What Benefits Do Wholesalers Add to the Marketing Mix? Chapter 12 Quizlet

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Chapter 9: Marketing Information Systems

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Chapter Objectives
Structure of the Affiliate
The Functions of Management
Managerial Roles
Decision Making
Components of a marketing information system
Chapter Summary
Central Terms
Review Questions
Chapter References

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To understand the proper function of data systems ane must examine what managers do and what information they need for conclusion making. We must also understand how decisions are made and what kinds of conclusion problems can be supported by formal data systems. One tin then determine whether information systems volition exist valuable tools and how they should be designed.

Chapter Objectives

This chapter has the purpose of leading the reader towards:

· An understanding of the dissimilar roles managers play and how marketing information systems can support them in these roles

· An appreciation of the different types and levels of marketing decision making

· A noesis of the major components of a marketing information arrangement

· An awareness of the often under-utilised internal sources of data bachelor to enterprises

· An power to clearly distinguish betwixt marketing research and marketing intelligence, and

· An agreement of the nature of analytical models inside marketing data system.

Structure of the Chapter

The chapter opens with a wide-ranging discussion of the functions of management, the various types and levels of decision that marketing managers must make. This then comprises the first one-half of the chapter whilst the second pan deals with the master components of a marketing information systems.. Internal reporting systems, marketing inquiry systems, marketing intelligence systems and analytical model banks are all discussed.

The Functions of Management

Clearly, information systems that claim to support managers cannot exist built unless one understands what managers do and how they do it. The classical model of what managers exercise, espoused by writers in the 1920's, such every bit Henry Fayol, whilst intuitively attractive in itself, is of limited value every bit an aid to information system design. The classical model identifies the following five functions as the parameters of what managers do:

i Planning
2 Organising
three Coordinating
4 Deciding
five Controlling

Such a model emphasises what managers practice, but not how they do it, or why. More recently, the stress has been placed upon the behavioural aspects of management decision making. Behavioural models are based on empirical testify showing that managers are less systematic, less reflective, more reactive and less well organised than the classical model projects managers to exist. For instance, behavioural models depict 6 managerial characteristics:

· High volume, high speed work
· Variety, fragmentation, brevity
· Issue preference electric current, ad hoc, specific
· Complex web of interactions, contacts
· Strong preference for verbal media.

Such behavioural models stress that managers work at an unrelenting footstep and at a loftier level of intensity. This is just equally true for managers operating in the developing world equally in the developed world. The nature of the pressures may be different but in that location is no testify that they are any less intense. The model as well emphasises that the activities of managers is characterised by variety, fragmentation and brevity. In that location is simply not enough time for managers to go deeply involved in a broad range of bug. The attention of managers increase speedily from one result to some other, with very little design. A trouble occurs and all other matters must be dropped until information technology is solved. Enquiry suggests that a manager's twenty-four hour period is characterised by a big number of tasks with only small periods of time devoted to each individual task.

Managers prefer speculation, hearsay, gossip in cursory, current, upward-to-date, although uncertain data. Historical, sure, routine information receives less attention. Managers desire to piece of work on issues that are current, specific and ad hoc.

Managers are involved in a circuitous and diverse web of contacts that together act as an data organisation. They converse with customers, competitors, colleagues, peers, secretaries, regime officials, then along. In one sense, managers operate a network of contacts throughout the system and the environment.

Several studies have found that managers prefer verbal forms of communication to written forms. Verbal media are perceived to offer greater flexibility, require less effort and bring a faster response. Communication is the work of the managing director, and he or she uses whatever tools are bachelor to be an constructive communicator.

Despite the inundation of work, the numerous deadlines, and the random club of crises, information technology has mostly been found that successful managers appear to be able to control their own diplomacy. To some extent, high-level managers are at the mercy of their subordinates, who bring to their attention crises and activities that must be attended to immediately. Nevertheless, successful managers are those who can control the activities that they cull to get involved in on a day-to-day basis. By developing their own long-term commitments, their own information channels, and their own networks, senior managers tin command their personal agendas. Less successful managers tend to exist overwhelmed by bug brought to them past subordinates.

Managerial Roles

Mintzberg suggests that managerial activities fall into 3 categories: interpersonal, information processing and determination making. An important interpersonal role is that of figurehead for the organization. 2d, a managing director acts equally a leader, attempting to motivate subordinates. Lastly, managers deed every bit a liaison between diverse levels of the organisation and, inside each level, among levels of the management squad.

A second set of managerial roles, termed every bit informational roles, tin be identified. Managers act as the nerve centre for the system, receiving the latest, most concrete, almost up-to-appointment data and redistributing information technology to those who need to know.

A more than familiar set of managerial roles is that of decisional roles. Managers act as entrepreneurs by initiating new kinds of activities; they handle disturbances arising in the organisation; they allocate resources where they are needed in the arrangement; and they mediate between groups in conflict within the organisation.

In the area of interpersonal roles, information systems are extremely limited and make only indirect contributions, interim largely as a communications assistance in some of the newer office automation and advice-oriented applications. These systems make a much larger contribution in the field of informational roles; big-scale MIS systems, part systems, and professional work stations that can enhance a manager's presentation of data are meaning. In the area of determination making, only recently accept conclusion support systems and microcomputer-based systems begun to brand important contributions.

While information systems have made great contributions to organisations, until recently these contributions have been confined to narrow, transaction processing areas. Much work needs to be washed in broadening the impact of systems on professional and managerial life.

Decision Making

Decision making is often seen equally the centre of what managers practice, something that engages almost of a managers time. It is i of the areas that information systems have sought most of all to affect (with mixed success). Decision making can be divided into iii types: strategic, direction control and operations command.

Strategic decision making: This level of decision making is concerned with deciding on the objectives, resources and policies of the organization. A major trouble at this level of determination making is predicting the hereafter of the organisation and its surround, and matching the characteristics of the organisation to the environment. This process generally involves a pocket-sized group of high-level managers who deal with very complex, non-routine problems.

For example, some years ago, a medium-sized food manufacturer in an East African country faced strategic decisions concerning its range of pasta products. These products constituted a sizeable proportion of the visitor'southward sales turnover. Withal, the visitor was suffering recurrent problems with the poor quality of durum wheat it was able to obtain resulting in a finished production that was as well brittle. Moreover, unit costs were shooting upwards due to increasingly frequent breakdowns in the ageing equipment used in pasta production. The company faced the decision whether to make a very big investment in new machinery or to accept the offer of another manufacturer of pasta products, in a neighbouring land, that it should supply the various pasta products and the local company put its own make proper noun on the packs. The decision is strategic since the conclusion has implications for the resource base of the enterprise, i.e. its capital equipment, its piece of work force, its technological base etc. The implications of strategic decisions extend over many years, often as much equally ten to fifteen years.

Management command decisions: Such decisions are concerned with how efficiently and finer resources are utilised and how well operational units are performing. Management control involves close interaction with those who are carrying out the tasks of the organisation; it takes place inside the context of broad policies and objectives prepare out past strategic planners.

An instance might be where a transporter of agronomical products observes that his/her profits are declining due to a decline in the chapters utilisation of his/her ii trucks. The manager (in this case the owner) has to decide betwixt several alternative courses of action, including: selling of trucks, increasing promotional activity in an attempt to sell the spare carrying capacity, increasing unit of measurement conveying charges to encompass the arrears, or seeking to switch to conveying products or produce with a college unit value where the returns to transport costs may be correspondingly higher. Management command decisions are more than tactical than strategic.

Operational command decisions: These involve making decisions about conveying out the " specific tasks fix forth past strategic planners and direction. Determining which units or individuals in the organisation volition acquit out the task, establishing criteria of completion and resources utilisation, evaluating outputs - all of these tasks involve decisions about operational control.

The focus here is on how the enterprises should respond to twenty-four hours-to-solar day changes in the business environment. In detail, this blazon of decision making focuses on adaptation of the marketing mix, e.g. how should the firm reply to an increase in the size of a competitor's sales strength? should the production line be extended? should distributors who sell beneath a given sales book be serviced through wholesalers rather than directly, and so on.

Within each of these levels, decision making can exist classified equally either structured or unstructured. Unstructured decisions are those in which the decision maker must provide insights into the problem definition. They are novel, important, and non-routine, and there is no well-understood procedure for making them. In contrast, structured decisions are repetitive, routine, and involve a definite procedure for treatment them so that they exercise non have to be treated each fourth dimension as if they were new.

Structured and unstructured trouble solving occurs at all levels of management. In the past, well-nigh of the success in near data systems came in dealing with structured, operational, and management command decisions. However, in more recent times, exciting applications are occurring in the direction and strategic planning areas, where problems are either semi-structured or are totally unstructured.

Making decisions is non a unmarried event only a series of activities taking place over time. Suppose, for case, that the Operations Manager for the National Milling Corporation is faced with a decision as to whether to establish buying points in rural locations for the grain crop. It before long becomes apparent that the decisions are probable to exist fabricated over a menstruum of time, take several influences, employ many sources of information and have to get through several stages. It is worth considering the question of how, if at all, information systems could assist in making such a decision. To arrive at some respond, it is helpful to intermission down decision making into its component parts.

The literature has described 4 stages in conclusion making: intelligence, design, option and implementation. That is, problems have to be perceived and understood; one time perceived solutions must be designed; once solutions are designed, choices take to exist made virtually a particular solution; finally, the solution has to be implemented.

Intelligence involves identifying the problems in the organisation: why and where they occur with what furnishings. This broad ready of information gathering activities is required to inform managers how well the organisation is performing and where problems exist. Management information systems that deliver a broad variety of detailed information can exist useful, especially if they are designed to report exceptions. For instance, consider a commercial arrangement marketing a large number of different products and product variations. Management volition desire to know, at frequent intervals, whether sales targets are existence achieved. Ideally, the information system will written report only those products/product variations which are performing essentially in a higher place or below target.

Designing many possible solutions to the problems is the 2nd stage of decision making. This phase may require more than intelligence to decide if a particular solution is appropriate. Here, more carefully specified and directed information activities and capabilities focused on specific designs are required.

Choosing among alternative solutions is the tertiary footstep in the decision making process. Hither a manager needs an information system which can estimate the costs, opportunities and consequences of each culling problem solution. The information system required at this stage is likely to be adequately circuitous, possibly also fairly large, because of the detailed analytic models required to calculate the outcomes of the various alternatives. Of course, human beings are used to making such calculations for themselves, just without the assist of a formal information organization, nosotros rely upon generalisation and/or intuition.

Implementing is the final stage in the conclusion making process. Here, managers can install a reporting arrangement that delivers routine reports on the progress of a specific solution, some of the difficulties that arise, resources constraints, and possible remedial actions. Table 9.1 illustrates the stages in conclusion making and the full general type of data required at each stage.

Table 9.1 Stages in the conclusion making process

Phase of Decision Making		Information Requirement
i	Intelligence	Exception reporting
2	Design	Simulation prototype
iii	Selection	"What-if simulation
four	Implementation	Graphics, charts

In do, the stages of decision making practice non necessarily follow a linear path from intelligence to design, choice and implementation. Consider again the problem of balancing the costs and benefits of establishing local buying points for the National Milling Corporation. At whatsoever signal in the decision making process it may be necessary to loop back to a previous stage. For example, one may have reached stage 3 and all but decided that having considered the alternatives of setting upwards no local buying points, local ownership points in all regions, districts or villages, the government decides to increase the amounts held in the strategic grain reserve. This could crusade the parastatal to return to stage 2 and reassess the alternatives. Another scenario would exist that having implemented a decision one apace receives feedback indicating that it is not proving effective. Once again, the decision maker may have to repeat the design and/or choice stage(s).

Thus, it can be seen that data system designers have to have into account the needs of managers at each stage of the decision making process. Each stage has its own requirements.

Components of a marketing information system

A marketing information organisation (MIS) is intended to join disparate items of data into a coherent body of information. An MIS is, as volition shortly exist seen, more than raw data or information suitable for the purposes of decision making. An MIS as well provides methods for interpreting the information the MIS provides. Moreover, as Kotler'due south¹ definition says, an MIS is more than than a system of data collection or a set of information technologies:

"A marketing information system is a standing and interacting structure of people, equipment and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate data for use by marketing decision makers to improve their marketing planning, implementation, and command".

Figure 9.1 illustrates the major components of an MIS, the environmental factors monitored by the system and the types of marketing decision which the MIS seeks to underpin.

Effigy nine.ane The marketing information systems and its subsystems

The explanation of this model of an MIS begins with a description of each of its four main constituent parts: the internal reporting systems, marketing enquiry system, marketing intelligence system and marketing models. Information technology is suggested that whilst the MIS varies in its degree of sophistication - with many in the industrialised countries being computerised and few in the developing countries being and so - a fully fledged MIS should have these components, the methods (and technologies) of collection, storing, retrieving and processing data notwithstanding.

Internal reporting systems: All enterprises which have been in operation for any period of time nave a wealth of information. However, this information ofttimes remains nether-utilised considering it is compartmentalised, either in the form of an private entrepreneur or in the functional departments of larger businesses. That is, information is usually categorised co-ordinate to its nature then that there are, for example, financial, production, manpower, marketing, stockholding and logistical information. Often the entrepreneur, or diverse personnel working in the functional departments property these pieces of data, practise non come across how information technology could help determination makers in other functional areas. Similarly, decision makers can fail to appreciate how information from other functional areas might help them and therefore exercise not request it.

The internal records that are of immediate value to marketing decisions are: orders received, stockholdings and sales invoices. These are only a few of the internal records that can exist used by marketing managers, but fifty-fifty this small set of records is capable of generating a bully deal of information. Below, is a list of some of the information that can be derived from sales invoices.

· Product type, size and pack type by territory
· Product type, size and pack type by blazon of account
· Production type, size and pack type past industry
· Production blazon, size and pack type by customer
· Average value and/or volume of sale by territory
· Average value and/or volume of sale past type of account
· Boilerplate value and/or volume of sale by industry
· Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise tin establish the extent to which information technology is providing an acceptable level of client service. In the same way, comparing stockholding records with orders received helps an enterprise ascertain whether its stocks are in line with electric current demand patterns.

Marketing research systems: The general topic of marketing enquiry has been the prime ' subject of the textbook and only a trivial more needs to exist added hither. Marketing research is a proactive search for information. That is, the enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases, data is collected in a purposeful way to address a well-defined problem (or a problem which can be defined and solved inside the form of the study). The other class of marketing enquiry centres non effectually a specific marketing problem but is an attempt to continuously monitor the marketing environment. These monitoring or tracking exercises are continuous marketing research studies, frequently involving panels of farmers, consumers or distributors from which the same data is collected at regular intervals. Whilst the ad hoc report and continuous marketing research differs in the orientation, withal they are both proactive.

Marketing intelligence systems: Whereas marketing research is focused, market place intelligence is non. A marketing intelligence system is a set of procedures and data sources used by marketing managers to sift data from the environment that they tin can use in their conclusion making. This scanning of the economic and business organisation environs can be undertaken in a diverseness of means, including²

Unfocused scanning	The managing director, by virtue of what he/she reads, hears and watches exposes him/herself to data that may prove useful. Whilst the behaviour is unfocused and the manager has no specific purpose in heed, it is non unintentional
Semi-focused scanning	Again, the manager is not in search of particular pieces of data that he/she is actively searching but does narrow the range of media that is scanned. For instance, the manager may focus more than on economical and business publications, broadcasts etc. and pay less attention to political, scientific or technological media.
Informal search	This describes the situation where a fairly express and unstructured attempt is made to obtain data for a specific purpose. For instance, the marketing director of a business firm considering entering the business organization of importing frozen fish from a neighbouring country may make breezy inquiries as to prices and need levels of frozen and fresh fish. In that location would exist little structure to this search with the director making inquiries with traders he/she happens to encounter as well as with other advertizing hoc contacts in ministries, international aid agencies, with merchandise associations, importers/exporters etc.
Formal search	This is a purposeful search subsequently data in some systematic way. The information will exist required to address a specific event. Whilst this sort of activeness may seem to share the characteristics of marketing inquiry information technology is carried out by the manager him/herself rather than a professional researcher. Moreover, the scope of the search is likely to be narrow in scope and far less intensive than marketing inquiry

Marketing intelligence is the province of entrepreneurs and senior managers within an agribusiness. It involves them in scanning paper trade magazines, business journals and reports, economical forecasts and other media. In addition it involves management in talking to producers, suppliers and customers, as well as to competitors. Nonetheless, it is a largely informal process of observing and conversing.

Some enterprises will approach marketing intelligence gathering in a more deliberate fashion and will train its sales force, after-sales personnel and district/area managers to take cognisance of competitors' actions, customer complaints and requests and distributor problems. Enterprises with vision will likewise encourage intermediaries, such as collectors, retailers, traders and other middlemen to be proactive in conveying market intelligence back to them.

Marketing models: Within the MIS there has to be the ways of interpreting information in social club to give direction to decision. These models may be computerised or may non. Typical tools are:

· Fourth dimension series sales modes
· Brand switching models
· Linear programming
· Elasticity models (price, incomes, demand, supply, etc.)
· Regression and correlation models
· Assay of Variance (ANOVA) models
· Sensitivity analysis
· Discounted cash menstruation
· Spreadsheet 'what if models

These and similar mathematical, statistical, econometric and financial models are the belittling subsystem of the MIS. A relatively modest investment in a desktop computer is enough to allow an enterprise to automate the analysis of its information. Some of the models used are stochastic, i.east. those containing a probabilistic element whereas others are deterministic models where chance plays no function. Brand switching models are stochastic since these limited make choices in probabilities whereas linear programming is deterministic in that the relationships between variables are expressed in verbal mathematical terms.

Chapter Summary

Marketing information systems are intended to back up management decision making. Management has five distinct functions and each requires support from an MIS. These are: planning, organising, coordinating, decisions and decision-making.

Information systems have to be designed to meet the way in which managers tend to work. Research suggests that a manager continually addresses a large variety of tasks and is able to spend relatively brief periods on each of these. Given the nature of the work, managers tend to rely upon information that is timely and exact (because this can exist assimilated quickly), even if this is likely to be less accurate so more formal and complex information systems.

Managers play at least three carve up roles: interpersonal, informational and decisional. MIS, in electronic form or otherwise, can support these roles in varying degrees. MIS has less to contribute in the example of a manager's informational role than for the other two.

Three levels of decision making tin can be distinguished from one another: strategic, control (or tactical) and operational. Once more, MIS has to support each level. Strategic decisions are characteristically one-off situations. Strategic decisions have implications for changing the structure of an organisation and therefore the MIS must provide data which is precise and accurate. Control decisions deal with broad policy issues and operational decisions concern the management of the arrangement'southward marketing mix.

A marketing information arrangement has four components: the internal reporting system, the marketing inquiry systems, the marketing intelligence system and marketing models. Internal reports include orders received, inventory records and sales invoices. Marketing research takes the form of purposeful studies either ad hoc or continuous. Past contrast, marketing intelligence is less specific in its purposes, is chiefly carried out in an informal mode and by managers themselves rather than by professional marketing researchers.

Fundamental Terms

Deterministic models
Internal reports
Marketing intelligence
Model banks
Operational decisions
Stochastic models
Strategic decisions
Tactical plans

Review Questions

1. What are stochastic models?
2. Name the iv components of an MIS.
3. What were the functions of direction that Henry Fayol identified?
4. To which management role does the textbook suggest MIS has least to contribute?
5. What are the 3 levels of decision making outlined in this chapter?
half-dozen. According to Kotler, what are the contributing elements to an MIS? information technology
vii. Which elements of the marketing environment are mentioned in the chapter?
8. What differences are there between marketing research and marketing intelligence?

Chapter References

ane. Kotler, P., (1988) Marketing Direction: Analysis Planning and Control, Prentice-Hall p. 102.

2. Agnilar, F.. (1967) Scanning The Concern Surround, Macmillan, New York, p.47.

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