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TEST BANK FOR
MARKETING MANAGEMENT 15TH
EDITION BY KOTLER AND
KELLER
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3. Collecting Information and
Forecasting Demand
Components of a Modern Information System
Making marketing decisions in a fast-changing world is both an art and a science.
Marketers have two advantages for the task: (1) disciplined methods for collecting
information and (2) time spent interacting with customers and observing competitors and
other outside groups. Some firms have marketing Information systems that provide rich detail
about buyer wants, preferences, and behavior.
Marketers also have extensive information about how consumption patterns vary across and
within countries.
On a per capita annual basis, for example, the Irish consume the most chocolate (24.7 lbs.), Czechs
the most beer (131.7 liters), the French the most wine (45.7 liters), and Greeks the most cigarettes
(4,313).3 Table 3.1 summarizes other comparisons across countries. Consider regional differences:
Seattle’s residents buy more sunglasses per person than in any other U.S. city; people in Salt Lake
City (and Utah) eat the most Jell-O; Long Beach, CA, residents eat the most ice cream; and New
York City dwellers buy the most music CDs.4
A marketing information system (MIS) consists of people, equipment, and procedures to gather,
sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing
decision makers. It relies on internal company records, marketing intelligence activities, and
marketing research.
The company’s marketing information system should combine what managers think they need,
what they really need, and what is economically feasible.
INTERNAL RECORDS
To spot important opportunities and potential problems, marketing managers rely on internal
reports of orders, sales, prices, costs, inventory levels, receivables, and payables.
The Order-to -Payment Cycle
The heart of the internal records system is the order-to-payment cycle. Sales representatives,
dealers, and customers send orders to the firm. The sales department prepares invoices, transmits
copies to various departments, and back-orders out-of-stock items. Shipped items generate
shipping and billing documents that go to various departments. Because customers favor firms that
can promise timely delivery, companies need to perform these steps quickly and accurately.
Sales Information Systems
Marketing managers need timely and accurate reports on current sales. Walmart operates a sales
and inventory data warehouse that captures data on every item for every customer, every store,
every day and refreshes it every hour.
Companies that make good use of “cookies,” records of Web site usage stored on personal
browsers, are smart users of targeted marketing. Many consumers are happy to cooperate: Not
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only do they not delete cookies, but they also expect customized marketing appeals and deals
once they accept them. Marketers must carefully interpret sales data, however, to avoid drawing
wrong conclusions. Michael Dell illustrates:
“If you have three yellow Mustangs sitting on a dealer’s lot and a customer wants a red one, the
salesman may be really good at figuring out how to sell the yellow Mustang. So the yellow
Mustang gets sold, and a signal gets sent back to the factory that, hey, people want yellow
Mustangs.”
Databases, Data Warehousing, and Data Mining
The explosion of data brought by the maturation of the Internet and mobile technology gives
companies unprecedented opportunities to engage their customers. It also threatens to
overwhelm decision makers.
“Marketing Insight: Digging into Big Data” describes opportunities and challenges in managing
massive data sets
Digging Into Big Data
Although unverified, one popular estimate says 90 percent of the data that has ever existed was
created in the past two years. In one year, people stored enough data to fill 60,00 Libraries of
Congress. YouTube receives 24 hours of video every minute. The world’s 4 billion mobile phone
users provide a steady source of data. Manufacturers are putting sensors and chips into appliances
and products, generating even more data.
The danger, of course, is information overload. More data are not better unless they can be
correctly processed, analyzed, and interpreted. In poll of North American senior business
executives, more than 90 percent reported collecting more information—86 percent more on
average—than in years past. Unfortunately, roughly as many said they were missing out on new
revenue growth because they could not gather the appropriate insights from those data.
Some companies are harnessing Big Data. UK supermarket giant Tesco collects 1.5 billion pieces of
data every month to set prices and promotions; U.S. kitchenware retailer Williams-Sonoma uses its
customer knowledge to customize versions of its catalog. Amazon report generating 30 percent of
its sales through its recommendation engine (“You may also like”). Many financial brands are
putting more emphasis on Big Data.
Bank of America is tracking spending and demographic data and tailoring promotions—for
example, offering back-to-school deals to cardholders with children. JPMorgan Chase has improved
communications to new cardholders to gain more engagement.
The Marketing Intelligence System
A marketing intelligence system is a set of procedures and sources that managers use to obtain
everyday information about developments in the marketing environment. The internal records
system supplies results data, but the marketing intelligence system supplies happenings data.
Marketing managers collect marketing intelligence by reading books, newspapers, and trade
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publications; talking to customers, suppliers, distributors, and other company managers; and
monitoring online social media.
Marketing intelligence gathering must be legal and ethical.
A company can take eight possible actions to improve the quantity and quality of its marketing
intelligence. After describing the first seven, we devote special attention to the eighth: collecting
marketing intelligence on the Internet.
Train and motivate the sales force to spot and report new developments.
Motivate distributors, retailers, and other intermediaries to pass along important intelligence
Hire external experts to collect intelligence.
Network internally and externally (as read competitors' publichsed reports…)
Set up a customer advisory panel (Members of advisory panels might include the company’s
largest, most outspoken, most sophisticated, or most representative customers. GlaxoSmithKline
sponsored an online community devoted to weight loss, where marketers felt they learned far
more than they could have gleaned from focus groups on topics from packaging its weight-loss pill
to where to place in-store marketing)
Take advantage of government-related data resources. The U.S. Census Bureau provides an in-
depth look at the population swings, demographic groups, regional migrations, and changing
family structure of the more than 311,591,917 people in the United States. Census marketer
Nielsen Claritas SiteReports cross-references census figures with consumer surveys and its own
grassroots research for clients such as The Weather Channel, BMW, and Sovereign Bank.
SiteReports offers more than 50 reports and maps that help companies analyze markets, select site
locations, and target customers effectively
Purchase information from outside research firms and vendors.
Collecting Marketing Intelligence on the Internet
Online customer review boards, discussion forums, chat rooms, and blogs can distribute one
customer’s experiences or evaluation to other potential buyers and, of course, to marketers
seeking information. Here are five places to find competitors’ product strengths and weaknesses
online.
Independent customer goods and service review forums. Independent forums include Web sites
such as Epinions.com, RateItAll.com, ConsumerReview.com, and Bizrate.com. Bizrate.com collects
millions of consumer reviews of stores and products each year from two sources: its 1.3 million
volunteer members and feedback from stores that allow Bizrate.com to collect it directly from
customers as they buy.
Distributor or sales agent feedback sites. Feedback sites offer positive and negative product or
service reviews, but the stores or distributors have built the sites themselves. Amazon.com offers
an interactive feedback opportunity through which buyers, readers, editors, and others can review
all products on the site, especially books.
Combo sites offering customer reviews and expert opinions. Combination sites are concentrated in
financial services and high-tech products that require professional knowledge. ZDNet.com offers
customer and expert evaluations of technology products based on ease of use, features, and
stability.
Customer complaint sites. Customer complaint forums are designed mainly for dissatisfied
customers.
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