Explain what big data is and describe the components of a marketing information system.
Respond to every aspect of the discussion prompt with originality.
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Case Analysis and Questions
Keaty Realty
Jim Keaty, the owner of Keaty Real Estate in LaFayette, Louisiana, is always looking for better ways to sell property. Keaty says the biggest challenge he and his agents have is converting leads (people they contact)—that is, getting them to say “yes” to either buy or sell real estate with the company.
More leads aren’t necessarily better. Quality leads are. In other words, you want to find the “hot” leads—people who are definitely thinking about selling their homes, not just kind of thinking about it. Trying to find the five or six deals that are going to close in a month out of 1,000 not-so-good leads is much harder than trying to find five or six deals that will close out of 100 good leads, says Keaty.
This is definitely true when you’re trying to find people who are willing to sell their property. Sure, you can make a lot of phone calls to people you know or are acquainted with. You can contact local homebuilders, who will usually pay agents for selling their homes. You can knock on the doors of people who are listing their properties “for sale by owner.” You can also use social media. And agents do. But that’s time consuming. The hot leads dry up quickly, too, because most homeowners agree to sign with the first real estate agent that contacts them.
That’s where big data is helping. Keaty works with LeadsToday.com, a small data broker that specializes in real estate. LeadsToday tracks people’s life events like job changes, pregnancies, divorces, and children heading to college—clues that could indicate homeowners may be considering buying or selling their houses. LeadsToday provides leads to realtors who then use the information to target potential customers with online ads and other types of ads.
Does targeting potential real estate customers this way sound creepy? “That’s how it goes,” says a homeseller who learned that he was targeted with a LeadsToday ad that led him to a good real estate agent. The practice has worked out for Keaty, too. “I went from having no seller leads to having ninety seller leads a month at a very low cost,” Keaty says.
Discussion Questions
1. Is using big data to help sell real estate any different than using it to sell other products? Why or why not?
2. Think of a small company you, your friends, or your parents have worked for. Could it use big data to better market its products? If so, how?
Principles of Marketing 4.0
Jeff Tanner and Mary Anne Raymond
©FlatWorld 2018
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PUBLISHED BY:
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©2019 BY FLATWORLD. ALL RIGHTS RESERVED. YOUR USE OF THIS WORK IS SUBJECT TO THE LICENSE AGREEMENT AVAILABLE.
NO PART OF THIS WORK MAY BE USED, MODIFIED, OR REPRODUCED IN ANY FORM BY ANY MEANS EXCEPT AS EXPRESSLY PERMITTED UNDER THE LICENSING AGREEMENT.
©FlatWorld 2018
CHAPTER 9
Using Supply Chains to Create Value for Customers
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THE SUPPLY CHAIN
Designing, monitoring, and altering these organizations is called supply-chain management.
In progressive companies, the term value chain is used to signify the important role they play.
INCLUDES ALL OF THE ORGANIZATIONS THAT IMPACT PRODUCTS BEFORE, DURING, AND AFTER THEIR PRODUCTION
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LEARNING OBJECTIVES
Explain why sourcing and procurement activities are an important part of supply chain management.
Describe the reasons why the use of outsourcing and offshoring has grown.
Explain some of the drawbacks companies face when they outsource their activities.
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SOURCING AND PROCUREMENT
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WHY OUTSOURCE?
Sometimes outside organizations can provide more value.
Sometimes outside organizations can provide more cost effectiveness.
Outside organization may provide products and services in a more timely manner.
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SUPPLY CHAIN FUNCTIONS OFFSHORED
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RISKS IN OUTSOURCING
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control
Loss of control has consequence for quality and safety.
quality
More than one-fifth of companies experience quality problems when outsourcing.
safety
Redundant safety checks may be necessary.
SOCIAL RESPONSIBILITY IN OUTSOURCING
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WHY FIRMS ARE GOING GREEN
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OTHER OUTSOURCING CONCERNS
The logistics of transporting and storing can be complex.
The workforce policies of companies in developing countries can be poor.
Some concerns lead to insourcing or moving activities back in house.
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MATCHING SOURCING AND CUSTOMER NEEDS
Customers can determine outsourcing and insourcing strategies.
The customer is the last link in the supply chain.
Recycling and reclaiming programs require the customer’s cooperation.
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KEY TAKEAWAYS
Sourcing is the process of evaluating and hiring individual businesses to supply goods and services to your business.
Procurement is the process of actually purchasing those goods and services.
Sourcing and procurement have become a bigger part of a supply-chain manager’s job in recent years, in part because businesses keep becoming more specialized.
Companies outsource activities to lower their costs to focus on the activities they do best.
Companies face numerous tradeoffs when they outsource activities, which can include a loss of control and product-quality and safety problems.
When firms can’t resolve their supplier problems, they find other suppliers to work with or move the activities back inhouse, which is a process called insourcing.
Customer should be the focus of any insourcing and outsourcing decisions companies make.
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LEARNING OBJECTIVES
Explain why demand planning adds value to products.
Describe the role inventory control plays when it comes to marketing products.
List the reasons why firms collaborate with another for the purposes of inventory control and demand planning.
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DEMAND PLANNING
Demand planning: the process of estimating how much a good or service a customer will buy.
Production scheduling: the management of the resources, events, and processes needed to create an offering.
Lead time: the amount of time it takes for a customer to receive a good or service once it’s been ordered.
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SOURCING AND FORECASTING
Sourcing decisions—deciding which suppliers to use—are generally made periodically.
Forecasting decisions must be made more frequently.
As an example, when President Trump imposed tariffs on foreign steel and aluminum in 2018, firms had to alter their sourcing and forecasting decisions.
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SUPPLY CHAIN MANAGEMENT
Supply chain managers consult with marketing managers and sales executives when they are generating demand forecasts.
Firms also look to their supply chain partners to help with their demand planning.
In collaborative planning, forecasting, and replenishment (CPFR) supply chain partners share information and coordinate their operations.
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INTEGRATING THE SUPPLY CHAIN IN PLANNING
Supply chain visibility: the trend is clearly toward more shared information.
Demand planning software: synthesizes a variety of factors to better predict a firm’s demand.
Inventory control: the process of ensuring your firm has an adequate amount of products to meet customer needs.
The goal of inventory management is to avoid stockouts.
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INVENTORY TERMS
Safety stock: backup inventory that serves as a buffer in case of a surge in demand.
Shrinkage: used to describe a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors, and supplier fraud.
Just-in-time inventory: a system in which a firm keeps very little inventory on hand. Instead, suppliers ship inventory as needed.
Vendor-managed inventory: The practice of having your suppliers manage your inventories.
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MASS CUSTOMIZATION
Dell’s inventory and production system allows customers to customize their computers.
Dell keeps its inventory levels low.
It has components on hand which can be configured to suit customer preferences.
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PRODUCT TRACKING
Electronic product code (EPC): similar to a barcode, only it is better because the number on it is truly unique.
Radio frequency identification (RFID) tag: emits radio signals that can record and track shipments.
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HOW RFID TECHNOLOGY WORKS
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KEY TAKEAWAYS
The best marketing decisions and supplier selections aren’t enough if your company’s demand forecasts are wrong.
Demand forecasting is the process of estimating how much of a good or service a customer will buy from you.
If you’re a producer of a product, this will affect not only the amount of goods and services you have to produce but also the materials you must purchase to make them.
Demand forecasting is part of a company’s overall inventory control activities. Inventory control is the process of ensuring your firm has an adequate amount of products and a wide enough assortment of them meet your customers’ needs.
One of the goals of inventory control is to avoid stockouts without keeping too much of a product on hand.
Some companies are beginning to experiment with new technologies such as RFID tags and blockchain in an effort to better manage their inventories and meet their customers’ needs.
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LEARNING OBJECTIVES
Understand the role warehouses and distribution centers play in the supply chain.
Outline the transportation modes firms have to choose from and the advantages and disadvantages of each.
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WAREHOUSING AND DISTRIBUTION CENTERS
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HOW DISTRIBUTION CENTERS FUNCTION
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Stock-keeping unit (sku)
Unique ID numbers used to find products.
automation
Robots are used to pick products.
Electronic data interchange (edi)
Computer to computer document exchange.
HOW CROSS-DOCKING WORKS
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TRANSPORTATION
Logistics: The physical flow of materials in the supply chain.
Trucks: More products are shipped by truck than by another means. Most products undergo some trucking.
Water: International trade could scarcely be conducted without cargo shipping.
Air: High cost of air transport limits its use to time sensitive products.
Railroads: In terms of its speed and cost, shipping by rail falls somewhere between truck and water transportation.
Pipelines: Generally used to transport oil, natural gas, and chemicals.
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KEY TAKEAWAYS
Some firms store products until their prices increase.
A distribution center is a warehouse or storage facility where the emphasis is on processing and moving goods on to other parts of the supply chain.
Warehousing products regionally can help a company tailor its product selection to better match the needs of customers in different regions.
Logistics refers to the physical flow of materials in the supply chain. Not all goods and services need to be physically transported.
Some goods are directly given to customers or sent to them electronically.
Products that need to be transported physically to get to customers are moved via, air, rail, truck, water, and pipelines.
The transportation modes a firm uses should be based on what its customers want and are willing to pay for.
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LEARNING OBJECTIVES
Understand why being able to trace products is important to organizations and their customers.
Explain what reverse logistics is and why firms utilize it.
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TRACK AND TRACE SYSTEMS
Track and trace systems electronically record the paths shipments take.
Most product shipments (tracking individual packages is harder) can be traced using:
GPS
RFID
Bluetooth
Barcodes
Consumers want to know where their products come from and when they will arrive.
Companies are working to develop systems that may one day make it possible to trace all products, for example, by utilizing the Internet of Things (IoT) and/or blockchain technology.
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REVERSE LOGISTICS
Most companies set up reverse logistics systems to “turn trash into cash.”
A recent study suggests companies can recover up to 0.3 percent of their annual sales this way, which for Best Buy would amount to $100 million a year.
Upcycling is a process to extract value from waste and using it to create new products.
RUNNING PRODUCTS AND MATERIALS BACKWARDS THROUGH THE SUPPLY CHAIN TO EXTRACT VALUE FROM THEM.
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KEY TAKEAWAYS
Being able to trace products helps a company anticipate events that could disrupt the supply chain, including shipping mistakes, bad weather, and accidents so they can be averted.
Most shippers have track and trace systems that can track product loads.
Tracking individual products, especially after they are combined to make other products, is more difficult.
Consumers are more interested than ever in knowing where their products come from—particularly when there is a contamination problem with an offering.
Reverse logistics is the process of running damaged and defective products and scrap materials backward through the supply chain to extract value from them.
Companies are increasingly employing reverse logistics not only to save money but for environmental reasons.
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Principles of Marketing 4.0
Jeff Tanner and Mary Anne Raymond
©FlatWorld 2018
1
PUBLISHED BY:
FLATWORLD
©2018 BY FLATWORLD. ALL RIGHTS RESERVED. YOUR USE OF THIS WORK IS SUBJECT TO THE LICENSE AGREEMENT AVAILABLE.
NO PART OF THIS WORK MAY BE USED, MODIFIED, OR REPRODUCED IN ANY FORM BY ANY MEANS EXCEPT AS EXPRESSLY PERMITTED UNDER THE LICENSING AGREEMENT.
©FlatWorld 2018
CHAPTER 10
Gathering and Using Information: Marketing Research and Marketing Intelligence
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MARKETING RESEARCH AND MARKET INTELLIGENCE
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MARKETING RESEARCH
Marketing research can help accomplish the following tasks:
Developing product ideas and designs
Determining if there is demand for your product so you know whether or not to produce it
Identifying market segments for your product
Making pricing decisions
Evaluating packaging types
Evaluating in-store promotions
Measuring the satisfaction of your customers
Measuring the satisfaction of your channel partners
Evaluating the effectiveness of your website
Testing the effectiveness of ads and their placement
Making marketing channel decisions
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LEARNING OBJECTIVES
Explain what big data is and describe the components of a marketing information system.
Explain the situations in which marketing research should be used versus market intelligence.
Describe the limitations of market intelligence and its ethical boundaries.
Explain when marketing research should and should not be used.
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MARKETING INFORMATION
Gathering marketing information is an ongoing process.
Internal documents capture important information.
The challenge is to integrate the information in a useful manner.
Any contact a company has with its customers is a touchpoint.
Sharing the information with various operating divisions aids in solving similar problems.
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BIG DATA
Big data is a buzzword used to refer to the massive amounts of online and offline data being gathered today, such as:
Previous purchases
Marital status
Credit ratings
Eating/exercise habits
Preferred brands
Pastimes
Often big data is collected by Internet-connected devices such as mobile phones and fitness trackers.
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MARKETING INFORMATION SYSTEMS (MIS)
A marketing information system should include the following components:
A system for recording internally generated data and reports.
A system for collecting market intelligence on an ongoing basis.
Marketing analytics software to help managers with their decision making.
A system for recording marketing research information.
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INTERNALLY GENERATED DATA AND REPORTS
Clickstream data: data generated about the number of people who visit a website.
Intranet: looks like the Web, but limits internal sensitive information access to employees only.
Data mining: filtering data using analytics software to retrieve relevant pieces to answer specific questions.
Data warehousing: combining data into one location.
Dashboard: a screen on a computer that makes data easily understood.
Also allows managers to detect marketing trends.
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ANALYTICS SOFTWARE
Analytics software allows managers to gather all kinds of different information from a company’s databases—information not produced in reports regularly generated by the company.
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PREDICTIVE ANALYSIS
An advanced branch of analytics that detects patterns and develops models to predict future outcomes. It utilizes:
Data mining
Statistics
Experiments
Machine learning
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MARKET INTELLIGENCE
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Collecting market intelligence data
Helps generate ideas or product concepts
Ideas can be tested by market research
Gathering market intelligence involves a number of activities such as:
Scanning newspapers and reports.
Studying economic data produced
by the government.
Search engines and corporate Websites
Monitoring competitors’ websites
to gain market intelligence.
Monitoring social networks via sentiment analysis—
Facebook and Twitter.
GOOD SOURCES FOR MARKET INFORMATION
Internet: Competitors’ websites, social media sites, internet searches, Google Alerts, social media monitoring tools such as SocialMention and Crimson Hexagon can be monitored.
Publications: The Economist, The Wall Street Journal, Forbes, Fortune, Business Week, The McKinsey Report, Sales and Marketing Management, and The Financial Times can be scanned for basic industry information.
Trade Shows and Associations: Trade shows are another way companies learn about what their competitors are doing.
Salespeople: A vital source of market intelligence are a company’s salespeople.
Suppliers and Industry Experts: Suppliers can provide a wealth of information.
Customers: How customers are behaving can provide important clues.
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GATHERING INTELLIGENCE
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Industrial espionage
Not uncommon.
Former and current employees
Can wittingly or unwittingly reveal proprietary information.
Intelligence gathering
Can be taken too far.
Can use professionals.
May create negative press.
Standards of conduct to exist.
Contracts usually forbid.
ETHICS FOR MARKET INTELLIGENCE PROFESSIONALS
To continually strive to increase the recognition and respect of the profession.
To comply with all applicable laws: domestic and international.
To accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.
To avoid conflicts of interest in fulfilling one’s duties.
To provide honest and realistic recommendations and conclusions in the execution of one’s duties.
To promote this code of ethics within one’s company, with third-party contractors and within the entire profession.
To faithfully adhere to and abide by one’s company policies, objectives, and guidelines.
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IS MARKETING RESEARCH ALWAYS CORRECT?
The process isn’t foolproof.
Research studies have rejected a lot of good ideas.
Many things can go wrong along the way that can affect the results of research and the conclusions drawn from it.
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KEY TAKEAWAYS
Many marketing problems and opportunities can be solved by gathering information from a company’s daily operations and analyzing it.
Market intelligence involves gathering information on a regular, ongoing basis to stay in touch 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 analytical software.
Marketing research is not infallible, however.
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LEARNING OBJECTIVE
Describe the basic steps in the marketing research process and the purpose of each step.
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MARKETING RESEARCH PROCESS
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DEFINE THE PROBLEM
A problem half-defined is a problem half-solved.
Narrow down the parameters of the study to the information you actually need to make a good decision.
Put the research objective into writing.
A poorly defined problem to be researched will result in lost time and wasted dollars.
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DESIGN THE RESEARCH
Research design: outlines what data is to be gathered; from whom, how, and when to collect the data; and how to analyze it once it’s been obtained.
Data sources:
Primary data: Data collected using hands-on tools such as interviews or surveys to answer a question for a specific research project.
Secondary data: Data already collected by your firm or another organization for purposes other than the marketing research project at hand.
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SOURCES OF SECONDARY DATA
Your company’s internal records
Syndicated research: primary data that marketing research firms collect and sell to other companies.
Scanner-based research: information collected by scanners at checkout stands in stores.
Marketing research aggregator: a marketing research company that buys research reports from other marketing research companies and then sells those reports in their entirety or in pieces to other firms.
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DATA BROKERS AND CHIEF PRIVACY OFFICERS
Data brokers: gather online and offline secondary data about consumers, create profiles of them, and sell the information to other firms.
Sources of information include:
Public records
Cookies
Credit-card companies
Loyalty programs
Obituaries and newspapers
Location-based ads: Ads targeted to consumers by location, which is identified by their mobile devices.
Chief privacy officers (CPO): top-level executives responsible for developing policies to ensure their firms are collecting information legally and accurately.
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QUALITY OF SECONDARY DATA
Who gathered this information?
For what purpose?
What does the person or organization that gathered the information have to gain by doing so?
Was the information gathered and reported in a systematic manner?
Is the source of the information accepted as an authority by other experts in the field?
Does the article provide objective evidence to support the position presented?
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TYPES OF RESEARCH DESIGN
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Exploratory research design
Initial investigation of a problem.
Descriptive research design
Gather “hard” numbers.
Casual research design
Examines cause-and-effect relationships.
Less structured.
Uses secondary data.
Uses surveys to answer questions.
Answers “what if” questions.
DESIGNING DATA COLLECTION FORMS
How the questions are worded is extremely important.
Questions must be written in an unbiased neutral way.
The questions need to be clear and unambiguous.
Sensitive questions have to be asked carefully.
Income questions are unwelcome but often asked.
Double-barreled questions ask two questions in one: “Do you think parents should spend more time with their children and/or their teachers?”
Open-ended questions ask respondents to elaborate
but are harder to tabulate than closed-ended questions.
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TESTING THE QUESTIONNAIRE
If the questions are bad, information gathered will be bad.
Getting people to complete questionnaires can be difficult; incentives can help.
Testing the questionnaires face-to-face on a limited number of respondents before sending improves responses.
Long surveys are less likely to be completed. Eliminate questions of little value.
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SPECIFY THE SAMPLE
A sample is a subset of potential buyers that are representative of the entire target market.
A sampling error is any type of marketing research mistake that results because a sample was utilized.
A sampling frame is the list from which the sample is drawn.
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SAMPLE TYPES
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COLLECT THE DATA
Face-to-face (can be computer aided).
Telephone (can be computer aided or completely automated).
Text message (SMS) or multimedia message (MMS).
Mail and hand-delivery.
E-mail and the Web.
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DATA COLLECTION
When conducted face-to-face or administered by a person over the phone, labor is intensive and costly.
Mailing out questionnaires is costly, and the response rates can be low.
Data collected by a computer either over the telephone or on the Internet can be very cost effective and, in some cases, free.
Web surveys are fast—a major plus. Face-to-face and mailed surveys often take weeks to collect.
Surveyors and observers need to be trained to avoid a wide disparity between how different observers and interviewers record the data.
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COLLECTING INTERNATIONAL MARKETING RESEARCH DATA
Gathering marketing research data in foreign countries poses special challenges.
Face-to-face surveys are commonly used in third-world countries to collect information from people who cannot read or lack phones and computers.
Translating surveys is an issue.
Back translation is used to determine if anything is lost in translations.
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ANALYZE THE DATA
Once all of the data is collected, the researchers begin the data cleaning—removing duplicated data.
A statistical program is then used to tabulate, or calculate, the basic results of the research.
The two most common criteria used to test the soundness of a study are (1) validity and (2) reliability.
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WRITE AND PRESENT THE RESEARCH REPORT
The six basic elements of a research report are as follows:
Title Page: explains what the report is about, when it was conducted, by whom, and who requested it.
Table of Contents: outlines the major parts of the report.
Executive Summary: summarizes all of the details in the report in a very quick way.
Methodology and Limitations: explains the technical details of how the research was designed and conducted.
Findings: a longer, fleshed-out version of the executive summary that goes into more detail about the statistics uncovered by the research that bolster the study’s findings.
Recommendations: outlines the course of action that should be taken based on the findings of the research and reflect the purpose of the project.
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KEY TAKEAWAYS
Step 1 in the marketing research process is to define the problem. Businesses take a look at what they believe are symptoms and try to drill down to the potential causes so as to precisely define the problem. The next task for the researcher is to put into writing the research objective, or goal, the research is supposed to accomplish.
Step 2 in the process is to design the research. The research design is the “plan of attack.” It outlines what data you are going to gather, from whom, how, and when, and how you’re going to analyze it once it has been obtained.
Step 3 is to design the data-collection forms, which need to be standardized so the information gathered on each is comparable. Surveys are a popular way to gather data because they can be easily administered to large numbers of people fairly quickly. However, to produce the best results, survey questionnaires need to be carefully designed and pretested before they are used.
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KEY TAKEAWAYS
Step 4 is drawing the sample, or a subset of potential buyers who are representative of your entire target market. If the sample is not correctly selected, the research will be flawed.
Step 5 is to actually collect the data, whether it’s collected by a person face-to-face, over the phone, or with the help of computers or the Internet. The data-collection process is often different in foreign countries.
Step 6 is to analyze the data collected for any obvious errors, tabulate the data, and then draw conclusions from it based on the results. The last step in the process,
Step 7 is writing the research report and presenting the findings to decision makers.
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