage : Big Data can provide businesses with a competitive advantage by providing insights that are not available to competitors. For example, Big Data can provide insights into market trends, helping businesses to stay ahead of the competition.

Predictive Analysis : Big Data can analyze large amounts of data to identify trends and patterns. This can help businesses to predict future outcomes and make informed decisions. For example, Big Data can predict customer behavior, helping businesses to tailor their marketing strategies.

Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page

MIS: Meaning, Definitions, Components, Types, Functions, Advantages, Difference

• Post author: Anuj Kumar
• Post published: 22 September 2022
• Post category: Consumer Behaviour / Marketing Management
• Post comments: 0 Comments

Table of Contents

• 1 What is MIS?
• 2 Definition of MIS
• 3.1 Internal Records
• 3.2 Product Database
• 3.3 Salesperson Database
• 3.4 Marketing Intelligence System
• 3.5 Marketing Research System
• 3.6 Marketing Decision Support System
• 4.1 Executive Information System (EIS)
• 4.2 Marketing Information System (MIS)
• 4.3 Business Intelligence System (BIS)
• 4.4 Customer Relationship Management System (CRM)
• 4.5 Sales Force Automation System (SFA)
• 4.6 Transaction Processing System (TPS)
• 4.7 Knowledge Management System (KMS)
• 4.8 Financial Accounting System (FAS)
• 4.9 Human Resource Management System (HRMS)
• 4.10 Supply Chain Management System (SCM)
• 5.1 Data Capturing
• 5.2 Processing of Data
• 5.3 Storage of Information
• 5.4 Retrieval of Information
• 5.5 Dissemination of Information
• 6 Advantages of MIS
• 7.1 On Basis of Meaning
• 7.2 On Basis of Purpose
• 7.3 On Basis of Scope
• 7.4 On Basis of Nature
• 7.5 On Basis of Reports
• 7.6 On Basis of Orientation
• 7.7 On Basis of Problems
• 7.8 On Basis of Data
• 7.9 On Basis of Operation
• 7.10 On Basis of Computers
• 8.1 What is marketing information system?
• 8.2 What are the components of MIS?
• 8.3 What are the types of MIS?
• 8.4 What are the functions of MIS?
• 8.5 What are the advantages of MIS?
• 8.6 What are the difference between MIS and marketing research?

What is MIS?

A marketing information system ( MIS ) is a continuing and interacting system of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely, and accurate information for use by marketing decision–makers to improve their marketing planning, implementation, and control.

MIS is the use of information technology, people, and business processes to record, store and process data to produce information that decision-makers can use to make day-to-day decisions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a collection of systems, hardware, procedures, and people that all work together to process, store, and produce information that is useful to the organization. The following are some of the justifications for having an MIS system :

• Decision makers need the information to make effective decisions. Management Information Systems ( MIS ) make this possible.
• MIS systems facilitate communication within and outside the organization as employees within the organization are able to easily access the required information for day-to-day operations. Facilitates such as Short Message Service (SMS) & Email make it possible to communicate with customers and suppliers from within the MIS system that an organization is using.
• Record keeping management information systems record all business transactions of an organization and provide a reference point for the transactions.

Definition of MIS

These are some of the simple definitions of MIS :

Components of MIS

The Marketing Information System refers to the systematic compilation, review, interpretation, storage, and distribution of market information to marketers on a daily and continuous basis, both from internal and external sources.

The marketing information system distributes the related data to marketers who can make appropriate marketing decisions, such as pricing , packaging, production of new goods, delivery, media, promotion , etc.

Each marketing activity functions in unison with both within and outside the organization’s prevailing circumstances, and therefore there are many sources (e. g. Internal, Marketing Intelligence, Marketing Research ) from which the appropriate consumer information can be accessed.

Following are the components of MIS :

Internal Records

Product database, salesperson database, marketing intelligence system, marketing research system, marketing decision support system.

With its internal records of sales data, customer database, product database, financial data, operational data, etc., the Organization will collect information. A comprehensive explanation of the internal data sources is given below:

Information may be obtained from records such as invoices, copies, and billing documents prepared by businesses upon receipt of the order for products and services from consumers, distributors, or sales representatives The latest sales information acts as an assistant to the Marketing Information System should be maintained on a regular basis.

Present sales and inventory level reports help managers decide on their objectives, and marketers may use this data to design their potential sales strategy . Companies maintain many databases, such as the Consumer Database, in which the full information on the name, address, phone number, purchasing frequency, financial status, etc. of the customer is kept.

Product database in which full information about the price, features, and variations, of the product is stored.

The salesperson database, wherein the complete information about the salesperson, his name, address, phone number, sales target, etc. is saved In the data warehouse, the companies store their data from where the data can be retrieved whenever the need arises.

When the data is stored, it is mined by statistical experts by applying many computer software and techniques to turn it into usable meaningful information that offers facts and figures.

The marketing intelligence system provides data on market events, i. e. marketing environment-related data that is external to the organization. It includes information on changing market trends, the pricing strategy of the competitor, changes in the tastes and preferences of the customer, new products launched on the market, the competitor’s promotion strategy, etc.

In order to have an effective marketing information system, companies should work aggressively by taking the following steps to enhance the marketing intelligence system:

• Providing the right training and encouraging the sales force to keep track of market trends, i. e. changing customer tastes and preferences, and providing suggestions for improvements if any.
• Motivating the partners of the channel, i. e. dealers, distributors, distributors in the real market to provide the appropriate and required customer and competitor details.
• Companies can also strengthen their system of marketing intelligence by having more and more competitor knowledge. This can be achieved either by buying the product of the competitor, visiting trade shows, or reading the written papers of the competitor in magazines, journals, or financial reports.

Marketing Research is the systematic collection, organization, analysis, and interpretation of primary or secondary data to find out solutions to marketing problems. By applying various statistical instruments, businesses perform marketing research, including shifts in the tastes and desires of the client, competitor tactics, the reach of new product launches, etc.

The data, which can be either primary data (first–hand data) or secondary data(second–hand data, available in books, magazines, research reports, journals, etc. ), must be obtained in order to perform market research.

It requires many software programs that can be used to evaluate the information gathered so far by marketers to make better marketing decisions. The marking managers can save the huge data in a tabular form with the use of computers and can apply statistical programs to evaluate the data and make decisions in line with the results.

Therefore, marketers need to check the marketing environment, i. e. both the internal (within the organization) and the external (without the organization), so that it is possible to plan marketing practices, processes, and strategies accordingly.

Types of MIS

A management information system is a broad term that incorporates many specialized systems. The major types of MIS :

Executive Information System (EIS)

Marketing information system (mis), business intelligence system (bis), customer relationship management system (crm), sales force automation system (sfa), transaction processing system (tps), knowledge management system (kms), financial accounting system (fas), human resource management system (hrms), supply chain management system (scm).

Senior management uses an EIS to make decisions that affect the entire organization. Executives need high-level data with the ability to drill down as necessary.

Marketing teams use MkIS to report on the effectiveness of past and current campaigns and use the lessons learned to plan future campaigns.

Operations use BIS to make business decisions based on the collection, integration, and analysis of the collected data and information . This system is similar to EIS, but both lower-level managers and executives use it.

A CRM system stores key information about customers, including previous sales, contact information, and sales opportunities. Marketing, customer service, sales, and business development teams often use CRM.

A specialized component of a CRM system that automates many tasks that a sales team performs. It can include contact management, lead tracking, and generation, and order management.

An MIS that completes a sale and manages related details. On a basic level, a TPS could be a point of sale (POS) system or a system that allows a traveler to search for a hotel and include room options , such as price range, the type, and a number of beds, or a swimming pool, and then select and book it. Employees can use the data created to report on usage trends and track sales over time.

Customer service can use a KM system to answer questions and troubleshoot problems.

This MIS is specific to departments dealing with finances and accounting, such as accounts payable (AP) and accounts receivable (AR).

This system tracks employee performance records and payroll data.

Manufacturing companies use SCM to track the flow of resources, materials, and services from purchase until final products are shipped.

Functions of MIS

MIS is set up by an organization with the prime objective to obtain management information that is to be used by its managers in decision-making. Thus, MIS must perform the following functions in order to meet its objectives. Following are the functions of MIS :

Data Capturing

Processing of data, storage of information, retrieval of information, dissemination of information.

MIS captures data from various internal and external sources of an organization. Data capturing may be manual or through computer terminals. End users typically record data about transactions on some physical medium, such as paper form, or enter it directly into a computer system .

The captured data is processed are converted into the required management information. Processing of data is done by such activities as calculating, comparing, sorting, classifying, and summarizing. These activities organize, analyze and manipulate data using various statistical, mathematical, operations research, and/ or other business models.

MIS stores processed or unprocessed data for future use. If any information is not immediately required, it is saved as an organizational record. In this activity, data and information are retained in an organized manner for later use.

Stored data is commonly organized into fields, records, files, and databases, all of which will be discussed in detail in a later chapter.

MIS retrieves information from its stores as and when required by various users. As per the requirements of management users, the retrieved information is either disseminated as such or it is processed again to meet the exact MI demands.

Information, which is a finished product of MIS, is disseminated to the users in the organization. It could be periodic through reports, or online through computer terminals.

Advantages of MIS

Let’s understand the advantages of MIS :

• Organized data collection.
• A broad perspective.
• The storage of important data.
• An avoidance of crises.
• Coordinated marketing plans.
• Speed in obtaining sufficient information to make decisions.
• Data amassed and kept over several time periods.
• 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.

Difference Between MIS and Marketing Research

These are the basis of differences between MIS and marketing research :

On Basis of Meaning

On basis of purpose, on basis of scope, on basis of nature, on basis of reports, on basis of orientation, on basis of problems, on basis of data, on basis of operation, on basis of computers.

MIS means to collect, analyze and supply relevant marketing information to the marketing managers. The marketing managers use this information for taking effective marketing decisions. It is a permanent and continuous process.

Marketing Research (MR) is a systematic process of collecting and analyzing information to solve a specific marketing problem.

The main purpose of MIS is to provide relevant information to marketing managers and enable them to make effective marketing decisions.

However, the main purpose of Marketing Research (MR) is to solve a specific marketing problem.

The scope of MIS is wide. Marketing Research (MR) is one of its components. It is not only used to solve problems but also helps to prevent problems in the future.

The scope of Marketing Research (MR) is narrow. It is one small part of MIS. It solves a specific present marketing problem.

MIS is more nonspecific or general in nature. It can solve many types of marketing problems.

Marketing Research (MR) is more specific or particular in nature. At one time, it can only solve a single type of marketing problem.

MIS gives four types of reports namely, plan reports, periodic-reports, triggered reports, and demand reports.

Marketing Research (MR) provides only one report called as ‘MR Report.’

The orientation of MIS is more future-oriented when compared to MR.

However, the orientation of Marketing Research (MR) is more past and present when compared to MIS . It concentrates more on the earlier and the latest information. It uses this information to solve a current marketing problem.

MIS deals with and attempts to solve many different marketing problems at one time. For this, it collects, stores analyzes, and supplies relevant market information to the marketing managers.

Marketing Research (MR) only deals with a single marketing problem at one time. It doesn’t solve multiple marketing problems simultaneously.

In MIS , the data is collected more frequently, usually almost daily. This is a must for every company.

In Marketing Research (MR), the data is not collected as frequently as in MIS. It is collected on a required basis.

MIS is a permanent and continuous system. Here, the inflow of market information never stops. Data is constantly collected and stored for further analysis. It is properly analyzed, studied, and well-organized before supplying to the marketing managers. MIS has a starting but no ending point.

Marketing Research (MR) is not a continuous system. Here, data is collected only when a company faces a specific marketing problem. It has a starting and ending point.

MIS is heavily based on the use of computers. Here, computing technologies are widely used to ease and facilitate data collection, storage, analysis, retrieval, and supply of relevant information to marketing managers of the company.

Unlike MIS , Marketing Research (MR) hardly makes use of computers. It uses computers only for analyzing some information and is not entirely based on computing technologies.

FAQ Related to MIS

What is marketing information system.

A marketing information system (MIS) is a continuing and interacting system of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely, and accurate information for use by marketing decision–makers to improve their marketing planning, implementation, and control.

What are the components of MIS?

Following are the components of management information system: 1. Internal Records 2. Product Database 3. Salesperson Database 4. Marketing Intelligence System 5. Marketing Research System 6. Marketing Decision Support System.

What are the types of MIS?

Following are the types of management information systems: 1. Executive Information System (EIS) 2. Marketing Information System (MIS) 3. Business Intelligence System (BIS) 4. Customer Relationship Management System (CRM) 5. Sales Force Automation System (SFA) 6. Transaction Processing System (TPS) 7. Knowledge Management System (KMS) 8. Financial Accounting System (FAS) 9. Human Resource Management System (HRMS) 10.  Supply Chain Management System (SCM).

What are the functions of MIS?

Following are the functions of marketing information systems: 1. Data Capturing 2. Processing of Data 3. Storage of Information 4. Retrieval of Information 5. Dissemination of Information.

What are the advantages of MIS?

Following are the advantages of marketing information systems: 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 sufficient information to make decisions. 7. Data amassed and kept over several time periods. 8. The ability to do a cost-benefit analysis.

What are the difference between MIS and marketing research?

MIS  means to collect, analyze and supply relevant marketing information to the marketing managers. The marketing managers use this information for taking effective marketing decisions. It is a permanent and continuous process.

Marketing Research  (MR) is a systematic process of collecting and analyzing information to solve a specific marketing problem.

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Chapter 10: Gathering and Using Information: Marketing Research and Market Intelligence

10.1 Marketing Information Systems

Learning Objectives

• Describe the components of a marketing information system and each component’s purpose.
• Explain the situations in which marketing research should be used versus market intelligence.
• Describe the limitations of market intelligence and its ethical boundaries.
• Explain when marketing research should and should not be used.

A certain amount of marketing information is being gathered all the time by companies as they engage in their daily operations. When a sale is made and recorded, this is marketing information that’s being gathered. When a sales representative records the shipping preferences of a customer in a firm’s customer relationship management (CRM) system, this is also marketing information that’s being collected. When a firm gets a customer complaint and records it, this too is information that should be put to use. All this data can be used to generate consumer insight. However, truly understanding customers involves not just collecting quantitative data (numbers) related to them but qualitative data, such as comments about what they think.

Audio Clip: Joy Mead interview

Recall from Chapter 3 “Consumer Behavior: How People Make Buying Decisions” that Joy Mead is an associate director of marketing with Procter & Gamble. Listen to this clip to hear Mead talk about the research techniques and methods Procter & Gamble uses to develop consumer insight. You will learn that the company isn’t just interested in what consumers want now but also years in the future.

The trick is integrating all the information you collect so it can be used by as many people as possible in your organization to make good decisions. Unfortunately, in many organizations, information isn’t shared very well among departments. Even within departments, it can be a problem. For example, one group in a marketing department might research a problem related to a brand, uncover certain findings that would be useful to other brand managers, but never communicate them.

A marketing information system (MIS) is a way to manage the vast amount of information firms have on hand—information marketing professionals and managers need to make good decisions. Marketing information systems range from paper-based systems to very sophisticated computer systems. Ideally, however, a marketing information system should include the following components:

• A system for recording internally generated data and reports
• A system for collecting market intelligence on an ongoing basis
• Marketing analytics software to help managers with their decision making
• A system for recording marketing research information

Internally Generated Data and Reports

As we explained, an organization generates and records a lot of information as part of its daily business operations, including sales and accounting data, and data on inventory levels, back orders, customer returns, and complaints. Firms are also constantly gathering information related to their Web sites, such as clickstream data. Clickstream data is data generated about the number of people who visit a Web site and its various pages, how long they dwell there, and what they buy or don’t buy. Companies use clickstream data in all kinds of ways. They use it to monitor the overall traffic of visitors that a site gets, to see which areas of the site people aren’t visiting and explore why, and to automatically offer visitors products and promotions by virtue of their browsing patterns. Software can be used to automatically tally the vast amounts of clickstream data gathered from Web sites and generate reports for managers based on that information. Netflix recently awarded a $1 million prize to a group of scientists to plow through Web data generated by millions of Netflix users so as to improve Netflix’s predictions of what users would like to rent (Baker, 2009). (That’s an interesting way to conduct marketing research, don’t you think?)

Being able to access clickstream data and other internally generated information quickly can give a company’s decision-makers a competitive edge. Remember our discussion in Chapter 9 “Using Supply Chains to Create Value for Customers” about how Walmart got a leg up on Target after 9/11? Walmart’s inventory information was updated by the minute (the retailer’s huge computing center rivals the Pentagon’s, incidentally); Target’s was only updated daily. When Walmart’s managers noticed American flags began selling rapidly immediately following the terrorist attacks on 9/11, the company quickly ordered as many flags as possible from various vendors—leaving none for Target.

Many companies make a certain amount of internal data available to their employees, managers, vendors, and trusted partners via intranets. An intranet looks like the Web and operates like it, but only an organization’s employees have access to the information. So, for example, instead of a brand manager asking someone in accounting to run a report on the sales of a particular product, the brand manager could look on her firm’s intranet for the information.

However, big companies with multiple products, business units, and databases purchased and installed in different places and at different times often have such vast amounts of information that they can’t post it all on an intranet. Consequently, getting hold of the right information can be hard. The information could be right under your nose and you might not know it. Meet people like Gary Pool: Pool works for BNSF Railway and is one of BNSF’s “go-to” employees when it comes to gathering marketing data. Pool knows how to access different databases and write computer programs to extract the right information from the right places at BNSF, a process known as data mining. Combining data into one location is called data warehousing, and makes Pool’s analysis easier. He then captures the information and displays it in dashboards, screens on the computer that make the data easily understood so that managers can detect marketing trends. While a dashboard may display a piece of information, such as the number of carloads sold in West Virginia, the manager can click on the number and get more detail.

Analytics Software

Increasingly, companies are purchasing analytics software to help them pull and make sense of internally generated information. Analytics software allows managers who are not computer experts to gather all kinds of different information from a company’s databases—information not produced in reports regularly generated by the company. The software incorporates regression models, linear programming, and other statistical methods to help managers answer “what if” types of questions. For example, “If we spend 10 percent more of our advertising on TV ads instead of magazine ads, what effect will it have on sales?” Oracle Corporation’s Crystal Ball is one brand of analytical software.

The camping, hunting, fishing, and hiking retailer Cabela’s has managed to refine its marketing efforts considerably using analytics software developed by the software maker SAS. “Our statisticians in the past spent 75 percent of their time just trying to manage data. Now they have more time for analyzing the data with SAS, and we have become more flexible in the marketplace,” says Corey Bergstrom, director of marketing research and analysis for Cabela’s. “That is just priceless” (Zarello, 2009).

The company uses the software to help analyze sales transactions, market research, and demographic data associated with its large database of customers. It combines the information with Web browsing data to gain a better understanding of the individual customers marketing channel preferences as well as other marketing decisions. For example, does the customer prefer Cabela’s’ one-hundred-page catalogs or the seventeen-hundred-page catalogs? The software has helped Cabela’s employees understand these relationships and make high-impact data-driven marketing decisions (Zarello, 2009).

Market Intelligence

A good internal reporting system can tell a manager what happened inside his firm. But what about what’s going on outside the firm? What is the business environment like? Are credit-lending terms loose or tight, and how will they affect what you and your customers are able to buy or not buy? How will rising fuel prices and alternate energy sources affect your firm and your products? Do changes such as these present business obstacles or opportunities? Moreover, what are your competitors up to?

Not gathering market intelligence leaves a company vulnerable. Remember Encyclopedia Britannica, the market leader in print encyclopedia business for literally centuries? Encyclopedia Britannica didn’t see the digital age coming and nearly went out of business as a result. (Suffice it to say, you can now access Encyclopedia Britannica online.) By contrast, when fuel prices hit an all-time high in 2008, unlike other passenger airline companies, Southwest Airlines was prepared. Southwest had anticipated the problem, and early on locked in contracts to buy fuel for its planes at much lower prices. Other airlines weren’t as prepared and lost money because their fuel expenses skyrocketed. Meanwhile, Southwest Airlines managed to eke out a profit. Collecting market intelligence can also help a company generate ideas or product concepts that can then be tested by conducting market research.

Gathering market intelligence involves a number of activities, including scanning newspapers, trade magazines, and economic data produced by the government to find out about trends and what the competition is doing. In big companies, personnel in a firm’s marketing department are primarily responsible for their firm’s market intelligence and making sure it gets conveyed to decision makers. Some companies subscribe to news service companies that regularly provide them with this information. LexisNexis is one such company. It provides companies with news about business and legal developments that could affect their operations. Other companies subscribe to mystery shopping services, companies that shop a client and/or competitors and report on service practices and service performance. Let’s now examine some of the sources of information you can look at to gather market intelligence.

Search Engines and Corporate Web Sites

An obvious way to gain market intelligence is by examining your competitors’ Web sites as well as doing basic searches with search engines like Google. If you want to find out what the press is writing about your company, your competitors, or any other topic you’re interested in, you can sign up to receive free alerts via e-mail by going to Google Alerts . Suppose you want to monitor what people are saying about you or your company on blogs, the comment areas of Web sites, and social networks such as Facebook and Twitter. You can do so by going to a site like WhosTalkin.com, typing a topic or company name into the search bar, and voilà! All the good (and bad) things people have remarked about the company or topic turn up. What a great way to seek out the shortcomings of your competitors. It’s also a good way to spot talent. For example, designers are using search engines like WhosTalkin.com to search the blogs of children and teens who are “fashion-forward” and then involve them in designing new products.

WhosTalkin.com and Radian6 (a similar company) also provide companies with sentiment analysis. Sentiment analysis is a method of examining content in blogs, tweets, and other online media (other than news media) such as Facebook posts to determine what people are thinking at any given time. Some companies use sentiment analysis to determine how the market is reacting to a new product. The Centers for Disease Control (CDC) uses sentiment analysis to track the progress of flu; as people post or tweet how sick they are, the CDC can determine where the flu is increasing or decreasing.

Publications

The Economist , the Wall Street Journal , Forbes , Fortune , BusinessWeek , the McKinsey Report , Sales and Marketing Management , and the Financial Times are good publications to read to learn about general business trends. All of them discuss current trends, regulations, and consumer issues that are relevant for organizations doing business in the domestic and global marketplace. All of the publications are online as well, although you might have to pay a subscription fee to look at some of the content. If your firm is operating in a global market, you might be interested to know that some of these publications have Asian, European, and Middle Eastern editions.

Other publications provide information about marketplace trends and activities in specific industries. Consumer Goods and Technology provides information consumer packaged goods firms want to know. Likewise, Progressive Grocer provides information on issues important to grocery stores. Information Week provides information relevant to people and businesses working in the area of technology. World Trade provides information about issues relevant to organizations shipping and receiving goods from other countries. Innovation: America’s Journal of Technology Commercialization provides information about innovative products that are about to hit the marketplace.

Trade Shows and Associations

Trade shows are another way companies learn about what their competitors are doing. (If you are a marketing professional working a trade show for your company, you will want to visit all of your competitors’ booths and see what they have to offer relative to what you have to offer.) And, of course, every field has a trade association that collects and disseminates information about trends, breakthroughs, new technology, new processes, and challenges in that particular industry. The American Marketing Association, Food Marketing Institute, Outdoor Industry Association, Semiconductor Industry Association, Trade Promotion Management Association, and Travel Industry Association provide their member companies with a wealth of information and often deliver them daily updates on industry happenings via e-mail.

Salespeople

A company’s salespeople provide a vital source of market intelligence. Suppose one of your products is selling poorly. Will you initially look to newspapers and magazines to figure out why? Will you consult a trade association? Probably not. You will first want to talk to your firm’s salespeople to get their “take” on the problem.

Salespeople are the eyes and ears of their organizations. Perhaps more than anyone else, they know how products are faring in the marketplace, what the competition is doing, and what customers are looking for.

A system for recording this information is crucial, which explains why so many companies have invested in customer relationship management (CRM) systems. Some companies circulate lists so their employees have a better idea of the market intelligence they might be looking for. Textbook publishers are an example. They let their sales representatives know the types of books they want to publish and encourage their representatives to look for good potential textbook authors among the professors they sell to.

Suppliers and Industry Experts

Your suppliers can provide you with a wealth of information. Good suppliers know which companies are moving a lot of inventory. And oftentimes they have an idea why. In many instances, they will tell you, if the information you’re looking for is general enough so they don’t have to divulge any information that’s confidential or that would be unethical to reveal—an issue we’ll talk more about later in the book. Befriending an expert in your industry, along with business journalists and writers, can be helpful, too. Often these people are “in the know” because they get invited to review products (Gardner, 2009).

Lastly, when it comes to market intelligence don’t neglect observing how customers are behaving. They can provide many clues, some of which you will be challenged to respond to. For example, during the latest economic downturn, many wholesalers and retailers noticed consumers began buying smaller amounts of goods—just what they needed to get by during the week. Seeing this trend, and realizing that they couldn’t pass along higher costs to customers (because of, say, higher fuel prices), a number of consumer-goods manufacturers “shrank” their products slightly rather than raise prices. You have perhaps noticed that some of the products you buy got smaller—but not cheaper.

After reading this section, you now know what kind of information feeds into a Marketing Information System!

After identifying the incorrect answers, can you explain what they are used for?

Can Market Intelligence Be Taken Too Far?

Can market intelligence be taken too far? The answer is yes. In 2001, Procter & Gamble admitted it had engaged in “dumpster diving” by sifting through a competitors’ garbage to find out about its hair care products. Although the practice isn’t necessarily illegal, it cast P&G in a negative light. Likewise, British Airways received a lot of negative press in the 1990s after it came to light that the company had hacked into Virgin Atlantic Airways’ computer system. [1]

Gathering corporate information illegally or unethically is referred to as industrial espionage. Industrial espionage is not uncommon. Sometimes companies hire professional spies to gather information about their competitors and their trade secrets or even bug their phones. Former and current employees can also reveal a company’s trade secret either deliberately or unwittingly. Microsoft recently sued a former employee it believed had divulged trade secrets to its competitors. [2] It’s been reported that for years professional spies bugged Air France’s first-class seats to listen in on executives’ conversations (Anderson, 1995).

To learn more about the hazards of industrial espionage and how it’s done, check out this YouTube video.

Watch the video: Spying at Work – espionage, who, how, why, how to stop it. Ideas theft. Business Security Speaker (8 minutes)

To develop standards of conduct and create respect for marketing professionals who gather market intelligence, the Society of Competitive Intelligence Professionals has developed a code of ethics. It is as follows:

• To continually strive to increase the recognition and respect of the profession.
• To comply with all applicable laws, domestic and international.
• To accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.
• To avoid conflicts of interest in fulfilling one’s duties.
• To provide honest and realistic recommendations and conclusions in the execution of one’s duties.
• To promote this code of ethics within one’s company, with third-party contractors and within the entire profession.
• To faithfully adhere to and abide by one’s company policies, objectives and guidelines. [3]

Marketing Research

Marketing research is what a company has to resort to if it can’t answer a question by using any of the types of information we have discussed so far—market intelligence, internal company data, or analytics software applied to data. As we have explained, marketing research is generally used to answer specific questions. The name you should give your new product is an example. Unless your company has previously done some specific research on product names—what consumers think of them, good or bad—you’re probably not going to find the answer to that question in your internal company data. Also, unlike internal data, which is generated on a regular basis, marketing research is not ongoing. Marketing research is done on an as-needed or project basis. If an organization decides that it needs to conduct marketing research, it can either conduct marketing research itself or hire a marketing research firm to do it.

So when exactly is marketing research needed? Keep in mind marketing research can be expensive. You therefore have to weigh the costs of the research against the benefits. What questions will the research answer, and will knowing the answer result in the firm earning or saving more money than the research costs?

Marketing research can also take time. If a quick decision is needed for a pressing problem, it might not be possible to do the research. Lastly, sometimes the answer is obvious, so there is no point in conducting the research. If one of your competitors comes up with a new offering and consumers are clamouring to get it, you certainly don’t need to undertake a research study to see if such a product would survive in the marketplace.

Alex J. Caffarini, the president and founder of the marketing research firm Analysights, believes there are a number of other reasons companies mistakenly do marketing research. Caffarini’s explanations (shown in parentheses) about why a company’s executives sometimes make bad decisions are somewhat humorous. Read through them:

• “We’ve always done this research .” (The research has taken on a life of its own; this particular project has continued for years and nobody questioned whether it was still relevant.)
• “Everyone’s doing this research .” (Their competitors are doing it, and they’re afraid they’ll lose competitive advantage if they don’t, yet no one asks what value the research is creating.)
• “The findings are nice to know .” (Great—spend a lot of money to create a wealth of useless information. If the information is nice to know, but you can’t do anything with it, you’re wasting money.)
• “If our strategy fails, having done the research will show that we made our best-educated guess .” (They’re covering their butts. If things go wrong, they can blame the findings, or the researcher.)
• “We need to study the problem thoroughly before we decide on a course of action .” (They’re afraid of making a tough decision. Conducting marketing research is a good way to delay the inevitable. In the meantime, the problem gets bigger, or the window of opportunity closes.)
• “The research will show that our latest ad campaign was effective .” (They’re using marketing research to justify past decisions. Rarely should marketing research be done after the fact) (Caffarini).

Is Marketing Research Always Correct?

To be sure, marketing research can help companies avoid making mistakes. Take Tim Hortons, a popular coffee chain in Canada, which has been expanding in the United States and internationally. Hortons recently opened some self-serve kiosks in Ireland, but the service was a flop. Why? Because cars in Ireland don’t have cup holders. Would marketing research have helped? Probably. So would a little bit of market intelligence. It would have been easy for an observer to see that trying to drive a car and hold a cup of hot coffee at the same time is difficult.

That said, we don’t want to leave you with the idea that marketing research is infallible. As we indicated at the beginning of the chapter, the process isn’t foolproof. In fact, marketing research studies have rejected a lot of good ideas. The idea for telephone answering machines was initially rejected following marketing research. So was the hit sitcom Seinfeld , a show that in 2002 TV Guide named the number-one television program of all time. Even the best companies, like Coca-Cola, have made mistakes in marketing research that have led to huge flops. In the next section of this chapter, we’ll discuss the steps related to conducting marketing research. As you will learn, many things can go wrong along the way that can affect the results of research and the conclusions drawn from it.

Key Takeaways

Many marketing problems and opportunities can be solved by gathering information from a company’s daily operations and analyzing it. Market intelligence involves gathering information on a regular, ongoing basis to stay in touch with what’s happening in the marketplace. Marketing research is what a company has to resort to if it can’t answer a question by using market intelligence, internal company data, or analytical software. Marketing research is not infallible, however.

Review Questions

• Why do companies gather market intelligence and conduct marketing research?
• What activities are part of market intelligence gathering?
• How do marketing professionals know if they have crossed a line in terms of gathering marketing intelligence?
• How does the time frame for conducting marketing intelligence differ from the time frame in which marketing research data is gathered?

Anderson, J., “Bugging Air France First Class,” Ellensburg Daily News , March 25, 1995, 3, http://news.google.com/newspapers?nid=860&dat =19950320&id=ddYPAAAAIBAJ&sjid=F48DAAAAIBAJ&pg=4554,2982160 (accessed December 12, 2009).

Baker, S., “The Web Knows What You Want,” BusinessWeek , July 24, 2009, http://www.businessweek.com/magazine/content/09_30/b4140048486880.htm (accessed September 13, 2021).

Caffarini, A. J., “Ten Costly Marketing Mistakes and How to Avoid Them,” Analysights, LLC.

Gardner, J., “Competitive Intelligence on a Shoestring,” Inc ., September 24, 2001, http://www.inc.com/articles/2001/09/23436.html (accessed December 14, 2009).

Nemes, J., “Dumpster Diving: From Garbage to Gold,” Greenbiz.com , January 16, 2009, http://www.businessgreen.com/bg/analysis/1805796/dumpster-diving-from-garbage-gold (accessed December 14, 2009).

Zarello, C., “Hunting for Gold in the Great Outdoors,” Retail Information Systems News , May 5, 2009, https://risnews.com/hunting-gold-great-outdoors (accessed September 13, 20201).

Media Attributions

• “ Metra BNSF Railway 149 ” by Michael Kappel is licensed under a CC BY-NC 2.0 licence.
• “ 299.365 :: Cabela’s ” by Echo9er is licensed under a CC BY-NC-ND 2.0 licence.
• S pying at Work – espionage, who, how, why, how to stop it. Ideas theft. Business Security Speaker video by Futurist Keynote Speaker Patrick Dixon is licensed under the Standard YouTube licence.
• “ dumpster_diving_leap ” by Halturg Skanser is licensed under a CC BY-NC 2.0 licence.
• “P&G Admits to Dumpster Diving,” PRWatch.org, August 31, 2001, http://www.prwatch.org/node/663 (accessed December 14, 2009). ↵
• “Microsoft Suit Alleges Ex-Worker Stole Trade Secrets,” CNET, January 30, 2009, http://news.cnet.com/8301-10805_3-10153616-75.html (accessed September 13, 2021). ↵
• “SCIP Code of Ethics for CI Professionals,” Society of Competitive Intelligence Professionals, http://www.scip.org/About/content.cfm?ItemNumber=578&navItemNumber=504 (accessed September 13, 2021). ↵

Principles of Marketing - H5P Edition Copyright © 2022 by [Author removed at request of original publisher] is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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An artificial intelligence system for quality level–based prediction of welding parameters for robotic gas metal arc welding

• ORIGINAL ARTICLE
• Published: 08 April 2024

Cite this article

• Tesfaye Negash Wordofa   ORCID: orcid.org/0000-0003-0171-4956 1 , 2 ,
• Janaki Ramulu Perumalla   ORCID: orcid.org/0000-0002-7856-8638 1 &
• Abhay Sharma   ORCID: orcid.org/0000-0001-7069-3621 2  

This study addresses the gap between laboratory-focused welding process parameter identification and their practical application in the industry. Unlike traditional input–output mapping reported in the literature, determining acceptable input process parameters in industry hinges on the acceptable threshold for imperfections. The research aims to devise an artificial intelligence system capable of forecasting acceptable parameters for robotic gas metal arc welding, aligning with the quality standards outlined in AWS B4.0:2016 and BS EN ISO 5817:2014. Parameters, including wire feed rate, travel speed, contact tip to work distance, and electrode work angle, are considered in the prediction model. Throat thickness and joint penetration are critical responses for weldments involving 2-mm-, 4-mm-, and 6-mm-thick 4130 steel plates. The fuzzy model achieves effective defuzzification by employing fuzzy expert rules, triangular membership functions, and the centroid area method via the MATLAB fuzzy logic toolbox. The models are rigorously validated through experimental work. The study culminates in the acquisition of accurately predicted and experimentally acceptable input process parameters across varying quality levels (B, C, and D).

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Data availability

The datasets used or analyzed during the current study are available from the corresponding author on reasonable request.

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Acknowledgements

The authors are thankful to Adama Science and Technology University Ethiopia and KU Leuven Belgium for the financial support and for providing the facilities for carrying out the experiments in undertaking this work.

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Tesfaye Negash Wordofa & Janaki Ramulu Perumalla

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Tesfaye Negash Wordofa & Abhay Sharma

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Tesfaye Negash Wordofa: conceptualization, data curation, formal analysis, investigation, methodology, resources, software, validation, visualization, writing original draft.

Perumalla Janki Ramulu: supervision, writing—review and editing.

Abhay Sharma: writing—review and editing.

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Wordofa, T.N., Perumalla, J.R. & Sharma, A. An artificial intelligence system for quality level–based prediction of welding parameters for robotic gas metal arc welding. Int J Adv Manuf Technol (2024). https://doi.org/10.1007/s00170-024-13518-7

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Received : 09 October 2023

Accepted : 22 March 2024

Published : 08 April 2024

DOI : https://doi.org/10.1007/s00170-024-13518-7

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