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Chapter 4
Data mining is the process of extracting patterns from data. Data mining is becoming an increasingly important tool to transform this data into information. It is commonly used in a wide range of profiling practices, such as marketing, surveillance, fraud detection and scientific discovery Data profiling is the process of examining the data available in an existing data source (e.g. a database or a file) and collecting statistics and information about that data
Need for marketing intelligence in a changing world A marketing intelligence system is designed to monitor a variety of sources to determine emerging trends or events in the external environment. This is necessary in order to take an innovative approach to managing in a time of rapid change. Stakeholders that can affect or be affected by decis ions of the enterprise include customers, the community, and the organization (including everything on the opposite side of the customer and the community)
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Organizational level Information is needed for management decisions at each level of the firm. Corporate managers are more concerned with trends and events that affect longterm financial results, and divisional managers are more concerned with factors that affect their own SBUs or profit centers.
Responsibility for marketing decisions Functional area Managers at the operating level must analyze all relevant information to determine the best marketing mix, personnel characteristics, accounting and financial position, production performance, and other factors. All employees should understand the market they serve.
How marketing decisions are made In a more complex, fastpaced world, managers have fewer strategic and tactical options available to them. The ability to support marketing management decisions with highquality market intelligence might include adequate time for highquality research at a reasonable price, early determination of information on hand that is relevant to the problem and information still needed, management expertise, unambiguous results, and a feasible solution
How marketing decisions are made Routine versus complex decisions Routine decisions are more programmed with predetermined policies and guidelines; complex decisions tend to involve new situations where there is little or no previous experience in making similar decisions and to involve higher levels of risk and investment.
How marketing decisions are made Time factor Complex decisions require more time for information gathering, analysis, and planning underscoring the need for highquality information and an efficient decision support system
Creative problem solving In addition to quantitative inputs, managers must also use qualitative inputs to fully understand situations with which they are faced. They must step outside the box to find creative solutions to business problems and opportunities. Stages in the analytical and creative problemsolving process are as follows:
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Market and buyer analysis current market trends and anticipation of changes that may occur; requires first defining the firms market, market demand and potential, customer characteristics and buying habits, etc.
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Competitive analysis includes both direct (serves same target market and b asic needs) and indirect competitors (from same or other industries, appeal with substitute products or other ways of doing business).
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Financial resources internal databases include records of the firms assets and liabilities that can be used to calculate financial ratios for comparison with industry ratios; level of risk also should be included.
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Human resources personnel records and management reviews provide i nformation about the ability of present personnel to satisfy customers profitably.
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Technological resources information technology can be used to monitor the market, gather customer data, and create a marketing information system; focus on available technological applications and how they can enhance performance and provide competitive advantage.
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Technological resources information technology can be used to monitor the market, gather customer data, and create a marketing information system; focus on available technological applications and how they can enhance performance and provide competitive advantage.
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Marketing effectiveness marketing research can be used to track the effectiveness of marketing programs, using methods such as the marketing audit. Marketing Audit Thorough systematic evaluation of an organizations environment, objectives, and strategy.
SOURCES OF INFORMATION
Sources of Information
Marketing intelligence is obtained from a variety of sources by both formal and informal methods and consists of data and facts that are converted first into information, then into knowledge, and finally into (wise) management decisions
Sources of Information
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Databases
Databases are created and maintained by successful marketing organizations to manage the wide range of information that comprises their marketing intelligence systems. The type, scope, and quality of data are varied.
Sources of Information
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Databases
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Marketing information system (MIS) formal complex of people, equipment, and procedures designed to gather, organize, structure, analyze, evaluate, and distribute timely, accurate, and meaningful information to marketing decision makers. Marketing Decision Support System (MDSS) coordinated collection of data, systems, models, analytic tools, and computing power by which information is gathered from the environment and turned into a basis for marketing action
Sources of Information
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Databases
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Types and uses of databases types of databases include sales, credit, and inventory records, PO scanner data, reservation systems, and other databases that have a wide variety of uses for every purpose from product design to demand forecasting to relationship marketing.
Sources of Information
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Sources of Information
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Internal recordsroutine data generated in the course of doing business (e.g., departmental and functional area records, order processing, sales, inventory status, customer accounts, etc.). External marketing intelligence obtained from either primary (answers to a specific marketing problem) or secondary (gathered for another purpose) sources; also strategic tracking studies, etc.
Sources of Information
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Information requirements marketing manager must specify the types of decisions to be made and specific types of information needed to make decisions; must be communicated clearly to the information provider as a basis for system design and data collection methods (law of the lens).
Sources of Information
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Database management Databases must be constantly evaluated for their currency and appropriateness for the types of decisions that must be made in a rapidly changing marketplace; danger of information overload with irrelevant data should be avoided. Remember that databases are only a tool for managersthey are not solutions in themselves.
Sources of Information
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Market measurement and forecasting demand Databases such as the MDSS can be used to estimate the results of strategic or tactical decisions under competing scenarios and to provide essential information for estimating market demand, market size, market share, etc. for a given product or product category.
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Inhouse or outsource research task assess advantages and disadvantages of obtaining information from internal or external information providers. Extent/scope of research to the extent possible, information obtained should be focused on that which is needed to solve the research problem. Organizational resources
Organizational resources
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Consider the following: Inhouse expertiseability of internal personnel to perform the research. MDSS/MIS availability (and appropriateness quality). MDSS means marketing decision support system and MIS means Marketing information system. Financial resourcesresearch can be costly and adequate funding should be provided for quality research
Organizational resources
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Consider the following: Time available to make decision deadlines may be determinant of research that can be conducted. Managerial objectivity and ability to use or act on informationmanagers must remain unbiased throughout entire research process if marketing mistakes are to be avoided.
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Research quality/quality of information breaks down into three areas: quality of the research process, quality of the data and information obtained, and quality of the management decision process; implications for use of resources and implementation plans, etc. International marketing research more complex process than in international markets; valuable in spite of cultural and language differences, higher costs, etc.
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Regulatory issues government regulations, industry standards, legal guid elines provide challenges for marketing intelligence users and providers. Privacy issues problem may exist in gathering and manipulating mar keting intelligence relative to customers and others if promises of anonymity are not maintained.
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Ethical issues research ethics include honesty throughout the research process; no manipulation, deception, fraudulent practices to achieve desired results, and respecting the rights of respondents and others. Bias issues avoid all sources of potential bias related to the researcher and the research process.