Marketing Information System (MKIS) and Marketing Research
To manage a business well is to manage its future, and to manage the future is to manage information.
To effectively manage this information, a company needs a marketing information system. As computers become common business tools in recent time firms are able to collect, store, and manipulate larger amount of data to aid marketing information system (MKIS) which is an ongoing, organized procedure to generate, analyse, disseminate, store, and retrieve information for use in making marketing decisions.
Generally, three trends render the needs for marketing information stronger than any time in the past.
The first trend is the shift from local to national and international marketing. This means that company decision maker must make key decisions based on second-hand information since they are far removed from scenes where their products are sold.
The second is the transition from buyer needs to buyer wants. -As the society becomes more affluent, its members’ survival needs are increasingly satisfied. Buying becomes a highly Expressive personal act, and sellers must depend on systematic research to understand the overt and latent wants of buyers.
The third is the transition from price to non-price competition1. As sellers increase their reliance on competitive weapons such as branding, product differentia-don, advertising, and sales promotion, they require a lot of information on the effectiveness of these marketing tools.
More specifically a company needs a strong marketing information system to survive because:
1. There is a shortening of the time span allotted to an executive for decision making.
2. Marketing activity is becoming more complex and broader in scope.
3. Shortages of energy and other raw materials,
4. Growing consumer discontent.
5. The knowledge explosion (the information explosion) is just fantastic.
The marketing information system stand between the environment and the marketing executive – user. There is a marketing data flow from the, .environment to the marketing information system of the company. The marketing information’ system turns this data flow into a marketing information flow that goes to its executives. On the basis of this information, the executives develop plans and programmes, which enter a marketing communication flow that goes back to the environment.
Philip Kotler (1998) thus defined “marketing information system as consisting of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
Marketing information system is illustrated in figure 7.1. The needed information is developed through internal company records, marketing intelligence, marketing research and marketing management science system.
Benefits and Uses of Marketing Information System – (MKIS)
A well designed MKIS can provide a faster, less expensive and more complete information flow for management decision making.
Executives can receive more frequent and more detailed reports. The storage and retrieval capacity of an MKIS allows a wider variety of information to be collected and used.
Management can continually monitor -the performance of products, markets, sales people, and other marketing units in greater detail.
An MKIS is of more obvious value in a large, multi-divisional company where information is likely to get lost or distorted as it becomes widely dispersed.
Marketing Research
The marketing manager has to take various decisions regarding the different activities of marketing. The decisions are combination of judgement and factual information. The correct decisions can be the outcome of the analysis of the factual data. In modern marketing system, management does not produce what he can sell, ‘but whatever is desired or required by ‘the consumer. Marketing research helps in -gathering useful information in this regard. Marketing research, by supplying the relevant information and facts, can aid the executives to raise the level of performance. The executive can change his decision if he finds that customers are not satisfied with the decision.
Definitions of Marketing Research
Cundiff and Still define “marketing research as a systematic gathering, recording and analyzing the data about marketing problems to facilitate decision-making”.
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”.
However, the author sees marketing research as the application of scientific method to the solution of marketing problem.
Scope of Marketing Research
The scope of marketing research is very wide and it is ever expanding. Several terms have been used widely to denote the same thing. These are “Market Research” and “Marketing Research”. In reality, marketing research is of wider meaning as it consists of all research activities in the field of marketing including market research or market analysis. Marketing research embraces all research activities carried on in connection with the management of marketing activities. This include market research, sales research, product research, advertising research, business economics analysis, export marketing research, motivation research, distribution research, competition research, etc.
Market Research
Market research is an important element of the process of marketing research. Market research includes the complete analysis of the market. Information regarding the nature, size, organisation, profitability of different markets, changes in markets and the various factors (economic, social and political) affecting those changes are studied.
The main purpose of market research is to know about the consumers and the markets of its products or services. The scope of market research include:
Analysis of the market size according to age, sex, income, profession, and standard of living of the customers.
To know about prospective customers.
To get a knowledge of competitors’ share of the market.
Estimating the territorial demand of different markets.
Studying the market changes and market conditions.
Knowing about the profitability of different markets and market segments.
Analyzing the working of various channels of distribution,
To know all about competitors and their products.
Importance and Benefits of Marketing Research
Marketing research reduces the risks involved in marketing decisions. Facts got from research can form the basis of planning, selling, sales promotion, and advertising.
Abundant vital information at regular intervals is needed to make marketing decisions in order to predict customers’ buying behaviour in short and long-term.
However, the benefits of marketing research can be stated as follows:
1. Production of new products: The marketer gets valuable information and facts regarding customers’ habits, and preferences through marketing research. In order to satisfy their needs, the company develops new products or make necessary improvement in its existing products.
2. New uses of products: Marketing research provides information regarding various uses of the product. If a company’s product is being used by the customers for some other purposes, not suggested by the company, it can widely publicize the alternatives uses of the product and create demand of the product in the market.
3. Valuable information about customers: Various valuable information about the customers are made available by marketing research. Who are our customers? Why do they purchase the company’s products? When and where do they purchase the products? etc.
4. Selection of Channel of Distribution: As marketers comes to know about the need for satisfaction of his customers and the marketing strategies of his competitors, he can select the best channel of distribution for his product to meet the needs of the customers effectively.
5. Knowledge about Demand: Marketing research studies the nature of demand of the company’s product whether it is elastic or non-elastic. By the study of nature of demand, the producer can plan his product programme effectively. He will plan to produce goods when they are in demand and can avoid the cost of production and of marketing.
6. Discovery of Potential Markets: Through marketing research, potential markets are discovered where company’s product can be sold.
The Marketing Research Process
Since marketing research is the systematic, objective, and exhaustive search for and study of the facts relevant to any problem in the field of marketing. Then marketing research is undertaken in the effort to understand a marketing problem better. The value of the results depends upon the skill with which marketing research project is designed and implemented.
While the marketing manager has to do many things, he is not expected to be a qualified researcher. However, he must know enough about marketing research procedure to be able to evaluate research findings.
Marketing research being systematic involves some recognizable steps. The steps to be adopted depend on the researcher and on peculiar problems and local factors.
There are basically five steps of marketing research process to conducting research. The five steps are:
1. Defining and Locating Problems: Problem definitions is the first step towards finding a solution or launching a research study. The first sign that a problem exist is usually a departure from some normal function or appearance, such as conflicts between failures in attaining objectives. Problem comes with a symptom that something inside or outside the organisation has blocked the attainment of the desired goals such as decreasing sales, increasing expense, or decreasing profits. To get at the specific causes of the problem through research, however, marketers must define the scope of the problem and develop problem definition that go beneath its superficial symptoms. Research is more effective when the problem and the alternatives are well defined. The poor definition of the problem is often the fault of the manager requesting, the study.
2. Developing Hypothesis: The objective statement of a marketing res’earch should include hypothesis drawn from previous research and from experience concerning expected research findings. A hypothesis is a guess of assumption about a certain problem or set’ of circumstances. Essentially, a hypothesis is a reasonable guess or supposition that may be right or wrong. It is based on the insight and knowledge available about the problem from previous research studies and general information. As information is gathered, a researcher can test the hypothesis. Sometimes, several hypothesis are developed in the course of the study; the hypothesis that are accepted or rejected become the chief conclusions drawn from the study.
3. Data Collection: Two types of data are available to marketing researchers. They are the primary data and the secondary data. The primary data are observed and recorded or collected directly from respondents. The data are collected strictly for the purpose of the study. Such information can be gathered from customers, middlemen, salesmen, competitors, or other information sources. The” secondary data are compiled inside or outside the organisation for some purpose other than the current investigation. The data needed already exist in an accessible term and merely have to be found. Examples of secondary data include accounting records from the firm, journals and reports from public/private agencies.
4. Interpreting Research Findings: After collecting data, they are tabulated and analyzed. Statistical techniques employed to test their hypothesis. Marketers must be ready to interpret the research findings. However, interpretation is easier if marketers carefully plan their data analysis methods early in the research process. Marketers should also allow for continual evaluation of the data during the entire collection period. They can then gain valuable insight into areas that ought to be probed during the formal interpretation. The interpretation is another facet of marketing research that calls for marketers to apply judgement or intuition. Also, when they interpret statistics, marketers rely on estimates or expected error or deviation from the true values of the population.
5. Reporting Research Findings: The final step in the marketing research process is preparing a report of the research findings. Before writing the report the marketer must take a clear objective look at the findings to see how well the gathered facts answer the fundamental research question posed in the beginning. When marketing decision makers have a firm grasp of research methods and procedures, they are able to integrate reputed findings and personal experience. The inability of some marketers to understand basic statistical assumptions and data gathering procedures causes them to misuse research findings. Still, report writers should understand the backgrounds and research abilities of those who will use the report to make decisions. Providing adequate explanations in understandable language makes it easier for decision makers to apply the findings and diminishes the likelihood that a report will be misused or ignored entirely.
Methods of Marketing Research
There are three basic methods for marketing research. They are:
(a) The Observational Method
(b) The Experimental Method
(c) The Survey Method
The Observational Method: Data are collected on direct observation. No talk take place. This form of marketing research involves- viewing or taking note of some act or occurrence. Often it necessitates measuring reactions with instruments such as camera or tape recorders. When this technique is used, the researcher merely observes behaviour, often without their knowing it.
The advantages of these techniques lie in the fact that it produces more results that are accurate. Secondly, it is more objectives than surveys.
The disadvantage lies in the fact that it is more dependent on the observer’s interpretations of what happened and observers may misinterpret what they see. Second, many customers actions cannot be observed e.g. family desires about what to do.
The Experimental Method: Experimental marketing research is the testing or trial of an item or an idea to determine whether it is suitable for a specific purpose or will bring about a desired result. The experimental method is used in some cases to determine a product design, its packages, its price and the potential market for it.
This method is based on the concept that small-scale experiment is useful to indicate the expectations of large-scale experiment.
Researchers frequently encounter difficulties using experiment to conduct market research. The reasons are; experimental method takes more time and it is expensive. Secondly, experimental research projects are often difficult to design and put into practice. Lastly, test conditions are never the same as parallel conditions in the broader market.
The Survey Method: The survey method to marketing research requires the researcher to interview people and gather information directly by (i) telephone (ii) mail (iii) personal interview.
This is also referred to as the ‘questionnaire technique and responses to direct questions are expected. This is more widely used method. The survey method has three main uses
to gather fact from respondents,
to report their opinion,
to probe the interpretations they give to various matters.
In most marketing research situations, it is impossible to survey every customer or potential customer. Instead, researchers often use a statistical technique known as sampling. This requires the selection of a portion of the entire group (called the population or universe) being studied. If the group is large enough, a random sample, one for which each individual has an eqijal chance of being chosen, can be used. The more representative the sample is, the more valid and reliable the research results are.
Generally, three types of survey techniques are employed:
(a) Personal Interview Survey: Under this method information is gathered by face to face interviewing. However, this method is cumbersome and has cost disadvantage. It involves much time and energy. It is also difficult to contact a large number of persons. Moreso, some areas are difficult to be covered.
(b) The Mail Questionnaire Survey: A covering letter explains the purpose of the study. This method is economical if the response is good. The advantage of this method is that distant areas can easily be covered with limited expenses. Even those persons who cannot be .contacted through personal interview can be reached. It is free from personal bias and the data is more accurate.
(c) The Telephone Survey: Here both the interviewer and the interviewee (respondent) are on the telephone. This saves time and traveling from place to place. More interviews could be held in a short time. The disadvantage of this method is that only rich persons who own telephones can be approached
Sources of Collecting Marketing Research Data
One of the important tools for conducting marketing research is the availability of necessary and useful data. Data Collection is an art. Sometimes it is very expensive and time consuming. The sources of information fall under two categories: Internal and External sources.
Internal Sources: A business organisation has to maintain s of financial /accounting, sales records, reports of salesmen, budgets, production records, etc. These records provide sufficient information. Proper use can be made of the various information in possession of the organisation.
External Sources: When the internal records are insufficient the organization will have to depend on external sources. The external sources fall into two categories: Primary data and secondary data. A Primary sources is one from which information is got directly for instance through questionnaire interview. Primary sources include consumers and buyers, middlemen, salesmen, trade associations, executives and others. Secondary sources are mostly published materials, such as government publications like those of Ministry of Information, Ministry of National Planning, Census Board, Office of Statistics, Electoral Commission and the Central Bank. Other secondary sources are daily newspapers, monthly magazines or special annual reports, Economic Times, Financial Standards, Journal of Marketing, Libraries, Universities, Research Institutions, etc; are important source of useful information.
Limitations of Marketing Research
The technique of marketing research has several limitations. They include:
* Human Behaviour: Marketing research studies the behaviour of consumers who are rational. Very often they do not express their feelings correctly. In such cases, their habits, practice, preferences cannot be assessed correctly. The result therefore will not be correct.
* Use of Technical Jargon: Research findings are often written in a technical language or jargon, which is difficult to understand.
* The Data are not Predictive: Despite the considerable progress that has been made in the field of marketing research, it is impossible to predict accurately certain types of consumer behaviour (such as purchases) on the basis of research.
* The Data are Subject to many Sources of Error: The very nature of sampling procedures means that there is a built in error, regardless of the soundness of the study’s experimental design.
* Research Costs are High: The cost is one of the greatest hindrances to the wide application of marketing research.
* Belated Information: Most times, research findings are turned in late thus, making it difficult for management to use such findings in decision-making.
* Research Results cannot dictate Action: It is sometimes assumed that once a problem is defined and research results are secured, the research results indicate the marketing action that should be taken. This is far from the truth. Research result can seldom dictate action.
Types of Marketing Research
There are basically three types of marketing research:
(a) Exploratory Research: The emphasis is on the discovery of ideas and insights or discovering the general form of the problem situation. It is conducted when little is known about the phenomenon being studied. Its aim is to generate and test ideas that are more specific and relate to the problem in question. Exploratory research tends to rely mostly on secondary data, convenience or judgement, samples, surveys and case analyses.
(b) Descriptive Research: This is focused on the accurate description of all the variables in the problem or one or more variables. Studies such as consumer profiles, marketing potential studies, product usage studies, competition surveys, sales analysis and price survey are examples of descriptive research. Because of their interest in association between variables, descriptive studies often contain hypothesis in their problem formulation stage.
(c) Casual Research: The purpose of this research is to establish the presence or absence of a cause and effect relationship between variables. Causal studies are experiments that allow the isolation of the effect of change in one variable in a change in another variable. The basic assumption underlying casual research is that some variables cause or affect the values of other variables. For example, studies on the effectiveness of advertising generally attempt to discover the extent to which advertising causes sales or changes attitudes of consumers or customers.
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