MARKETING INTELLIGENCE AND CREATIVE PROBLEM SOLVING

Chapter 4

Data mining is the process of extracting patterns from data. Data mining is becoming an increasingly important tool to transform this data into information. It is commonly used in a wide range of profiling practices, such as marketing, surveillance, fraud detection and scientific discoveryData profiling is the process of examining the data available in an existing data source (e.g. a database or a file) and collecting statistics and information about that data

MARKETING MANAGEMENT DECISIONS AND CREATIVE PROBLEM SOLVING

Marketing Management Decisions and Creative Problem Solving1. Need for marketing intelligence in a chan

ging world A marketing intelligence system is design

ed to monitor a variety of sources to determine emerging trends or events in the external environment. This is necessary in order to take an innovative approach to managing in a time of rapid change. Stakeholders that can affect or be affected by decisions of the enterprise include customers, the community, and the organization (including everything on the opposite side of the customer and the community)

Marketing Intelligence System Process of gathering information about

customers, competitors, and other relevant data from the external environment

2. Responsibility for marketing decisions In a customer

oriented organization, personnel in all functional areas make marketing related decisions; it is not just the responsibility of the marketing department.

Marketing Management Decisions and Creative Problem Solvinga) Organizational level – Information is

needed for management decisions at each level of the firm. Corporate managers are more concerned with trends and events that affect long term financial results, and divisional managers are more concerned with factors that affect their own SBUs or profit centers.

Marketing Management Decisions and Creative Problem Solving2. Responsibility for marketing decisions

b) Functional area – Managers at the operating level must analyze all relevant information to determine the best marketing mix, personnel characteristics, accounting and financial position, production performance, and other factors. All employees should understand the market they serve.

Marketing Management Decisions and Creative Problem Solving3. How marketing decisions are made In a more complex, fast

paced world, managers have fewer strategic and tactical options available to them.

The ability to support marketing management decisions with high quality market intelligence might include adequate time for high quality research at a reasonable price, early determination of information on hand that is relevant to the problem and information still needed, management expertise, unambiguous results, and a feasible solution

Marketing Management Decisions and Creative Problem Solving3. How marketing decisions are made

a) Routine versus complex decisions - Routine decisions are more “programmed” with predetermined policies and guidelines; complex decisions tend to involve new situations where there is little or no previous experience in making similar decisions and to involve higher levels of risk and investment.

Marketing Management Decisions and Creative Problem Solving3. How marketing decisions are made

b) Time factor - Complex decisions require more time for information gathering, analysis, and planning – underscoring the need for high quality information and an efficient decision support system

Marketing Management Decisions and Creative Problem Solving4. Creative problem solving In addition to quantitative inputs, manag

ers must also use qualitative inputs to fully understand situations with which they are faced. They must “step outside the box” to find creative solutions to business problems and opportunities.

Stages in the analytical and creative problem solving process are as follows:

Creative Problem Solving

“Stepping out of the box” to find creative solutions to business problems and opportunities

Creative problem solving Stage 1: Analyzing the environment—

identifying problems and opportunities in order to respond quickly to change and resolve problems successfully.

Marketing Management Decisions and Creative Problem Solving Stage 2: Recognizing a problem—

must be aware of a problem before it can be solved; awareness may come from formal or informal environmental scanning or just an intuitive “feeling.”

Stage 3: Identifying the problem—symptoms are separated from the real problem; both a rational and intuitive process to determine about past, present, and future situations.

Marketing Management Decisions and Creative Problem Solving Stage 4: Making assumptions—

before generating alternatives, assumptions must be made about future conditions that are related to the problem situation (e.g., internal resources, external macro and microenvironments, etc.)

Stage 5: Generating alternatives—involves both rational and intuitive thinking; take creative approach to identifying alternatives not already known; innovate and brainstorm.

Marketing Management Decisions and Creative Problem Solving Stage 6: Choosing among alternatives—

each available alternative should be evaluated systematically to determine whether it meets criteria established in the problem identification stage.

Stage 7: Implementing the chosen solution—successful implementation requires constant attention to details and awareness of potential obstacles to the success of the plan.

Marketing Management Decisions and Creative Problem Solving Stage 8: Control—

this stage of analysis provides feedback on whether the actions taken actually solved the problem and whether the plan was executed appropriately; things that work are also recognized at this stage so that they can be made to work even better; and deficiencies are recognized so the plan can be improved.

THE MARKETING RESEARCH PROCESS

The Marketing Research Process Creative problem solving and the market

ing research process are closely related and both processes influence the quality of management decisions.

General steps in the marketing research process are as follows:

The Marketing Research Process Step 1: Recognize the need for research

—be aware that unresolved problems or opportunities exist and that available information cannot provide satisfactory answers.

Step 2: Define the research problem and objectives (purpose)—determine the research question(s) and the related managerial decisions that must be made.

The Marketing Research Process Step 3: Specify information and data req

uirements—determine the type of information needed for an informed decision; focus directly on the research problem identified earlier.

Step 4: Develop the research plan—determine data collection method, such as whether it will be obtained by primary research or from secondary sources.

The Marketing Research Process Step 5: Design the method for collecting

data—determine details of data collection; create questionnaire or other data gathering instrument if needed; design sampling plan, etc.

Step 6: Perform the research—actual data collection occurs in this stage with an emphasis on listening to respondents and or being objective in all aspects of data collection (whether from primary or secondary sources).

The Marketing Research Process Step 7: Analyze the data and interpret th

e results—data are coded, prepared for analysis, tabulated, analyzed, and interpreted (objectively to avoid misinterpretation).

Step 8: Communicate findings—researcher prepares a final report and presents the findings and recommendations to those who will use the information for decision making.

KEY INFORMATION FOR MARKETING DECISIONS

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

1. External opportunities and threatsa) Market and buyer analysis—

current market trends and anticipation of changes that may occur; requires first defining the firm’s market, market demand and potential, customer characteristics and buying habits, etc.

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

1. External opportunities and threatsb) Competitive analysis—

includes both direct (serves same target market and basic needs) and indirect competitors (from same or other industries, appeal with substitute products or other ways of doing business).

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

2. Internal strengths and weaknessesa) Financial resources—

internal databases include records of the firm’s assets and liabilities that can be used to calculate financial ratios for comparison with industry ratios; level of risk also should be included.

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

2. Internal strengths and weaknessesb) Human resources—

personnel records and management reviews provide information about the ability of present personnel to satisfy customers profitably.

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

2. Internal strengths and weaknessesc) Technological resources—

information technology can be used to monitor the market, gather customer data, and create a marketing information system; focus on available technological applications and how they can enhance performance and provide competitive advantage.

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

2. Internal strengths and weaknessesc) Technological resources—

information technology can be used to monitor the market, gather customer data, and create a marketing information system; focus on available technological applications and how they can enhance performance and provide competitive advantage.

Key Information for Marketing Decisions Some of the more useful types of extern

al and internal information are as follows:

2. Internal strengths and weaknessesd) Marketing effectiveness—

marketing research can be used to track the effectiveness of marketing programs, using methods such as the marketing audit.Marketing Audit – Thorough systematic evaluation of an organization’s environment, objectives, and strategy.

SOURCES OFINFORMATION

Sources of Information

Marketing intelligence is obtained from a variety of sources by both formal and informal methods and consists of data and facts that are converted first into information, then into knowledge, and finally into (wise) management decisions

Sources of Information

1. Databases Databases are created and maintained by

successful marketing organizations to manage the wide range of information that comprises their marketing intelligence systems. The type, scope, and quality of data are varied.

Sources of Information

1. Databasesa) Marketing information system (MIS)—

formal complex of people, equipment, and procedures designed to gather, organize, structure, analyze, evaluate, and distribute timely, accurate, and meaningful information to marketing decision makers.

b) Marketing Decision Support System (MDSS)—coordinated collection of data, systems, models, analytic tools, and computing power by which information is gathered from the environment and turned into a basis for marketing action

Sources of Information

1. Databasesc) Types and uses of databases—

types of databases include sales, credit, and inventory records, PO scanner data, reservation systems, and other databases that have a wide variety of uses for every purpose from product design to demand forecasting to relationship marketing.

Sources of Information

2. Database design and creation The design of a database is directly relate

d to the quality of its components and usefulness.

Communication and understanding between those who create the database and those who use it are essential

Sources of Information

2. Database design and creationa) Internal records—routine data

generated in the course of doing business (e.g., departmental and functional area records, order processing, sales, inventory status, customer accounts, etc.).

b) External marketing intelligence—obtained from either primary (answers to a specific marketing problem) or secondary (gathered for another purpose) sources; also strategic tracking studies, etc.

Sources of Information

2. Database design and creationc) Information requirements—

marketing manager must specify the types of decisions to be made and specific types of information needed to make decisions; must be communicated clearly to the information provider as a basis for system design and data collection methods (“law of the lens”).

Sources of Information

3. Database management Databases must be constantly evaluated for their currency and appropriateness for the types of decisions that must be made in a rapidly changing marketplace; danger of information overload with irrelevant data should be avoided.

Remember that databases are only a tool for managers—they are not solutions in themselves.

Sources of Information

4. Market measurement and forecasting demand

Databases such as the MDSS can be used to estimate the results of strategic or tactical decisions under competing scenarios and to provide essential information for estimating market demand, market size, market share, etc. for a given product or product category.

ISSUES IN MARKETING INFORMATION ACQUISITION AND USE

Issues in Marketing Information Acquisition and Use1. In house or outsource research task—

assess advantages and disadvantages of obtaining information from internal or external information providers.

2. Extent/scope of research—to the extent possible, information obtained should be focused on that which is needed to solve the research problem.

3. Organizational resources

Organizational resources

Consider the following:a) In house expertise—ability of internal

personnel to perform the research.b) MDSS/

MIS availability (and appropriateness quality). MDSS means marketing decision support system and MIS means Marketing information system.

c) Financial resources—research can be costly and adequate funding should be provided for quality research

Organizational resources

Consider the following:d) Time available to make decision—

deadlines may be determinant of research that can be conducted.

e) Managerial objectivity and ability to use or act on information—managers must remain unbiased throughout entire research process if marketing mistakes are to be avoided.

Issues in Marketing Information Acquisition and Use4. Research quality/quality of information

—breaks down into three areas: quality of the research process, quality of the data and information obtained, and quality of the management decision process; implications for use of resources and implementation plans, etc.

5. International marketing research—more complex process than in international markets; valuable in spite of cultural and language differences, higher costs, etc.

Issues in Marketing Information Acquisition and Use6. Legal and ethical issues

a) Regulatory issues—government regulations, industry standards, legal guidelines provide challenges for marketing intelligence users and providers.

b) Privacy issues—problem may exist in gathering and manipulating marketing intelligence relative to customers and others if promises of anonymity are not maintained.

Issues in Marketing Information Acquisition and Use6. Legal and ethical issues

c) Ethical issues—research ethics include honesty throughout the research process; no manipulation, deception, fraudulent practices to achieve desired results, and respecting the rights of respondents and others.

d) Bias issues—avoid all sources of potential bias related to the researcher and the research process.