The Role of It in Marketing

The role of IT inthe reshaping of

marketing

87

The role of IT in thereshaping of marketing

Fiona LeverickRobert Gordon University, Aberdeen, UK

Dale Littler and Dominic WilsonManchester School of Management, UMIST, Manchester, UK, and

Margaret BruceDepartment of Textiles, UMIST, Manchester, UK

IntroductionIf recent assertions are to be believed, the pace of implementation ofInformation Technology (IT) within organizations would appear to berelentless and its scope pervasive, with extravagant claims made in terms ofIT’s organizational benefits such as increased efficiency and higher levels ofcustomer service. In particular, much literature has focused on the power of ITto facilitate and accentuate dramatic changes in organizational structures.Management practices associated with the increased utilisation of IT, such as“business reprocessing”, “downsizing”, the “boundaryless organization” andthe “knowledge based enterprise”, have become a significant part oforganizational language (see, for example, Quinn, 1992). IT has also been saidto facilitate the way in which information is processed, with the potential tochange the way in which decision making is undertaken, and even to effect ashift in the nature and scope of activities undertaken by the business. Forexample, IT at least promises dramatic repercussions for the form and contentof inter-organizational relationships as well as intra-organizationalcommunication; the bases on which organizations compete; the means ofproduction; the process of distribution and service support; indeed for almostevery aspect of accepted organizational activity.

In reality, whether radical organizational changes have truly occurredalongside the implementation of IT systems is not clear. Few would disagree,however, that IT, because of the speed with which it can process, analyse andtransmit huge amounts of data and present these in palatable, convenient andspecific ways, offers at least the potential to facilitate significant change in theway in which organizations are structured and undertake activities. The extentto which these changes are realised and the form they take is likely to flow froma continuing process in which a number of parties, including, of course, ITsuppliers and end users, play a role.

Journal of Marketing Practice:Applied Marketing Science,

Vol. 3 No. 2, 1997, pp. 87-106. © MCB University Press, 1355-2538

This paper is based on research financed by the Economic and Social Research Council’sProgramme on Information and Communication Technologies (PICT).

JMP:AMS3,2

88

It is the various organizational changes and refigurations potentially flowingfrom the implementation of IT which are the focus of this paper. These changeswill be considered by addressing a particular area of organizational activity,that of marketing. This immediately raises the question of whether the use of ITin marketing is significantly different in any way from the use of IT in otherfunctional areas of business and whether or not there are unique questionsposed. Here, the focus on marketing is not to imply that it necessarily doespossess uniqueness as an organizational activity. Rather, it stems partly fromthe interests of the authors, and partly because marketing, through itsacknowledged position at the interface between the organization and itsexternal environment, offers the ability to study the effects of IT on therelationship between organizations and the environment within which theyoperate.

The remainder of this paper will explore the possibilities IT opens up formarketing and the extent to which shifts and changes in the nature and scopeof marketing have occurred alongside the implementation of IT systems. Threeareas in particular will be considered: changes in the nature of marketingactivities; changes in the nature and use of marketing information; and changesin the structure and organization of the marketing function. The discussiondraws both on existing literature and on a programme of empirical researchundertaken by the authors in the UK as part of the Economic and SocialResearch Council’s Programme on Information and CommunicationTechnologies (PICT). A brief summary of research methods follows.

Research methodsThe empirical research drawn on in this paper was a study of the use ofinformation and communication technology by the marketing function. Itsprimary aims were:

(1) To document the extent of ITadoption and the tasks for which IT iscurrently being used in marketing.

(2) To investigate the changes in the scope of marketing activities and themanner in which they are carried out as a result of IT implementation.

(3) To identify barriers to and driving forces towards the implementation ofIT systems in marketing.

(4) To examine likely future shifts in the nature of the marketing functionoccurring alongside the implementation of IT.

These aims were addressed by a number of different and complementaryresearch methods. In this paper, we draw primarily on the results of a “Delphi-type” mail questionnaire survey of marketing practitioners undertakenbetween May and October 1994. The survey was undertaken in two stages. Inthe first stage, the aim was to collect as wide and unbiased a range of views andexperiences of IT in marketing as possible. To this end, relatively unstructuredinitial questionnaires were sent to a sample of 100 UK based organizations in


marketing

89

sectors including financial services, consulting services, food and drink, publicutilities and consumer electrical goods. Organizations in these sectors wereselected at random from the Kompass trade directory. The questionnairerequired respondents to express their views in relation to a series of open endedquestions dealing with their organization’s current use of IT in marketing;accompanying changes in the nature and scope of marketing activities; thecurrent and likely future barriers to and facilitators of increased IT use inmarketing; and their organization’s projected IT use over the next two to tenyears. The questionnaire was addressed to the marketing director in each case.34 usable responses were received, a response rate of 34 per cent.

A second stage questionnaire was then developed which consisted of a seriesof statements derived from the views expressed in the first stage questionnaire.The questionnaire was sent to the original 34 respondents, who were invited toexpress the extent to which they agreed or disagreed, using a Likert scale, withthe statements listed. 29 of these made usable responses. In order to test theextent to which the questionnaire findings were applicable to a widerpopulation, the second stage questionnaire was also sent to a further sample of300 UK based organizations in the food and drink, consulting and leisureservices, chemicals and engineering sectors, again drawn at random from theappropriate sections of the Kompass trade directory. 82 usable responses werereceived, a response rate of 27 per cent. In total, then, the findings presentedhere are derived from these 82 respondents and the 29 respondents referred toabove, making a total of 111 organizations.

In addition to the questionnaire survey, other components of the researchhave included qualitative personal interviews with IT users and suppliers anda further mail questionnaire survey aimed at discriminating between more andless “effective” IT applications. The results referred to here are by necessity onlya snapshot of the findings. For a more thorough examination of both theresearch methods and results, see Leverick et al. (1995a, b, c and d); Littler andLeverick (1995), Leverick et al. (1996) and Morris (1995)[1].

IT and marketingIT and the marketing functionReceived wisdom would appear to suggest that only those organizations whichfully embrace IT for their marketing applications will be able to competeeffectively. Indeed, as long ago as 1988, Warren MacFarlan, Dean of Studies atHarvard Business School (quoted in Shaw, 1994a, and Gorski and Ingram, 1993)predicted that:

…In five years there will be two types of company – those who (sic) use the computer as amarketing tool and those who face bankruptcy.

Given statements such as this, it is perhaps not surprising that the adoption ofIT for marketing applications has received much contemporary consideration(see Bowles, 1995; Gorski, 1995; Li, 1995; Talvinen, 1995; Chapman andHoltham, 1994; Hewson and Wilson, 1994; Palihawadana and Delfino, 1994;

JMP:AMS3,2

90

Woudhuysen, 1994), or that there has been significant investment in IT formarketing purposes. According to Shaw (1994b), UK expenditure on IT tosupport sales and marketing totals around £1.5 billion, which accounts foraround 15 per cent of total IT expenditure by organizations, and is one of thefastest growing areas of IT investment.

Various explanations have been forwarded for such substantial expenditureon IT in marketing. Like IT investments more widely, it may be driven byobvious environmental imperatives: the technology itself which excites interestby its very availability, as well as the promises it offers; the constant search toincrease efficiency because of the impact of inter alia lower cost competition; theapparently increasingly rapidly changing marketing environment coupled withthe corresponding growth in marketing information available to organizations;consumer demand for higher “quality” products and services; as well aspressure on organizations to improve customer service (see, for example, Baker,1994; Hewson and Wilson, 1994; Conway and Elliott, 1994; Palihawadana andDelfino, 1994; Sääksjärvi and Talvinen, 1993; Noyak, 1991). It may equally bethe case that IT has come simply to be regarded as a prerequisite forcompetitiveness and this belief has itself fuelled developments in IT. Almostinevitably, suppliers will generate much hype in order to create a climateconducive to the greater acceptance of IT in marketing.

Whatever the reasons for the heralded IT “revolution” in marketing, theapparently radical benefits flowing from its application have understandablycaptured the attention of practitioners and academics alike (Mazur, 1991;Fletcher, 1995; Wilson and McDonald, 1994). Fletcher (1995) highlights thebenefits of IT for enhancing personal productivity; while Wilson and McDonald(1994) point to the benefits of IT based decision support systems. Others havenoted its use to develop and augment “relationship marketing” (Schmitz andRovner, 1992); and to improve the effectiveness of sales and promotion (Hewsonand Wilson, 1994); as well as a means to improve product development. IT hasbeen acknowledged as a source of product and service innovation; and moregenerally for improving the efficiency of marketing tasks and the decisionmaking processes because of its ability to manage large volumes of data atgreater speed (Fletcher, 1995; Arnold and Penn, 1987; Wightman, 1987; Kumarand Vrat, 1989).

IT and the nature and scope of marketingVarious authors have, however, gone further and looked at the types oforganizational change, and the shifts in the nature and scope of marketing, thatmight occur during and following the process of implementing IT systems. It isworth noting at this point that there is much marketing literature referring towhat is termed the “impact” or “effect” of IT on organizations, suggesting a one-way process in which IT is seen as an external force somehow “impactingupon” existing organizational processes. While the implementation of ITsystems clearly has the potential to set in motion a number of, possibly quiteradical, organizational changes, viewing these changes as clear cut events


marketing

91

caused by the “impact” of IT systems might be inappropriate. The introductionof an IT system in any part of an organization is a complex process. It isintroduced by and affected itself by individuals within and outside theorganization: numerous stakeholder groups which themselves impinge on andshape the direction and content of the IT system and the resulting process oforganizational change through a continuing process of negotiation and re-negotiation. Concerns might also be raised over the direction of causation: itmay be equally valid to suggest that organizational change itself impacts uponthe nature and scope of IT systems as it is to conceptualise IT as “causing”organizational change.

Setting aside such questions over the direction of causation, a number ofwriters have identified themes concerning the implementation of IT and theaccompanying changes in the nature and scope of marketing. Fletcher (1995)refers to two major areas in which IT might shape marketing processes:changes to the marketing system, allowing, for example, the development ofnew products; and changes in the manner in which information is managed,potentially allowing for increased efficiency in marketing management tasks.Martell (1988) charts three major areas of change in which IT plays a majorrole: “observable effects” (changes in the manner in which marketing mixvariables are employed); “invisible effects” (changes to the size and structure ofthe marketing function) and “information effects” (enabling the handling ofhigher volumes of and more complex marketing information).

It is these themes with which this paper is concerned and in the remainder ofthe paper, each of the areas of change identified by Martell will be considered inturn.

Changes in the manner in which marketing mix variables are employed. Theareas in which IT systems can be applied to marketing are considerable andvaried. Applications range from what Fletcher (1995) terms as personalproductivity tools (spreadsheets, word processing and simple customerdatabases) to, for example, more sophisticated decision support systems(Wilson and McDonald, 1994).

Higby and Farah (1991) and Shaw (1994b) have attempted to list the potentialmarketing applications of IT. Higby and Farah list applications includingcustomer profile analysis, sales forecasting, budgeting, inventory control, orderprocessing, pricing decisions, competitive analysis, price quotes, sales forceanalysis and statistical analysis, although some of these are clearly notapplications unique to marketing. Shaw distinguishes between sales relatedapplications, such as sales reporting, sales forecasting, sales order processing,product databases, lead tracking, telemarketing and sales route planning, asopposed to marketing related applications, such as customer databases, marketresearch, competitor analysis and promotion campaign management/tracking.

Baker (1994, p. 26) refers to Melkman’s (1989) distinction between four broadareas of IT application to marketing activities, although the categories do notappear to be entirely clear cut:

JMP:AMS3,2

92

(1) IT to enhance operating efficiency. The application of IT to marketingactivities already carried out in the organization, such as themaintenance of customer records; budgeting; preparing and makingpresentations; or analysing sales statistics.

(2) IT and changed methods. The application of IT to enable the marketingdepartment to carry out internal functions which were not possiblebefore – often extending (1) above – using databases for segmentationand positioning studies; more sophisticated forecasting and modelling;better and faster communication with a field sales force.

(3) IT for enhancing customer service. The use of IT to provide better andfaster communication with customers; using customer data to reachconclusions on changing market “needs” and preferences.

(4) IT and marketing innovation. Including the use of on-line databases;direct mail services; external segmentation packages such as MOSAICand ACORN; and the provision of electronic banking services.

Recent research, however, has suggested that far from the radicaltransformation of marketing promised by IT, the use of IT for marketing hasthus far focused primarily on the routine and tactical; activities such asdatabase management systems providing facilities including sales leadtracking and order taking (Hewson and Wilson, 1994). Indeed, it has recentlybeen argued that the utilisation of IT per se by the marketing function is still arelatively recent phenomenon and is by no means as widespread as issometimes claimed. Based on a survey of 65 organizations in the North-East ofEngland, Palihawadana and Delfino (1994) described the use of IT formarketing as “still quite patchy”. They also concluded that IT for marketingwas in its infancy (see also Shaw, 1994a), with all 65 respondents havingadopted IT for marketing within the last five years. In addition, around half ofthese respondents stated that as a result of adopting IT, marketing practice hadaltered only “a little” or “not at all”, although clearly this finding has to betreated with some caution, given that marketing practice may have been drivingthe type of IT adopted and not vice versa. Kench and Evans (1991) reported thatthe extent of IT adoption for marketing varied considerably betweenorganizations, dependent to an extent on company size and on dominantcorporate culture.

Our own empirical research produced similar findings (see Table I). Themost frequent use by far of IT among the sample of 111 marketing respondentswas to keep a database of existing customers (96 per cent of respondents),although quite clearly the nature of the database in question and the uses towhich it is put are likely to vary considerably. The use of IT to analyseperformance was also common, 81 per cent of respondents breaking down salesfigures and 72 per cent performing product line analysis through IT. Otherimportant uses of IT were in forecasting sales and profitability (78 per cent) andanalysing survey data (67 per cent).


marketing

93

IT was also extensively employed in promotion, for direct mailings, presumablywith more specific targeting; for customer segmentation and for assessingpromotional effectiveness. Other less common uses of IT were to trackcompetitors and customer attitudes, predominantly among the largerorganizations; to provide product information at point of sale; and in the designof products.

Our empirical research also examined the manner in which IT might be usedin the future, asking respondents, in the two stage “Delphi-type” survey, topredict the nature of IT use within their organization two and five to ten yearshence (see Table II). Here, at least, some extension in the range and

Per cent ofApplication respondents

Keeping a database of existing customers 96Analysis of sales by market 81Aiding the marketing planning process 79Sales forecasting 78Profitability forecasting 77Product line analysis 72Analysing survey data 67Automation of the order processing process 66Direct mail 64Inventory management 64Customer segmentation 59Monitoring sales staff performance 58Analysing the effectiveness of promotional spend 57“What if” analysis 51Internal electronic mail communications 51Electronic funds transfer 49Tracking competitors 44Remote access to office systems for sales staff 42Electronic data interchange with customers 40Distribution management 40Electronic data exchange with suppliers 35Electronic data interchange with other business partners 34Product design 34Tracking customer attitudes 33Providing product information at POS for access by sales staff 33Sales force route management 26Providing product information at POS for access by customers 13n = 111

Table I.Current use of IT

JMP:AMS3,2

94

sophistication of applications was envisaged. IT driven direct marketing waspredicted by 95 per cent of respondents within five to ten years, with 64 per centanticipating that it would be their most common promotional method in thatperiod. Within two years, many considered that IT would be used for specificproduct and customer analysis (94 per cent and 92 per cent respectively); 77 per

Within NotWithin 5-10 within

Now 2 years years 10 yearsApplication (%) (%) (%) (%)

Calculate profit contribution of specific products 60 34 6 –Calculate profit contribution of specific customers 58 34 5 3Direct marketing 56 21 18 4Customer segmentation 46 34 16 4Gather on-line external data 38 31 27 4Enable off-site working practices 22 34 38 6Calculate optimum price levels 42 35 17 6Measure promotion effectiveness 43 32 16 9Communicate on-line with field sales people 26 36 30 9Project management 44 31 17 9Electronic data interchange with customers 34 27 29 10Electronic funds transfer 41 28 21 11Electronic data interchange with suppliers 21 41 26 12Customer contact staff have on-line access tocustomer database 36 27 24 13Electronic data interchange with business partners 21 38 26 14Provide product information at point of sale foraccess by sales staff 32 26 28 15Customer lead tracking 24 41 19 15Administrative staff reductions 36 22 17 25Provide product information at point of sale foraccess by customers 10 27 35 28Electronic data interchange with retailers 20 31 18 31IT driven direct marketing most commonpromotional method 15 23 26 36Decrease external agency use 29 12 21 37Extended availability hours to customers 11 29 11 47Marketing staff reductions 14 16 17 54Increase external agency use 15 16 5 65IT driven telemarketing primary distributionchannel 5 8 16 72n = 111

Table II.Projected use of IT


marketing

95

cent to calculate optimum price levels. It was also envisaged that IT would beemployed more to augment offerings and to improve the efficiency oftransactions with customers and suppliers through the use of EDI.

All of these uses, however, might still be seen as relatively continuous: theydo not involve particularly dramatic transformations in the nature and scope ofmarketing activities. Rather, they are themselves an extrapolation of existingpractice; whereas in theory at least IT offers much more dramatic possibilities:for example, those of radically affecting the form and scope of marketing as anorganizational activity, the execution of the essence of marketing itself, namely,an intimate empathy with customers and users, and the interrelationship ofmarketing with a variety of external actors.

Indeed, the scope for reshaping, redefining and restructuring marketing inan organization is possibly as wide as imagination allows. The gathering,systemisation and analysis of customer data permits consistent monitoring ofattitudes and behaviour, the highlighting of sales opportunities, creativesegmentation and specific targeting of sales messages. Strategic marketing canbe enriched by more extensive scenario development and assessment.Information on individual customers is increasingly available and the emphasiscould increasingly be on “managers of customers” who take on board a widerange of customer related responsibilities. Such conceptualisations reflect theincreasing emphasis in marketing literature on so called “relationshipmarketing” (Schmitz and Rovner, 1992). Take this to its logical conclusion andthe boundaries between organizations become increasingly blurred: the conceptof the roving manager focusing on contact with specific customers is already apossibility. Space, territory, property and distance in the world of work maybecome increasingly redundant. This discussion again raises the question ofwhether such changes in the nature and scope of marketing are made possibleby developments in IT or whether the developments in marketing practicesthemselves shape the nature and scope of IT systems.

Furthermore, IT not only permits the development of innovative offerings, asalready mentioned, but also can alter their means of development. For instance,IT enables the canvassing of a wide spectrum of consumer opinion to a varietyof product designs; it even allows consumers to participate in product design;and, of course, IT allows manufacturing to respond to customer requirements,perhaps tapped in at the point of sale. Such experimentation can be extended tothe development of, for example, store interiors; although the traditionalconcept of the store may be replaced, or more likely augmented by, innovationsin distribution, such as the “virtual store” (Buckley, 1995) and other forms ofgenerally home bound shopping. Nevertheless, many of these more adventurousIT applications apparently remain to be exploited.

At this juncture, it perhaps worth noting that a priori it could be expectedthat there will be significant diversity in IT application and practice. Thecompetitive process in itself stimulates variety as individual players seekadvantages over their rivals through innovation, such as the pioneeringinvestment or the adoption of new technologies, techniques and products. Even

JMP:AMS3,2

96

so, over time a conformity may be established as those practices which are seento be more effective become widely known and accepted.

However, the history of innovation in any case clearly indicates that diffusionof new technologies and the extent of their usage can be spread over manyyears. There is not a spontaneous awareness of the technology by all of thevarious actors in the social system to which it applies – it naturally takes timefor it to diffuse and for it to be perceived of as relevant and significant; whilstresource differences, previous commitments and varying external stimuli, suchas competitive pressures, can all have an impact (Rogers, 1983).

Furthermore, existing research has noted a number of barriers to theadoption of IT for more than routine and unadventurous marketing tasks.Business Intelligence (1990) lists poor appreciation at board level for thepotential of IT for marketing; difficulty in justifying expenditure on IT onstrategic grounds; and poor understanding of marketing’s requirements by ISdepartments; although many of these factors could clearly apply to theadoption of IT per se and are perhaps not specific to marketing. Palihawadanaand Delfino (1994) report similar findings, identifying defining managers’needs; resistance to change (although it is not clear whether what is meant hereis resistance to change per se, or resistance to IT); obtaining reliableinformation; educating users; and budget constraints as major barriers to theadoption of IT in marketing.

Our own empirical research also asked respondents to indicate the extent towhich they had experienced barriers to the implementation of IT systems formarketing in the past and the extent to which these were likely to continue inthe future. Only 21 per cent of the 111 respondents to the “Delphi-type” surveyconsidered there to have been no major barriers to the adoption of IT formarketing purposes in the past, although 58 per cent felt that there would be nomajor barriers over the next five years or so. The various potential barriersidentified by the remaining respondents are listed in Table III and werecategorised by the researchers as “technological” barriers, “organizational”barriers, and “personal” barriers. A number of further barriers were identifiedwhich did not fall neatly into any of these categories and these are listedseparately under the heading “other” barriers.

As Table III shows, among the many other perceived barriers, the simpleissue of IT skills comes into play. 69 per cent of respondents who did experiencebarriers had found the lack of information technology skills among marketingstaff a major barrier to implementing IT in the marketing function, making thisthe third most frequently mentioned barrier noted overall, behind software andhardware limitations. Somewhat surprisingly, 52 per cent of respondents whoanticipated longer-term barriers considered that this would continue to be amajor barrier over the following five years making it again the third mostfrequently mentioned barrier, this time behind hardware and software costs.This appeared to be an issue across the spectrum of respondents and was notcommon to any particular size of organization or sector. As one respondentstated:


marketing

97

Getting marketing staff to use end user computing is a problem as they have been traditionallykept at arms length from IT and its uses.

Survey Respondent, Financial Services.

Perhaps then, for a combination of the reasons above, the somewhatunadventurous application of IT among the majority of our own researchsample is unsurprising.

NextNow five years

Barrier (%) (%)

No barriers 21 58

Of the Of theremaining remaining

88 respondents 47 respondentsTechnological barriersLimitations in available software 73 38Limitations in available hardware 73 23Hardware costs 66 76Software costs 54 72Organizational barriersIS function does not understand marketing’s needs 48 44Marketing function is a low priority for IT investment 45 30Organizational culture of resistance to change 44 36Organizational culture of resistance to IT 35 18Lack of top management commitment to IT 35 33Personal barriersLack of IT skills among marketing staff 69 52Lack of an IT “champion” 44 *Resistance of other organizational functions to data sharing 36 29Resistance of marketing staff to IT 27 14Resistance of marketing staff to data sharing 14 13Other barriersObtaining access to relevant information 48 *Unsuitability of creative activities to IT 27 20Fast pace of change in the marketing environment * 31Customer resistance to information provision * 18

n = 88 n = 47Note:Where * appears, the factor was not listed in the questionnaire survey as it was not mentionedby any of the respondents to the first stage open ended questionnaire. No figures are thereforeavailable.

Table III.Barriers to IT use

JMP:AMS3,2

98

Changes in the nature and use of marketing information. The “informationeffects” identified by both Fletcher and Martell are a consistent theme in muchIT literature. In particular, the beneficial ability of IT to manage increasingvolumes of data at increasing speeds is frequently referred to. The assumptionis often made of a linkage between increased quantities of information andimprovements in the decision making process (Arnold and Penn, 1987;Wightman, 1987; Kumar and Vrat, 1989).

Other research, however, has questioned whether this is, indeed, the case.The necessary focus of IT systems is primarily on what Hackner (1988) termsas “hard” information (numerical information which can be quantified andprocessed), about which, he states, “it is rarely possible to solve ill-structured ormessy problems only by gathering and analysing vast volumes of hardinformation”. (p. 48). Much managerial decision making is clearly reliant on“softer” influences such as intuition, managerial experience, ideas and visions.Stevenson et al (1990) similarly warn that marketing information systems lackthe “elementary creativity and imagination characteristic of human decisions”.Further, there is little evidence to suggest that increased information reducesthe uncertainty present in business decision making (Foxall, 1981), on thecontrary, it may be that more “information” could actually increase uncertainty,especially if it proves to be contradictory, as can be the case (Leverick andLittler, 1994).

In our own empirical research, respondents were asked to indicate whetherthe implementation of IT in the marketing function had been accompanied byany changes in the nature and scope of marketing activities. The results of thisare shown in Table IV. Only 15 per cent of the 111 respondents to the “Delphi-type” questionnaire reported no changes in marketing activities alongside theimplementation of IT systems. Among the remainder of the respondents, thenature of the changes noted were numerous and wide ranging but three broadareas of change were identified by the researchers and we termed these“activity changes”, “information changes” and “organizational changes” in linewith Martell’s (1988) typology.

Concerning “information changes”, a variety of observations and opinionsrelating to the use of marketing information were recorded (see Table IV). Over90 per cent of the 111 marketing professionals surveyed reported that followingthe implementation of IT systems, they were handling an increased volume ofinformation and that the “quality” of this information had improved, althoughthe precise manner in which this had occurred was less clear. 77 per cent ofrespondents reported that increased credibility was given to the results ofanalysis undertaken through IT systems, perhaps not surprisingly, given theability of IT systems, compared to alternative analytical systems, to processvast and complex data with rigour, at speed, and in detail.

29 per cent of respondents considered that the implementation of IT systemshad been accompanied by an over-emphasis of quantitative over qualitativedata; and 25 per cent reported an increased reliance on IT. IT can enhance


marketing

99

scenario planning, which requires judgement and intuition to interpret. Thispoint is made in the following statement by one of the survey respondents:

It is important to remember that people operate businesses. IT is a tool to run the businessmore efficiently not the other way round. Information must have a qualitative interpretationby the relevant manager.

(Survey Respondent, Food Retailing Sector).

27 per cent of participants in the research suggested that the unsuitability ofcreative activities to IT systems was a barrier to the usefulness of IT formarketing (see Table III), consistent with the proposition, found in somemarketing literature, that IT may somehow stifle creativity. Yet it should not be

% ofChange respondents

Little or no change in marketing practice 15

of the remaining85 per cent ofrespondents

“Activity” changesImproved efficiency 87Focus on profit contribution of specific customers/products 83Increased accuracy of customer targeting 74Made marketing more “scientific” 68IT systems shape way some activities carried out 65More equitable setting of branch sales targets 46Marketing decision making takes longer 11“Information” changesIncreased volume of marketing information 91Improved quality of information 90Increased credibility given to results of analysis 77Over-emphasis of quantitative data over qualitative data 29Reliance on IT at expense of intuition and judgement 25“Organizational” changesEnhanced status/visibility of marketing function 59Increased demands on marketing by other functions 59Marketing controls activities previously carried out by others 47Less administrative staff employed 42Greater decentralization of activities 34Less marketing staff employed 20Decreased scope of activities carried out by marketing 9n = 111

Table IV.Changes in marketing

practice followingadoption of IT

JMP:AMS3,2

100

accepted without question that IT inevitably constrains creativity simplybecause it generates primarily quantitative information. IT systems do clearlytend to legitimise a certain language, as defined by architects of the system, andthis is likely to influence power relationships within an organization. However,this is another issue. Whether or not IT constrains creativity must surely bedependent on the manner in which it is utilised; indeed, if users so wish, ITsystems have the potential to allow for more creativity than would previouslyhave been the case. As has already been discussed, IT can be used to generate awide array of product concepts for customer assessment, produce many andvaried scenarios for evaluation in marketing planning and so on. Moreover,there is no reason to conclude that attributes such as “creativity” and “intuition”should be ignored just because an IT system is in place. How IT is employed isvery much dependent on the imagination of those involved in development,design and implementation.

While not necessarily stifling creativity, the contribution of IT to decisionmaking may however be constrained because of its requirements for structures,logic and selective data types that may only reflect a portion of intelligenceemployed in some decision contexts, especially those with more strategic andinnovative dimensions. Not only can IT systems fail to capture the variety ofintelligences that are drawn on by individual decision makers to formidiosyncratic impressions that shape the manner and form of decision making,but also they cannot embrace the socio-political context within which majordecisions are formulated and implemented and which itself may shape the dataemployed and the manner in which the marketing information system isemployed. At best, IT may only assist the existentialist nature of muchmanagerial behaviour.

Changes to the size and structure of the marketing function. A third area ofchange to which IT has been frequently linked is that of changes inorganizational structure, for example the flattening of organizationalhierarchies. We confine ourselves here primarily to changes in the compositionand structure of the marketing function and its position in the organization as awhole. The potential for IT to become part of a process of reshaping inmarketing activity has already been discussed. However, IT can be perceived aspart of a wider process of adaptation and redefinition of organizationsoperating in an environment where there are powerful drivers to reduce costsand where there is an awareness of the opportunities IT raises with a tendencyfor competitors to exploit them.

As Martell (1988) states, “institutions can be viewed as complex informationsystems which connect people in a myriad of economic and social relationships”and organizations are looking for structural forms which “provide quick,flexible strategic responses to the constant changes in the marketplace.” Onequestion which arises in relation to this is whether or not there will be anerosion of the influence of marketing and of the “marketing professional”. Thisclearly could happen if a dominant paradigm of “how IT should be used”emerges and this is to use IT to allow the widespread dissemination of market


marketing

101

and customer information and a consequent flattening of the organizationaldecision making structure. Customer information can be accessible to all thosewho interface with customers; all can now be “part-time marketers” and theintegrity of the professional marketer and the marketing function may beincreasingly challenged as marketing information is widely distributedthroughout the organization and the power accorded to marketing bycontemporary market grounded ideology eroded. As Martell (1988) states, itmay be that “more effective information dissemination throughout theorganization is bound to decrease dependency on the marketing department.”The question then, according to Martell, is if and how marketing can retain itscentral position in the organizational network as the interface function betweenthe organization and its customers.

Our own empirical research provides some indication of the pertinence ofthese issues. 36 per cent of respondents had already made reductions in thenumbers of administrative staff employed in marketing, apparently as a resultof the adoption of IT, and 14 per cent had made reductions in staff numbers inother areas of marketing (see Table II). It is clearly difficult to attribute staffreductions to a single “cause” and it is perhaps unwise to read too muchsignificance into these figures. However, they do appear to constitute a trend,especially in the light of further staff reductions predicted by respondents fortwo and five to ten years hence. It was also predicted that there would be anincrease in the use of outsourcing, especially among service sector businessesand relatively small businesses, with, in particular, employees providingservices via IT from home. Indeed, 94 per cent of respondents expect to useinformation technology to enable such off-site working within five to ten years.In addition, 34 per cent of respondents considered that the adoption of IT hadbeen accompanied by greater decentralisation of activities within theorganization, with an accompanying devolution of responsibility (see Table IV).

The picture presented was not completely conclusive, however. 47 per cent ofrespondents considered that IT and the accompanying process of change hadenabled marketing to “control” activities previously undertaken by otherorganizational functions and only 9 per cent of respondents considered IT to havedecreased the scope of activities undertaken by marketing (see Table IV). Indeed,59 per cent of participants in the research stated that the adoption of IT hadincreased the demands made on marketing by other organizational functions.

Certainly some of these findings imply a degree, at least, of blurring oftraditional functional divisions within organizations. Martell (1988) suggeststhe consequent need for both an organization and information strategy toanswer such questions as:

• “Should there be a marketing department?”

• “If so, positioned where and adopting which role?”

• “What degree of centralisation or decentralisation is applicable?”

• “What structure should be adopted?”

JMP:AMS3,2

102

• “What data are required?”

• “What can be automated?”

Yet to assume that the power of the marketing function will somehow be erodedas a result of increased dissemination of information within the organization isto make at least one major assumption: that information sharing through ITsystems is itself unproblematic. This is clearly not the case (see, for example,Davenport, 1994). The proportion of respondents to our own surveyconsidering the unwillingness of other staff to share data with colleagues to bea major barrier to the effective use of IT in marketing was of some interest. 36per cent of respondents agreed that the resistance of other organizationalfunctions to share data with the marketing department was a major barrier; 14per cent of respondents had found the reluctance of marketing staff to sharedata with their own colleagues to be a problem (see Table III). The issue reducesonly marginally in importance when the findings in relation to the next fiveyears are considered. Although rarely mentioned in the literature on IT inmarketing, these findings are in line with those of Conway and Elliott (1994).

The issue of data sharing also emerged from the personal interviewsundertaken, with one organization, for example, noting the reluctance inparticular of salespeople to share data with others through a central sales ITsystem.

One of the problems was getting co-operation from people who actually handle contacts, theirleads if you like, [to take them] across to a common pool. Part of the reason it’s difficult is thatyou have to persuade people that the information once handed across is actually of value andthey’re going to get value back from joining this common pool of shared knowledge. It’s beena question of hammering away, hammering away and I think as new people come into thecompany they accept the systems [and] you get a turnover of staff [too].”

Survey Respondent, Consultancy Sector.

The outcome of this debate is not yet clear. It may be that marketing’s role isindeed eroded by the increasing dissemination of marketing and customerinformation throughout the organization, although for this to occur, there areclearly a number of barriers to be overcome. On the other hand, it may be thatmarketing is able to retain its position in the organization by adopting the roleof “guardian of the customer orientation”, taking responsibility for defining theform and content of information that is an acceptable basis for organizationaldiscourse.

ConclusionThe purpose of this paper has been to examine the various issues associatedwith IT implementation and its relationship to changes in the nature and scopeof organizational activity. This was undertaken by considering these issues inrelation to the marketing function. Three areas in particular were addressed:changes in the nature and scope of marketing activities; changes in the natureand use of marketing information; and changes to the role and position of


marketing

103

marketing within the organizational framework. Clearly these issues are inter-related, at least to some extent.

Concerning the first of these three areas, it might be concluded that IT has,up to a point, created new opportunities and led to marked changes in the roleof marketing, the range of marketing activities performed and the manner inwhich these are undertaken. In terms of marketing activities, of particular notewere the major shift in emphasis from advertising to IT driven direct marketingand the growth of electronic communication, both within and betweenorganizations. Indeed, IT driven telemarketing is firmly on the agenda with 29per cent of respondents expecting this to become their priority for distributionwithin five to ten years (see table II). In other words, IT can influence aredirection of effort by changing the economics and effectiveness of what isfeasible - direct marketing can be more focused to lead to more effectiverelationship marketing, some might argue.

The impact of IT on the nature and quality of marketing decisions may alsobe significant. IT provides a wider range of information for decision-makingbut may in the process “eclipse” intuition, creativity and experience with astructured set of quantitative data electronically processed which may be givenhigher credibility per se.

In addition, customer related intelligence may become more widelydisseminated and so not remain the exclusive property of marketing, theimplications of which could be widespread. Indeed, marketing itself mightundergo a process of reconfiguration within the organizational setting. A majorchallenge to the marketing function comes from the restructuring towardscustomer oriented management. This, coupled with the more widespreaddissemination of customer intelligence, could lead to other areas that interactwith customers potentially taking over some of marketing’s tasks. This maybroaden the scope of marketing within the organization but weaken thefunction of marketing.

In our research, 14 per cent of respondents reported that informationtechnology had already lead to marketing staff cuts and a further 33 per centexpected marketing staff reductions as a direct result of IT within five to tenyears. Staff reductions were apparently accompanied by other trends in theorganization of marketing, such as a flattening of the structure of the marketingfunction, with fewer decision-making layers, more extensive part-time andcontractual arrangements, and increased teleworking. The future of marketingas a core organizational activity may also be eroded by off-site working and 84per cent of respondents expected to use IT in this way over the next five years.

The full impact of these changes is not yet clear. At one end of the spectrumof possibilities, it may be that they lead to marketing becoming moreentrepreneurial; at the other end, it may mean an increase in formal procedures,as executive control is exerted over such new organizational forms. Anotherpossibility is that marketing as a centralised function ceases to exist as somemarketing tasks are diffused through the organization, or these are taken overby other newly emerging specialist areas, such as Customer Services.

JMP:AMS3,2

104

To conclude, it is clear from our research that the nature and substance ofmarketing is undergoing change, although there is little evidence as yet of theradical changes predicted in some quarters. Clearly IT has an active part to playin this reshaping, and it is likely to continue to do so in the longer-term.However, the extent of IT’s role may be tempered by the time taken for IT to beperceived as relevant and significant. Resource issues, previous commitmentsand external forces, such as competitive pressures have an effect on theadoption of IT, in addition to the internal factors discussed in this paper. Muchclearly depends on how the use of IT for marketing is interpreted andimplemented by the various “role players” within the organization and thisdepends on their agenda. The acceptance and implementation of IT isundertaken within a complex selection environment of competing claims andpreferences. That together with the dominant organizational culture, will affectthe expression of IT as it emerges within the organization.

Note1. The research programme also encompasses a parallel study of the use of ICT for business

planning, summarised in Leverick et al. (1995b).

ReferencesArnold, M.E. and Penn, J.M. (1987), “The information technology revolution in marketing(1): a

review of some current applications”, Quarterly Review of Marketing, Vol. 12 No. 2, pp. 1-7.Baker, M.J. (1994), “Marketing intelligence for intelligent marketing”, in Chapman, J. and Holtham,

C. (Eds), IT in Marketing, Alfred Waller in association with UNICOM, Henley on Thames, pp. 25-40.

Bowles, T. (1995), “Information systems for marketing”, in Thomas, M.J. (Ed.), The GowerHandbook of Marketing, fourth edition, Gower Publishing Company.

Buckley, N. (1995), “Check it out”, Financial Times, 8 August 8, p. 10.Chapman, J. and Holtham, C. (Eds), IT in Marketing, Alfred Waller in association with UNICOM,

Henley on Thames.Conway, M. and Elliott, R. (1994), “Marketing information systems: what you see is what you get

but not what you use”, paper presented at the British Academy of Management Conference,University of Lancaster, 12-14 September.

Davenport, T.H. (1994), “Saving IT’s soul: human centred information management”, HarvardBusiness Review, March/April, pp. 119-31.

Fletcher, K. (1995), Marketing Management and Information Technology, second edition, PrenticeHall International, London.

Foxall, G. (1981), Strategic Marketing Management, Croom Helm, London.Gorski, D. (1995), “The marketing database”, in Thomas, M.J. Ed.), The Gower Handbook of

Marketing, fourth edition, Gower Publishing Company.Gorski, D. and Ingram, J. (1993), The Price Waterhouse Sales and Marketing Software Handbook,

second edition, Pitman Publishing, London.Hackner, E. (1988), “Strategic development and information use”, Scandinavian Journal of

Management, Vol. 4 No. 1/2, pp. 45-61.Hewson, W. and Wilson, H. (1994), “Exploring the alignment of information technology

investments with sales and marketing strategies”, paper presented at the British Academy ofManagement Conference, University of Lancaster, 12-14 September.


marketing

105

Higby, M.A. and Farah, B.N. (1991), “The status of marketing information systems, decisionsupport systems and expert systems in the marketing function of US firms”, Information andManagement, Vol. 20, pp. 33-48.

Kench, R. and Evans, M. (1991), “IT: the information technology dichotomy”, MarketingIntelligence and Planning, Vol. 9 No. 5, pp. 16-22.

Kumar, R. and Vrat, P. (1989), “Using computer models in corporate planning”, Long RangePlanning, Vol. 22 No. 2, pp. 114-20.

Leverick, F. and Littler, D.A. (1995), Using Information Technology Effectively: A Study ofMarketing Applications, Manchester School of Management, ISBN 1-871782-95-3.

Leverick, F. and Littler, D.A. (1994), Marketing in the Process of Managing Ambiguity: TheDevelopment of Telepoint in the UK, Marketing Working Paper Series, Manchester School ofManagement.

Leverick, F., Littler, D.A., Bruce, M., and Wilson, D. (1995a), Information Technology and theChanging Face of Marketing, Manchester School of Management, ISBN 1-871782-65-1.

Leverick, F., Littler, D.A., Bruce, M. and Wilson, D. (1995b), Information Technology and theBusiness Planning Function, Manchester School of Management, ISBN 1-871782-66-X.

Leverick, F., Littler, D., Bruce, M. and Wilson, D. (1995c), “A revolution unrealised, promisesunfulfilled: information technology in marketing”, paper presented at the EuropeanConference on the Management of Technology, Aston University, Birmingham, UK, 5-7 July1995.

Leverick, F., Littler, D., Bruce, M. and Wilson, D. (1995d), “Information technology in marketing:servant, suitor or subverter?” Paper presented at the 24th Annual EMAC Conference, Paris,France, 16-19 May 1995.

Leverick, F., Littler, D., Bruce, M. and Wilson, D. (1996), “Using information technology effectively:a study of marketing applications”, paper presented at the Marketing Education GroupConference, University of Strathclyde, 9-12 July 1996.

Li, E.Y. (1995), “Marketing information systems in top US companies: a longitudinal analysis”,Information and Management, Vol. 28, pp. 13-31.

Littler, D. and Leverick, F. (1995), “Information technology in marketing decision making”, paperpresented at the Conference on Telecommunications and Information Markets, The Universityof Rhode Island, US, 5-8 November.

Martell, D. (1988), “Marketing and information technology”, European Journal of Marketing, Vol. 22 No. 9, pp. 16-24.

Mazur, L. (1991), “Going for IT”, Marketing, 13 June 13, pp. 19-20.Morris, B. (1995), IT in Marketing and Business Planning, unpublished document, CROMTEC,

Manchester School of Management, UMIST.Noyak, P.R. (1991), “Forces driving rapid technological development”, Marketing Intelligence and

Planning, Vol. 9 No. 4, pp. 6-11.Palihawadana, D. and Delfino, M. (1994), “Marketing and information technology: a study related

to the North East of England”, in Biemans, W.G. and Ghauri, P.N. (Eds), Meeting the Challengesof New Frontiers, proceedings of the 10th IMP Conference, Groningen, The Netherlands.

Quinn, J.B. (1992), Intelligent Enterprise: A Knowledge and Service Based Paradigm for Industry,The Free Press.

Rogers, E.H. (1983), Diffusion of Innovations, third edition, The Free Press.Sääksjärvi, M.V.T. and Talvinen, J.M. (1992), “Integration and effectiveness of marketing

information systems”, European Journal of Marketing, Vol. 27 No. 1, pp. 64-79.Schmitz, R.A. and Rovner, M.L. (1992), “A world of diminishing distance: how information

technology is collapsing the transaction barriers between marketers and consumers”, MarketResearch Today, Vol. 20 No. 4, pp. 227-34.

JMP:AMS3,2

106

Shaw (1994a) “Marketing systems that are fit for purpose”, IT in Marketing book.Shaw, R. (1994b), How to Transform Marketing Through IT, Business Intelligence, London.Stevenson, T.H., Plath, A.D. and Bush, C.M. (1990), “Using expert systems in industrial

marketing”, Industrial Marketing Management, Vol. 19 No. 3, pp. 243-49.Talvinen, J.M. (1995), “Information systems in marketing: identifying opportunities for new

applications”, European Journal of Marketing, Vol. 29 No. 1, pp. 8-26.Wightman, D.W.L. (1987), “Competitive advantage through information technology”, Journal of

General Management, Vol. 12 No. 4, pp. 36-45.Wilson, H. and McDonald, M.H.B. (1994), “Decision support systems as learning aids: the case of

marketing planning”, paper presented at the Marketing Education Group Conference,University of Ulster, July.

Woudhuysen, J. (1994), “Tailoring IT to the needs of customers”, Long Range Planning, Vol. 27 No. 3, pp. 33-42.

Documents

The Role of It in Marketing