Mis and consumer buying behaviour


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Mis and consumer buying behaviour

  1. 1. Marketing Informationsystem & Consumer Buyingbehavior
  2. 2. Chapter Questions What are the components of a modernmarketing information system? What are useful internal records? What is involved in a marketingintelligence system? What are the key methods for trackingand identifying opportunities in themacro environment? What are some important macroenvironment developments?
  3. 3. What is a Marketing Information System(MIS)?A marketing information systemconsists of people, equipment, andprocedures to gather, sort, analyze,evaluate, and distribute needed,timely, and accurate information tomarketing decision makers.
  4. 4. Marketing Information is the Foundation of the ValueDelivery Endeavour of the Firm Marketing Planning, Implementation, and Control, AllRest on Marketing Information• As knowledge becomes a major input in managingbusinesses, importance of information keeps growingFrom data to information to knowledge• Marketing information becomes marketing knowledge/intellectualcapitalAttributes of good marketing informationDesigning a Marketing Information System (MIS) Why do we need a system to handle marketinginformation? MIS has to serve as a DSS (decision support system) MIS must be a unified system
  5. 5. Internal Records andMarketing IntelligenceOrder-to-PaymentCycle(e.g. Sales reps.,dealers,sales invoices)Databases,Warehousing,Data MiningMarketingIntelligenceSystemSalesInformationSystem(reports ofcurrents sales)
  6. 6. Data, Information, and KnowledgeData are any facts, numbers, or text that can be processed by acomputer. Today, organizations are accumulating vast and growingamounts of data in different formats and different databases. Thisincludes:• operational or transactional data such as, sales, cost, inventory,payroll, and accounting• Non-operational data, such as industry sales, forecast data, andmacro economic data• meta data - data about the data itself, such as logical databasedesign or data dictionary definitionsInformation The patterns, associations, or relationships among allthis data can provide information. For example, analysis of retail pointof sale transaction data can yield information on which products areselling and when
  7. 7.  Knowledge Information can be convertedinto knowledge about historical patterns andfuture trends. For example, summary information on retailsupermarket sales can be analysed in light ofpromotional efforts to provide knowledge ofconsumer buying behaviour. Thus, a manufacturer orretailer could determine which items are mostsusceptible to promotional efforts. Customer Relationship Management (CRM) Companies capture information at every possiblecustomer touch point. Customer relationship management (CRM) is used tomanage detailed information about individualcustomers and carefully manage customer touchpoints in order to maximize customer loyalty.
  8. 8.  Data mining is primarily used today by companieswith a strong consumer focus -retail, financial, communication, and marketingorganizations It enables these companies to determinerelationships among "internal" factors such asprice, product positioning, or staff skills, and"external" factors such as economicindicators, competition, and customerdemographics It enables them to determine the impact onsales, customer satisfaction, and corporate profits.Finally, it enables them to "drill down" intoData Mining
  9. 9.  with the data mining a retailer could use point-of-salerecords of customer purchases to send targetedpromotions based on an individuals purchase history Wal-Mart captures point-of-sale transactions from over2,900 stores in 6 countries and continuously transmits thisdata to its massive 7.5 terabyte Teradata datawarehouse. Wal-Mart allows more than 3,500 suppliers,to access data on their products and perform dataanalyses. These suppliers use this data to identifycustomer buying patterns at the store display level
  10. 10. Data mining consists of five major elements: Extract, transform, and load transactiondata onto the data warehouse system. Store and manage the data in amultidimensional database system. Provide data access to business analystsand information technology professionals. Analyse the data by application software. Present the data in a useful format, suchas a graph or table.
  11. 11.  Data mining provides the link between the two. Data mining softwareanalyses relationships and patterns in stored transaction data based onopen-ended user queries, data mining applications are available on all sizesystems for mainframe, client/server, and PC platforms Classes: Stored data is used to locate data in predetermined groups. Forexample, a restaurant chain could mine customer purchase data todetermine when customers visit and what they typically order. Thisinformation could be used to increase traffic by having daily specials Clusters: Data items are grouped according to logical relationships orconsumer preferences. For example, data can be mined to identify marketsegments or consumer affinities. Associations: Data can be mined to identify associations. E.g. weekendoffers might not be available in weekdays Sequential patterns: Data is mined to anticipate behaviour patterns andtrends. For example, an outdoor equipment retailer could predict thelikelihood of a backpack being purchased based on a consumerspurchase of sleeping bags and hiking shoes.How does Data mining work?
  12. 12. Architecture to Support E-Mail Campaigns and ResponseManagement (CRM-ready Data Warehouse)
  13. 13.  The Data Warehouse system is acomplete, powerful, scalable, andcustomizable intelligent data warehousesolution, which optionally offers the mostcomplete analytic functionality availableon the market, fully integrated into thesystem “Data warehouses store current as well ashistorical data and are used for creatingtrending reports for senior managementreporting such as annual and quarterlycomparisons.”DATAWAREHOUSE
  14. 14.  Marketing Intelligence System. (MIS) :(MIS) Consists of people, equipment, and proceduresto gather, sort, analyse, evaluate and distributetimely and accurate information to decision makers Consumer Intelligence System:This provides useful information on a customer’sbusiness, preferences or loyalties, personaldemographic details Competition Intelligence: This gives information onstrengths and weaknesses of each competitor inthe territory, the strategy and the tactics beingused by them.Marketing Intelligence System
  15. 15. Managers collect info in variety of differentways: Reading books Newspapers Trade publications Talking to customers Suppliers Distributors Monitoring social media on internet meeting with other co.s managers
  16. 16.  Hyderabad: An advocate inHyderabad was shocked afterfinding a dead rat in his RealActive+ fruit drink on Friday. Theadvocate, Achyut Rao, is also achild rights activist in the city. He isset to approach the consumerforum soon. According to Rao, the fruit juicepack was purchased along withfour others from a local eatery onThursday. “On Friday, I opened oneof the tetra packs and was struckby an unbearable stink comingfrom it. When I tried to poured thejuice, the nozzle was obstructed. Isqueezed the pack harder and asquashed body of a dead ratcame out,” he claimed. Mr Rao says he will be approachingthe consumer forum. While sayingthat he was sure this was anaccident, headded, “Dabur, which owns theReal brand, is a reputed company.The company must ensure that itscustomers get its fullest attention.”
  17. 17. Consumer Intelligence
  18. 18.  Customer satisfaction Creative and effective marketingstrategy Realities of the companyIts competitors Strengths and weaknesses Realities of the marketplaceOpportunities and threats Competitive advantage Anticipate the competitive move anddevelop competitive strategiesPurposes of Marketing Intelligence:
  19. 19. Analyzing the Meta-EnvironmentDemographicEconomicPolitical-LegalSocio-CulturalTechnologicalNatural
  20. 20.  Educational groups: whocan read, who can’tread, who can read&write, illiterate etc. Household patterns:rural, urban, semi-urban,tribes etc. Population growth Population age mix:Fastrack by Titan. Spirit;bravo By Bajaj. MTV,Channel V (youthtarget), Bacardi Tagline“be what you want tobe” Ethnic markets:The GODREJ Agrovet: Best known for the RealGood Chicken and Yummiez brands, is now a JVwith Tyson Foods and has 45% market share inprocessed poultry.For example: Many Chinese prefer pork and poultry.Most Hindus are vegetarian but some doconsume meat (though it is not likely tobe beef or horse). Jews who keep kosher will eat kosherbeef, goat, lamb and poultry but nothorse, pork or rabbit. Muslims will eat halal beef, goat, horse,lamb, rabbit and poultry and avoid pork. Many Hispanics, especially those fromthe Caribbean, enjoy goat meat as domany from the Middle East, southeastAsia, north Africa and Greece. Horsemeat is a delicacy in Japan, is widelyconsumed in francophone Canada andis popular in Belgium, France, Italy andmany other European countries as wellPopulation and Demographics
  21. 21. Steps to Improve Marketing IntelligenceTrain sales force to scan for new developmentsMotivate channel members to shareintelligenceNetwork externallyUtilize a customer advisory panelUtilize government data resourcesPurchase informationCollect customer feedbackonline
  22. 22.  Define the problem and research objective: Amarketing research project might have one of threetypes of objectives Exploratory research: to gather preliminaryinformation that will help define the problem andsuggest hypotheses. Descriptive research: to describe things, such as themarket potential for a product Causal research: to test hypotheses aboutcause-and-effect relationships. develop the research plan: primary & secondarydata collect the information: surveys, telephonic, internet,personal interviewing analyze the information present the findings decision makingMIS PROCESS
  23. 23. 1. Observational research2. Focus Group3. Survey Research4. Behavioral researchINSTRUMENT OF RESEARCH questionnaire qualitative techniques quantitative techniques technological devicesResearch approaches
  24. 24.  sampling unit: whom should we survey? sample size: how many people shouldwe survey? sampling procedures: how should wechoose the respondents? mail contact personal contacts online contactsSampling plan
  25. 25.  Managers of small businesses and nonprofitorganizations can obtain marketing insights byobserving things around them. Managers can conduct informal surveys usingsmall convenience samples. Managers can glean a wealth of competitivedata and information by turning to the Internet.Marketing Research in SmallBusinesses and NonprofitOrganizations
  26. 26.  International marketing researchers follow the samesteps as domestic researchers. The international researcher may have a difficult timefinding good secondary data. International researchers often must collect their ownprimary data. Reaching respondents is often not easy in other partsof the world. Few international research agencies like GALLUP NIELSEN MOODY’S BOSTON CONSULTING GROUPInternational Marketing Research
  27. 27. Sources of Competitive Information Independent customer goods andservice review forums Distributor or sales agent feedback sites Combination sites offering customerreviews and expert opinions Customer complaint sites Public blogs
  28. 28. Intrusions on Consumer Privacy Many consumers strongly resent or even mistrustmarketing research. Increasing consumer resentment has led to lowersurvey response rates in recent years. The best approach is for researchers to ask only forthe information they need, to use it responsibly toprovide customer value, and to avoid sharinginformation without the customer’s permission.Misuse of Research Findings Many research studies appear to be little more thanvehicles for pitching the sponsor’s products. Several associations have developed codes ofresearch ethics and standards of conductPublic Policy and Ethics inMarketing Research
  30. 30. Case letLess than one-third of GE’s annualsales come from consumerproducts. The vast majority of salesfor GE come from commercial andindustrial customers across a widerange of industries.GE locomotives might not seemglamorous, but they provide bigdollars to the bottom line. Thechallenge is to win buyers’ businessby building day-in, day-out, year-in,year-out partnerships with thembased on superior products andclose collaboration.Locomotive performance is onlypart of the buying equation. GEwins contracts by partnering withbusiness customers to help themtranslate that performance intomoving their passengers and freightmore efficiently and reliably.Business customer buying decisionsare made within the framework of astrategic, problem-solvingpartnership. Says GE chairman andCEO Immelt, “We are viewed as atechnical partner by customersaround the world.”• Why does GE have to go to suchlengths to help their customerssucceed?• What is GE doing when it“partners” with an industrialcustomer?
  31. 31. What is Organization/Business BuyingBusiness buyer behavior refers to the buying behavior of theorganizations that buy goods and services for use in the production ofother products and services that are sold, rented, or supplied to others.It also includes the behavior of retailing and wholesaling firms thatacquire goods for the purpose of reselling or renting them to others at aprofit.The business market is huge. In fact, business markets involve far moredollars and items than do consumer markets.The main differences between consumer and business markets are inmarket structure and demand, the nature of the buying unit, and thetypes of decisions and the decision process involved.
  32. 32.  The business marketer normally deals with farfewer but far larger buyers than the consumermarketer does. Even in large business markets, a few buyersoften account for most of the purchasing. Business demand is derived demand—itultimately derives from the demand ofconsumer goods. B2B marketers sometimespromote their products directly to finalconsumers to increase business demand. Business markets are more geographicallyconcentrated. More than half the businessbuyers are concentrated in eight states.Market Structure and Demand
  33. 33. Characteristics of Business Markets Fewer, larger buyers Close supplier-customerrelationships Professionalpurchasing Many buyinginfluences Multiple sales calls Derived demand Inelastic demand Fluctuatingdemand Geographicallyconcentratedbuyers Direct purchasing
  34. 34.  Business buyers usually face more complex buyingdecisions than do consumer buyers. Purchases often involve large sums of money, complextechnical and economic considerations, andinteractions among many people at many levels of thebuyer’s organization. The business buying process also tends to be moreformalized than the consumer buying process. In the business buying process, buyer and seller areoften much more dependent on each other. Many customer companies are now practicing supplierdevelop-ment, systematically developing networks ofsupplier-partners to ensure an appropriate anddependable supply of products and materials that theywill use in making their own products or reselling toothers.TYPES OF DECISIONS AND THE DECISION PROCESS
  35. 35.  Compared with consumer purchases, abusiness purchase usually involves moredecision participants and a moreprofessional purchasing effort. Often, business buying is done by trainedpurchasing agents who spend theirworking lives learning how to buy better. The more complex the purchase, themore likely that several people willparticipate in the decision-makingprocess.Nature of the Buying Unit
  36. 36. Major Types of Buying SituationsStraight rebuy:the buyer reorders something without any modifications. It is usuallyhandled on a routine basis by the purchasing departmentModified rebuythe buyer wants to modify the product specifications, prices,terms, or suppliers. The modified rebuy usually involves moredecision participants than does the straight rebuy.New taskA company buying a product or service for the first timefaces a new task situation. In such cases, the greater thecost or risk, the larger the number of decision participantsand the greater their efforts to collect information will be.
  37. 37. Systems Buying and SellingTurnkey solutiondesired;bids solicitedPrimecontractorsSecond-tiercontractorsSystemsubcomponentsassembled
  39. 39. The Buying CenterInitiatorsUsersInfluencersDecidersApproversBuyersGatekeepers
  40. 40. Environmental Factors: Business buyers are heavily influenced by factors in the currentand expected economic environment, such as the level ofprimary demand, the economic outlook, and the cost ofmoney. shortages in key materials are creating situations for manycompanies to buy and hold larger inventories of scarcematerials to ensure adequate supply. Business buyers also areaffected by technological, political, and competitivedevelopments in the environment Culture and customs can strongly influence business buyerreactions to the marketer’s behavior and strategies, especiallyin the international marketing environment.Business buyers respond to both economic and personal factors. Theyreact to both reason and emotionBUYING CENTER INFLUENCE
  41. 41.  Organizational Factors:Each buying organization has its own objectives, policies,procedures, structure, and systems, and the businessmarketer must understand those factors as well. Interpersonal Factors:The buying center usually includes many participants whoinfluence each other; so interpersonal factors also influencethe business buying process. It is often difficult to assess suchinterpersonal factors and group dynamics. Individual Factors:Age, income, education, job position, personality, and riskattitudes.Each participant in the business buying-decision processbrings in personal motives, perceptions, and preferences.These individual factors are affected by personalcharacteristics such as age, income, education,professional identification, personality, and attitudes towardrisk.Continued…..
  42. 42. The purchasing &procurement process
  43. 43.  Some MNC’s now a days implementing“strategic supply department” viz.purchasing, inventory control, productionscheduling, combined into onedepartment. Business Marketers Must Upgrade Their SalesPersonnel To Match The Higher Caliber OfThe Business Buyers “surveyed that buying group was moreinvolved in new product-development thanit was 5r years ago” decentralizing small ticket items, resultingless paper work and increasing efficiencyThe purchasing department
  44. 44. Stages in the Organizational BuyingProcess Problem recognition:Internally, the company may decide to launch a newproduct that requires new production equipment andmaterials. Externally, the buyer may get some newideas at a trade show, see an ad, or receive a call froma salesperson who offers a better product or a lowerprice. General need description:For standard items, this process presents few problems.For complex items, however, the buyer may have towork with others—engineers, users, and consultants—todefine the item. Product specification: For standard items, this processpresents few problems. For complexitems, however, the buyer may have to work withothers—engineers, users, and consultants—to definethe item.
  45. 45.  Supplier search:Search to find the best vendors. The buyer can compile a smalllist of qualified suppliers by reviewing trade directories, doing acomputer search, or phoning other companies forrecommendations.E.G Us Recruiters Depends On Huge Vendor Listings To Market ItConsultants For Various Projects Proposal solicitation:Buyer invites qualified suppliers to submit proposals.When the item is complex or expensive, the buyer will usuallyrequire detailed written proposals or formal presentations fromeach potential supplier. Supplier selection:Buyers may attempt to negotiate with preferred suppliers forbetter prices and terms before making the final selections. Inthe end, they may select a single supplier or a few suppliers.Many BUYERS PREFER MULTIPLE SOURCES OFSUPPLIERS TO AVOID BEING TOTALLY DEPENDENT ONONE SUPPLIER AND TO ALLOW COMPARISONS OFPRICES AND PERFORMANCE OF SEVERAL SUPPLIERSOVER TIME.
  46. 46.  Order-routine specification:The final order with the chosen supplier or suppliersand lists items such as technical specifications,quantity needed, expected time of delivery, returnpolicies, and warranties.In The Case Of Maintenance, Repair, And OperatingItems, Buyers May Use Blanket Contracts RatherThan Periodic Purchase Orders. A Blanket ContractCreates A Long-term Relationship In Which TheSupplier Promises To Resupply The Buyer As NeededAt Agreed Prices For A Set Time Period. Performance review:Buyer may contact users and ask them to rate theirsatisfaction. This review may lead the buyer tocontinue, modify, or drop the arrangement.
  47. 47.  Electronic purchasing (E-procurement) is now standardprocedure in most companies. E-procurement gives buyers access to new suppliers andlower purchasing costs, and hastens order processingand delivery. In turn, business marketers can connectwith customers online to share marketing information, sellproducts and services, provide customer supportservices, and maintain ongoing customer relationships. Companies can conduct reverse auctions or engage inonline trading exchanges.E-PROCUREMENT: BUYING ON THE INTERNET
  48. 48.  Companies can also conduct e-procurement by setting up their owncompany buying sites or by setting upextranet links with key suppliers. E-procurement reduces the time betweenorder and delivery. Time savings areparticularly dramatic for companies withmany overseas suppliers. Beyond the cost and time savings, e-procurement frees purchasing people tofocus on more strategic issues. The use of e-procurement also presents someproblems.E-PROCUREMENT: BUYING ON THE INTERNET
  49. 49.  Institutional Markets The institutional market consists of schools, hospitals, nursing homes, prisons, and otherinstitutions that provide goods and services to people in their care. Institutions differ fromone another in their sponsors and in their objectives. Many institutional markets are characterized by low budgets and regular customers Many marketers set up separate divisions to meet the special characteristics and needsof institutional buyers. Government Market The government market offers large opportunities for many companies, both big andsmall. Government buyers are asked to favor depressed business firms and areas; small businessfirms; minority-owned firms; and business firms that avoid race, gender, or agediscrimination. Many firms that sell to the government have not been marketing oriented. Total government spending is determined by elected officials rather than by anymarketing effort to develop this market. Government buying has emphasized price, making suppliers invest their effort intechnology to bring costs down. When the product’s characteristics are specified carefully, product differentiation is not amarketing factor. Nor do advertising or personal selling much matter in winning bids on an open-bid basis.