Principles of Business Marketing and Finance Chapter 10 Marketing Review
Chapter x: Gathering and Using Information: Marketing Inquiry and Market Intelligence
ten.i Marketing Information Systems
Learning Objectives
- Draw the components of a marketing information organisation and each component's purpose.
- Explain the situations in which marketing enquiry should be used versus market intelligence.
- Describe the limitations of market intelligence and its ethical boundaries.
- Explain when marketing research should and should non be used.
A certain amount of marketing information is existence gathered all the time by companies as they engage in their daily operations. When a sale is made and recorded, this is marketing information that's being gathered. When a sales representative records the shipping preferences of a customer in a house'south customer relationship management (CRM) system, this is besides marketing information that's beingness collected. When a firm gets a client complaint and records it, this as well is data that should exist put to use. All this data can exist used to generate consumer insight. However, truly understanding customers involves not simply collecting quantitative data (numbers) related to them simply qualitative data, such every bit comments about what they think.
The trick is integrating all the information you collect so it can be used by as many people equally possible in your organization to make good decisions. Unfortunately, in many organizations, information isn't shared very well amidst departments. Fifty-fifty within departments, it can be a problem. For example, one group in a marketing department might enquiry a problem related to a make, uncover certain findings that would be useful to other make managers, but never communicate them.
A marketing data system (MIS) is a way to manage the vast amount of information firms accept on hand—information marketing professionals and managers need to make good decisions. Marketing information systems range from paper-based systems to very sophisticated computer systems. Ideally, however, a marketing information system should include the post-obit components:
- A system for recording internally generated data and reports
- A system for collecting market intelligence on an ongoing basis
- Marketing analytics software to assistance managers with their decision making
- A arrangement for recording marketing inquiry information
Internally Generated Data and Reports
Every bit we explained, an organisation generates and records a lot of information every bit part of its daily business operations, including sales and bookkeeping information, and data on inventory levels, dorsum orders, client returns, and complaints. Firms are too constantly gathering data related to their Web sites, such equally clickstream data. Clickstream data is information generated about the number of people who visit a Web site and its various pages, how long they dwell at that place, and what they buy or don't buy. Companies use clickstream information in all kinds of ways. They use it to monitor the overall traffic of visitors that a site gets, to see which areas of the site people aren't visiting and explore why, and to automatically offer visitors products and promotions past virtue of their browsing patterns. Software can be used to automatically tally the vast amounts of clickstream data gathered from Web sites and generate reports for managers based on that information. Netflix recently awarded a $1 million prize to a group of scientists to plow through Spider web information generated by millions of Netflix users so as to improve Netflix's predictions of what users would similar to rent (Baker, 2009). (That's an interesting way to carry marketing enquiry, don't you think?)
Beingness able to access clickstream data and other internally generated information quickly can give a company'south determination-makers a competitive edge. Remember our discussion in Affiliate 9 "Using Supply Chains to Create Value for Customers" about how Walmart got a leg up on Target afterwards 9/xi? Walmart's inventory information was updated by the infinitesimal (the retailer'south huge computing heart rivals the Pentagon'southward, incidentally); Target'due south was only updated daily. When Walmart'due south managers noticed American flags began selling rapidly immediately following the terrorist attacks on 9/11, the visitor speedily ordered as many flags as possible from various vendors—leaving none for Target.
Many companies brand a certain corporeality of internal data available to their employees, managers, vendors, and trusted partners via intranets. An intranet looks similar the Web and operates similar it, but simply an organization'south employees take access to the information. Then, for example, instead of a brand manager asking someone in accounting to run a report on the sales of a particular product, the brand manager could look on her firm's intranet for the information.
However, large companies with multiple products, business organization units, and databases purchased and installed in different places and at different times frequently take such vast amounts of data that they can't mail it all on an intranet. Consequently, getting concur of the correct information can be hard. The information could be right nether your olfactory organ and you might non know it. Meet people like Gary Pool: Pool works for BNSF Railway and is i of BNSF'south "go-to" employees when it comes to gathering marketing data. Pool knows how to access different databases and write computer programs to extract the correct information from the correct places at BNSF, a process known as data mining. Combining information into 1 location is called data warehousing, and makes Pool's analysis easier. He and then captures the information and displays it in dashboards, screens on the calculator that make the information easily understood so that managers can detect marketing trends. While a dashboard may display a piece of information, such as the number of carloads sold in West Virginia, the manager tin can click on the number and go more than particular.
Michael Kappel – Metra BNSF Railway 149 – CC Past-NC 2.0.
Analytics Software
Increasingly, companies are purchasing analytics software to help them pull and make sense of internally generated data. Analytics software allows managers who are not figurer experts to gather all kinds of different information from a company'due south databases—information not produced in reports regularly generated by the company. The software incorporates regression models, linear programming, and other statistical methods to help managers answer "what if" types of questions. For case, "If we spend 10 percent more of our advertizing on Television set ads instead of magazine ads, what effect will it accept on sales?" Oracle Corporation'south Crystal Brawl is one make of analytical software.
The camping, hunting, fishing, and hiking retailer Cabela'south has managed to refine its marketing efforts considerably using analytics software developed by the software maker SAS. "Our statisticians in the past spent 75 percent of their time but trying to manage data. At present they have more than fourth dimension for analyzing the data with SAS, and nosotros have get more flexible in the marketplace," says Corey Bergstrom, manager of marketing research and analysis for Cabela'due south. "That is just priceless" (Zarello, 2009).
Echo9er – Cabela's – CC By-NC-SA 2.0.
The company uses the software to aid clarify sales transactions, market research, and demographic information associated with its large database of customers. It combines the information with Web browsing information to gain a better understanding of the individual customers marketing channel preferences as well every bit other marketing decisions. For example, does the customer adopt Cabela's' one-hundred-page catalogs or the seventeen-hundred-page catalogs? The software has helped Cabela's employees understand these relationships and brand loftier-touch on data-driven marketing decisions (Zarello, 2009).
Market Intelligence
A skilful internal reporting system can tell a manager what happened within his house. But what about what's going on outside the firm? What is the business environment like? Are credit-lending terms loose or tight, and how volition they affect what yous and your customers are able to buy or not buy? How will rising fuel prices and alternate free energy sources touch your firm and your products? Do changes such every bit these present business concern obstacles or opportunities? Moreover, what are your competitors up to?
Non gathering marketplace intelligence leaves a company vulnerable. Recollect Encyclopedia Britannica, the marketplace leader in print encyclopedia business for literally centuries? Encyclopedia Britannica didn't encounter the digital age coming and nearly went out of business equally a upshot. (Suffice it to say, you lot tin can at present access Encyclopedia Britannica online.) By dissimilarity, when fuel prices hit an all-fourth dimension loftier in 2008, unlike other passenger airline companies, Southwest Airlines was prepared. Southwest had anticipated the problem, and early locked in contracts to buy fuel for its planes at much lower prices. Other airlines weren't as prepared and lost money because their fuel expenses skyrocketed. Meanwhile, Southwest Airlines managed to eke out a profit. Collecting market intelligence can also help a company generate ideas or production concepts that can then be tested by conducting marketplace inquiry.
Gathering marketplace intelligence involves a number of activities, including scanning newspapers, merchandise magazines, and economic data produced by the regime to observe out about trends and what the competition is doing. In big companies, personnel in a house's marketing section are primarily responsible for their firm's marketplace intelligence and making sure it gets conveyed to determination makers. Some companies subscribe to news service companies that regularly provide them with this data. LexisNexis is one such company. It provides companies with news well-nigh business organization and legal developments that could touch on their operations. Other companies subscribe to mystery shopping services, companies that store a client and/or competitors and report on service practices and service performance. Permit'due south now examine some of the sources of information you can await at to gather market place intelligence.
Search Engines and Corporate Web Sites
An obvious way to proceeds market intelligence is past examining your competitors' Web sites too as doing basic searches with search engines like Google. If yous want to detect out what the press is writing almost your company, your competitors, or any other topic you're interested in, you lot can sign up to receive free alerts via e-mail by going to Google Alerts at http://www.google.com/alerts. Suppose you lot desire to monitor what people are saying about you or your company on blogs, the annotate areas of Web sites, and social networks such every bit Facebook and Twitter. You can do so past going to a site like WhosTalkin.com, typing a topic or visitor name into the search bar, and voilà! All the good (and bad) things people have remarked most the company or topic plough upwards. What a corking way to seek out the shortcomings of your competitors. It's also a good way to spot talent. For example, designers are using search engines like WhosTalkin.com to search the blogs of children and teens who are "way-forward" and then involve them in designing new products.
WhosTalkin.com and Radian6 (a like company) likewise provide companies with sentiment analysis. Sentiment analysis is a method of examining content in blogs, tweets, and other online media (other than news media) such as Facebook posts to make up one's mind what people are thinking at any given time. Some companies use sentiment assay to determine how the marketplace is reacting to a new production. The Centers for Illness Control (CDC) uses sentiment analysis to rail the progress of flu; as people mail service or tweet how sick they are, the CDC tin determine where the flu is increasing or decreasing.
Publications
The Economist, the Wall Street Periodical, Forbes, Fortune, BusinessWeek, the McKinsey Report, Sales and Marketing Management, and the Financial Times are good publications to read to learn near general business trends. All of them discuss current trends, regulations, and consumer bug that are relevant for organizations doing business concern in the domestic and global market place. All of the publications are online equally well, although y'all might take to pay a subscription fee to look at some of the content. If your business firm is operating in a global marketplace, you might be interested to know that some of these publications have Asian, European, and Heart Eastern editions.
Other publications provide information about marketplace trends and activities in specific industries. Consumer Appurtenances and Technology provides information consumer packaged goods firms want to know. Likewise, Progressive Grocer provides data on issues of import to grocery stores. Information Week provides information relevant to people and businesses working in the area of engineering science. World Merchandise provides information well-nigh bug relevant to organizations shipping and receiving goods from other countries. Innovation: America's Periodical of Engineering science Commercialization provides data about innovative products that are about to hit the marketplace.
Trade Shows and Associations
Trade shows are another way companies learn about what their competitors are doing. (If you are a marketing professional person working a merchandise show for your company, you lot volition want to visit all of your competitors' booths and see what they have to offer relative to what you lot accept to offer.) And, of class, every field has a trade association that collects and disseminates data about trends, breakthroughs, new technology, new processes, and challenges in that detail industry. The American Marketing Association, Food Marketing Institute, Outdoor Industry Association, Semiconductor Industry Clan, Trade Promotion Management Association, and Travel Manufacture Association provide their member companies with a wealth of data and oft deliver them daily updates on industry happenings via e-post.
Salespeople
A company'southward salespeople provide a vital source of market intelligence. Suppose i of your products is selling poorly. Volition you initially look to newspapers and magazines to figure out why? Will you consult a trade association? Probably not. You volition first want to talk to your firm's salespeople to go their "take" on the problem.
Salespeople are the eyes and ears of their organizations. Maybe more than anyone else, they know how products are faring in the marketplace, what the competition is doing, and what customers are looking for.
A system for recording this information is crucial, which explains why so many companies have invested in customer relationship direction (CRM) systems. Some companies circulate lists so their employees have a meliorate idea of the market intelligence they might exist looking for. Textbook publishers are an example. They let their sales representatives know the types of books they want to publish and encourage their representatives to wait for practiced potential textbook authors amongst the professors they sell to.
Suppliers and Industry Experts
Your suppliers can provide you lot with a wealth of information. Practiced suppliers know which companies are moving a lot of inventory. And oft they take an idea why. In many instances, they will tell yous, if the data yous're looking for is general enough so they don't have to divulge any information that's confidential or that would be unethical to reveal—an upshot we'll talk more about subsequently in the book. Befriending an expert in your industry, along with business journalists and writers, tin can be helpful, too. Ofttimes these people are "in the know" because they get invited to review products (Gardner, 2009).
Customers
Lastly, when it comes to market intelligence don't fail observing how customers are behaving. They tin provide many clues, some of which you will be challenged to reply to. For example, during the latest economic downturn, many wholesalers and retailers noticed consumers began buying smaller amounts of goods—just what they needed to get by during the calendar week. Seeing this trend, and realizing that they couldn't pass along higher costs to customers (because of, say, higher fuel prices), a number of consumer-appurtenances manufacturers "shrank" their products slightly rather than raise prices. Yous have perchance noticed that some of the products you buy got smaller—but not cheaper.
After reading this section, you now know what kind of information feeds into a Marketing Information Arrangement!
Later on identifying the incorrect answers, can you explicate what they are used for?
Tin can Market Intelligence Be Taken Too Far?
Can market intelligence exist taken too far? The answer is yes. In 2001, Procter & Gamble admitted it had engaged in "dumpster diving" past sifting through a competitors' garbage to find out about its hair care products. Although the practice isn't necessarily illegal, it cast P&G in a negative light. Too, British Airways received a lot of negative press in the 1990s after it came to light that the company had hacked into Virgin Atlantic Airways' estimator system1.
Gathering corporate data illegally or unethically is referred to as industrial espionage. Industrial espionage is non uncommon. Sometimes companies hire professional spies to gather information about their competitors and their trade secrets or even bug their phones. Former and electric current employees can also reveal a company'due south trade hugger-mugger either deliberately or unwittingly. Microsoft recently sued a former employee it believed had divulged trade secrets to its competitorstwo. It's been reported that for years professional spies bugged Air France'south beginning-course seats to listen in on executives' conversations (Anderson, 1995).
Video Clip
Spying at Work—Espionage: Who, How, Why, and How to Stop It
To learn more than about the hazards of industrial espionage and how it'south done, check out this YouTube video.
">(click to see video)
Halturg Skanser – dumpster diving leap – CC BY-NC 2.0.
To develop standards of conduct and create respect for marketing professionals who gather market intelligence, the Society of Competitive Intelligence Professionals has developed a code of ethics. Information technology is every bit follows:
- To continually strive to increment the recognition and respect of the profession.
- To comply with all applicable laws, domestic and international.
- To accurately disclose all relevant data, including one's identity and organization, prior to all interviews.
- To avoid conflicts of interest in fulfilling 1's duties.
- To provide honest and realistic recommendations and conclusions in the execution of 1'south duties.
- To promote this code of ethics within 1'south visitor, with third-political party contractors and within the entire profession.
- To faithfully adhere to and abide by 1'due south visitor policies, objectives and guidelines3.
Marketing Research
Marketing enquiry is what a company has to resort to if information technology can't answer a question past using whatsoever of the types of information we have discussed so far—marketplace intelligence, internal company data, or analytics software applied to data. Every bit we take explained, marketing enquiry is generally used to respond specific questions. The name y'all should give your new product is an example. Unless your company has previously done some specific research on product names—what consumers think of them, adept or bad—you're probably non going to find the answer to that question in your internal company data. Too, different internal data, which is generated on a regular basis, marketing inquiry is non ongoing. Marketing research is done on an as-needed or project basis. If an organization decides that it needs to carry marketing research, it tin can either comport marketing enquiry itself or hire a marketing research firm to do it.
So when exactly is marketing inquiry needed? Proceed in mind marketing research tin can be expensive. Y'all therefore take to weigh the costs of the inquiry against the benefits. What questions will the research reply, and will knowing the answer event in the house earning or saving more than money than the inquiry costs?
Marketing enquiry can also have fourth dimension. If a quick decision is needed for a pressing problem, information technology might not be possible to do the enquiry. Lastly, sometimes the answer is obvious, then there is no point in conducting the research. If one of your competitors comes up with a new offering and consumers are clamouring to get it, you certainly don't demand to undertake a research study to run across if such a product would survive in the marketplace.
Alex J. Caffarini, the president and founder of the marketing research house Analysights, believes at that place are a number of other reasons companies mistakenly do marketing research. Caffarini'due south explanations (shown in parentheses) most why a company's executives sometimes make bad decisions are somewhat humorous. Read through them:
- "Nosotros've always done this research." (The research has taken on a life of its ain; this particular projection has continued for years and nobody questioned whether it was yet relevant.)
- "Everyone's doing this inquiry." (Their competitors are doing it, and they're afraid they'll lose competitive advantage if they don't, yet no ane asks what value the research is creating.)
- "The findings are nice to know." (Great—spend a lot of money to create a wealth of useless information. If the data is dainty to know, but yous can't exercise anything with it, you're wasting coin.)
- "If our strategy fails, having done the research volition show that we made our best-educated guess." (They're covering their butts. If things go wrong, they tin blame the findings, or the researcher.)
- "We need to study the problem thoroughly before we make up one's mind on a course of activeness." (They're afraid of making a tough decision. Conducting marketing research is a good way to filibuster the inevitable. In the concurrently, the problem gets bigger, or the window of opportunity closes.)
- "The research will show that our latest advertizing campaign was constructive." (They're using marketing enquiry to justify by decisions. Rarely should marketing research be done after the fact) (Caffarini).
Is Marketing Research Always Correct?
To be sure, marketing enquiry can help companies avoid making mistakes. Take Tim Hortons, a popular coffee chain in Canada, which has been expanding in the U.s. and internationally. Hortons recently opened some self-serve kiosks in Ireland, only the service was a flop. Why? Because cars in Republic of ireland don't have loving cup holders. Would marketing research have helped? Probably. So would a little bit of market intelligence. It would take been easy for an observer to meet that trying to drive a machine and hold a cup of hot java at the same time is difficult.
That said, we don't want to exit you with the thought that marketing research is infallible. As we indicated at the offset of the chapter, the process isn't foolproof. In fact, marketing enquiry studies have rejected a lot of good ideas. The idea for telephone answering machines was initially rejected following marketing research. And so was the hit sitcom Seinfeld, a show that in 2002 Television receiver Guide named the number-ane television plan of all fourth dimension. Even the all-time companies, like Coca-Cola, have made mistakes in marketing research that take led to huge flops. In the next section of this chapter, nosotros'll talk over the steps related to conducting marketing enquiry. Equally you lot will learn, many things can get wrong along the way that can affect the results of research and the conclusions drawn from it.
Primal Takeaway
Many marketing problems and opportunities can be solved by gathering information from a company'southward daily operations and analyzing it. Market intelligence involves gathering information on a regular, ongoing basis to stay in bear on with what's happening in the marketplace. Marketing research is what a company has to resort to if it can't answer a question by using market intelligence, internal company data, or belittling software. Marketing research is non infallible, however.
Review Questions
- Why do companies assemble market intelligence and conduct marketing research?
- What activities are part of market intelligence gathering?
- How practise marketing professionals know if they have crossed a line in terms of gathering marketing intelligence?
- How does the time frame for conducting marketing intelligence differ from the time frame in which marketing research data is gathered?
1"P&G Admits to Dumpster Diving," PRWatch.org, Baronial 31, 2001, http://www.prwatch.org/node/663 (accessed December 14, 2009).
2"Microsoft Conform Alleges Ex-Worker Stole Trade Secrets," CNET, January 30, 2009, http://news.cnet.com/8301-10805_3-10153616-75.html (accessed September 13, 2021).
3"SCIP Code of Ethics for CI Professionals," Society of Competitive Intelligence Professionals, http://www.scip.org/About/content.cfm?ItemNumber=578&navItemNumber=504 (accessed September 13, 2021).
References
Anderson, J., "Bugging Air French republic First Form," Ellensburg Daily News, March 25, 1995, 3, http://news.google.com/newspapers?nid=860&dat =19950320&id=ddYPAAAAIBAJ&sjid=F48DAAAAIBAJ&pg=4554,2982160 (accessed December 12, 2009).
Bakery, S., "The Spider web Knows What You Want," BusinessWeek, July 24, 2009, http://www.businessweek.com/mag/content/09_30/b4140048486880.htm (accessed September 13, 2021).
Caffarini, A. J., "X Costly Marketing Mistakes and How to Avoid Them," Analysights, LLC.
Gardner, J., "Competitive Intelligence on a Shoestring," Inc., September 24, 2001, http://www.inc.com/articles/2001/09/23436.html (accessed December 14, 2009).
Nemes, J., "Dumpster Diving: From Garbage to Gold," Greenbiz.com, January 16, 2009, http://www.businessgreen.com/bg/analysis/1805796/dumpster-diving-from-garbage-golden (accessed December xiv, 2009).
Zarello, C., "Hunting for Gold in the Keen Outdoors," Retail Information Systems News, May v, 2009, https://risnews.com/hunting-gold-great-outdoors (accessed September thirteen, 20201).
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