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Learning Marketing Intelligence

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Consumer Behaviour

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Marketing Intelligence

 

Rationale

Market Intelligence (MI), according to Corning, is “the process of acquiring and analyzing information in order to understand the market (both existing and potential customers); to determine the current and future needs and preferences, attitudes and behavior of the market; and to assess changes in the business environment that may affect the size and nature of the market in future.” (“Product”, 1997, p147).

A software company will be likely know more about its market and have more success in its product selection when it collects more different categories of market intelligence which cover both tacit and explicit knowledge. MI is generated from both systematic methods of market research and software testing by users as well as recorded tacit process in daily operations. It includes information from customer analysis and industry analysis as well as general market conditions. The seven most used activities for collecting MI in product software industries are:

 

  • product testing
  • industry intelligence
  • sales/service
  • trade shows
  • channels
  • qualitative methods (small “focus groups” and personal interview)
  • aggregate data

MI’s main use is to identify successful new product developments early in the process to create company growth and maximize revenues by finding a balance between costs and prices of products. By using this knowledge about the external environment, software companies can successfully innovate to stay ahead of the competition.

Roles of Intelligence

MI is critical for helping with the new product development stage of the product lifecycle, which is crucial for product software.

See also: Case Study: Accelerating and Improving Market Intelligence for the Pharmaceutical Industry

References

 

Buyer Decision Processes are the decision making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service.

More generally, decision making is the cognitive process of selecting a course of action from among multiple alternatives. Common examples include shopping, deciding what to eat. Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to effect the action.

In general there are three ways of analysing consumer buying decisions. They are:

Nobel laureate Herbert Simon sees economic decision making as a vain attempt to be rational. He claims (in 1947 and 1957) that if a complete analysis is to be done, a decision will be immensely complex. He also says that peoples' information processing ability is very limited. The assumption of a perfectly rational economic actor is unrealistic. Often we are influenced by emotional and non-rational considerations. When we try to be rational we are at best only partially successful.

Stimulus-Reponse Model of Buyer Behaviour

Buying Decision Process

 

Objectives

The aim of this unit is to enable learners to understand the purchase decision-making process and to recognise the variables and situations that influence buying behaviour.

The learner will explore the marketing research process and assess the importance of different types of information and marketing research requirements needed for effective marketing management in a competitive environment. This unit will also provide learners with the specialist knowledge and skills to prepare and present a research proposal.

Learning hours: 60


Learning Outcomes

To achieve this unit a learner must:

 

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Buyer Behaviour and the Purchase Decision-making Process

 

Introduction

Customer Relationship Management (CRM) includes the methodologies, technology and capabilities that help an enterprise manage customer relationships. The general purpose of CRM is to enable organizations to better manage their customers through the introduction of reliable systems, processes and procedures.

Customer Relations Process

Enterprise Customer Relations Management

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Organisational Buying Behaviour

 

Brand Loyalty

In marketing, a brand is a collection of feelings toward an economic producer; more specifically, it refers to the concrete symbols for the brand, such as a name and design scheme. Feelings are created by the accumulation of experiences with the brand, both directly relating to its use, and through the influence of advertising, design, and media commentary. A brand is a symbolic embodiment of all the information connected to a company, product or service. A brand serves to create associations and expectations among products made by a producer. A brand often includes an explicit logo, fonts, color schemes, symbols, which are developed to represent implicit values, ideas, and even personality.

The brand, and "branding" and brand equity have become increasingly massive components of culture and the economy, now being described as "cultural accessories and personal philosophies". [1]
Think of the buying process as a series of steps

 

 

Consumer Behaviour and Communication Agenda

Stimulus-response Model of Buyer Behaviour

Consumer Buyer Behaviour Consumer Buyer Behaviour

Workshop

 

Marketing Information and Marketing Research Techniques

Introduction

Market Research Tools: Marketing Intelligence Platform

Information as a Tool in Marketing Strategy

Research is the search for and retrieval of existing, discovery or creation of new information or knowledge for a specific purpose. Research has many categories, from medical research to literary research. Marketing research (also called consumer research) is a form of business research. It is a form of applied sociology which concentrates on understanding the behaviours, whims and preferences, of consumers in a market-based economy. The field of marketing research as a statistical science was pioneered by Arthur Nielsen with the founding of the ACNielsen Company in 1923. Common Qualitative Research Design

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Validity

Market Analysis

Larger Map

 

Market Research

Larger Map

Market Research is the process of systematic gathering, recording and analyzing of data about customers, competitors and the market. Market research can help create a business plan, launch a new product or service, fine tune existing products and services, expand into new markets etc. It can be used to determine which portion of the population will purchase the product/service, based on variables like age, gender, location and income level. It can be found out what market characteristics your target market has. With market research companies can learn more about current and potential customers.

The purpose of market research is to help companies make better business decisions about the development and marketing of new products. Market research represents the voice of the consumer in a company.

 Marketing Research Defined

A list of questions that can be answered through market research:

A simple example of what market research can do for a business is the following. At the company Chevrolet they brought several disciplines together in a cross-functional team to developed a concept for a completely new Corvette. This team enabled the marketers to come up with an alternative concept, one that balanced 4 attributes: comfort and convenience, quality, styling, and performance. This was considered radical because comfort and convenience were not traditional Corvette values. However, market research demonstrated that consumers supported the alternative concept. As a result the new Corvette was a huge success in the market. [Burns 2001]

With market research you can get some kind of confirmation that there is a market for your idea, and that a successful launch and growth are possible.

Qualitative Research Methods

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Qualitative research is a set of research techniques, used in marketing and the social sciences, in which data are obtained from a relatively small group of respondents and not analyzed with statistical techniques. This differentiates it from quantitative research in which a large group of respondents provide data that are statistically analyzed.
Quantitative Marketing Research is the application of quantitative research techniques to the field of marketing. It has roots in both the positivist view of the world, and the modern marketing viewpoint that marketing is an interactive process in which both the buyer and seller reach a satisfying agreement on the "four P's" of marketing: Product, Price, Place (location) and Promotion. As a social research method, it typically involves the construction of questionnaires and scales. People who respond (respondents) are asked to complete the survey. Marketers use the information so obtained to understand the needs of individuals in the marketplace, and to create strategies and marketing plans. Using the Internet for Quantitative Survey Research

 

Decision Support Systems are a class of computerized information systems or knowledge based systems that support decision making activities.

The concept of a decision support system (DSS) is extremely broad and its definitions vary depending upon the author's point of view (Druzdzel and Flynn 1999). A DSS can take many different forms and the term can be used in many different ways (Alter 1980).

On the one hand, Finlay (1994) and others define a DSS broadly as "a computer-based system that aids the process of decision making." In a more precise way, Turban (1995) defines it as "an interactive, flexible, and adaptable computer-based information system, especially developed for supporting the solution of a non-structured management problem for improved decision making. It utilizes data, provides an easy-to-use interface, and allows for the decision maker's own insights."

Other definitions fill the gap between these two extremes. For Keen and Scott Morton (1978), DSS couple the intellectual resources of individuals with the capabilities of the computer to improve the quality of decisions ("DSS are computer-based support for management decision makers who are dealing with semi-structured problems"). For Sprague and Carlson (1982), DSS are "interactive computer-based systems that help decision makers utilize data and models to solve unstructured problems." On the other hand, Keen (1980) claims that it is impossible to give a precise definition including all the facets of the DSS ("there can be no definition of decision support systems, only of decision support"). Nevertheless, according to Power (1997), the term decision support system remains a useful and inclusive term for many types of information systems that support decision making. He humorously adds that every time a computerized system is not an on-line transaction processing system (OLTP), someone will be tempted to call it a DSS. As you can see, there is no universally accepted definition of DSS.

 Intelligent Decision Support Systems

Additionally, the specifics of it is what makes it less generalized and more detailed. In addition, a DSS also is a specific Software application that helps to analyze data contained with a customer database. This approach to customers is used when deciding on target markets as well as customer habits. As you can see in this specific example, it is obvious that DSS can be used for more than just organization.

Recommended reading: Druzdzel and Flynn (1999), Power (2000), Sprague and Watson (1993), the first chapter of Power (2002), the first chapter of Makaras (1999), the first chapter of Silver (1991), the first two chapters of Sauter (1997), and Holsaple and Whinston (1996).

A Marketing Plan is a written document that details the actions necessary to achieve a specified marketing objective(s).

It can be for a product or service, a brand, or a product line. It can cover one year (referred to as an annual marketing plan), or cover up to 5 years.

A marketing plan may be part of an overall business plan.

Solid marketing strategy is the foundation of a well-written marketing plan.

While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

 How Marketing Plan Works

 

Sample Morphological Field: Research Market Evaluation Template

 

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Shopper

Image: A shopper in a low carb section of a supermarket. Title: Low Carb Food
Stores Gain Popularity. Copyright: Getty Images available from Education Image Gallery

Rollercoaster

A day trip to a theme park might be the perfect opportunity to develop
your skills in project management and experience the problems and
issues in managing a project successfully from beginning to end.
Copyright: A Ashwin

 

Case Studies - Market Research Companies

Forrester Research

Forrester Research is an independent technology and market research company that provides its clients with advice about technology's impact on business and consumers.

Deloitte

Deloitte Touche Tohmatsu (branded as Deloitte) is the second largest professional services firm in the world after PricewaterhouseCoopers and one of the Big Four auditors, a group of the largest international public accountancy firms. At $18.2 billion USD, it earned the second most revenue out of the Big Four in 2005 (PricewaterhouseCoopers brought in $20.3 billion in 2005). In addition to its accounting practice, Deloitte is one of the largest business advisory firms in the world, providing strategic and operational management consulting services to Fortune 500 companies.

Frost & Sullivan

Frost & Sullivan is a growth consulting company providing research, training, consulting, events and corporate strategy to its clients. It has 25 global offices and over 1000 analysts and consultants worldwide.

 

Price Waterhouse Coopers

PricewaterhouseCoopers (or PwC) is the world's largest professional services firm. It was formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand. PwC is the largest of the Big Four auditors, whose other member firms include Deloitte Touche Tohmatsu, Ernst & Young and KPMG.

PricewaterhouseCoopers earned aggregated worldwide revenues of $20.3 billion for fiscal 2005, and employed over 130,000 people in 148 countries.

In the United States it operates as PricewaterhouseCoopers LLP where it is the 4th largest privately owned organization. [2].

 PwC Offices in Sydney

 

Market Size and Demand

 

Introduction

A Market is, as defined in economics, a social arrangement that allows buyers and sellers to discover information and carry out a voluntary exchange. Along with a right to own property, it is one of the two key institutions that organize trade. The existence of markets is one of the key components of capitalism.

Structure

The information function of a market requires, at a minimum, that the buyer and seller are both aware of what is being sold and if a voluntary transaction is possible. Economic models assume that such knowledge is perfect, including in knowledge of alternatives and other factors affecting the proposed sale/purchase.

Markets rely on adjustments to price to coordinate individual decision making relating to supply and demand. For example, suppose that more buyers want a certain good than is available from sellers at a given price. The solution requires either that buyers reduce their demand for the good, or that sellers produce more of the good. These results are accomplished by a rise in the price of that good: some buyers will refuse to pay the higher price, while more sellers are willing to offer the good for the increased price. In cases where more of an item is available than people will buy, the reverse effect (a drop in price) will make the choices of buyers and sellers compatible. Markets are thus efficient, in the economic sense, in that the buyers who value a good most highly will buy from sellers most willing to sell.

In economics, a market that runs under laissez-faire policies is a free market. It is "free" in the sense that the government makes no attempt to intervene through taxes, subsidies, minimum wages, price ceilings, etc. Markets may also be skewed by a seller with a monopoly, sellers with an oligopoly or a buyer with a monopsony. Markets that have their efficiency reduced in these ways are referred to by economists as "failed markets".

While barter markets exist, most markets require the existence of currency or other form of money. An economic system in which goods and services (and resources required to produce those goods and services) are mediated by markets is called a market economy. Critics of the market economy have tried or proposed a command economy or other non-market economy. The attempt to mix socialism with the incentives created by a market is known as market socialism, which includes the relatively recent socialism with Chinese characteristics, though some argue that socialism and markets are fundamentally incompatible.

Also see

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Market Structures

Larger Map

In economics, Market Structure describes the state of a market with respect to competition.

There are two kinds of market structures that are usually discussed: perfectly competitive market structure and imperfectly competitive market structure. Perfectly competitive market structure is an ideal state of a market in which the competition amongst the buyers and sellers is likely to be perfectly balanced. The imperfectly competitive structure is quite identical to the realistic market conditions where some monopolists, oligopolists, and duopolists exist and dominate the market conditions.

 

Market size = number of buyers in the market x
quantity purchased by an average buyer in the market per year x
price of an average unit

Relative Market Size by GDP

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In economics, the Concentration Ratio of an industry is used as an indicator of the relative size of firms in relation to the industry as a whole. This may also assist in determining the market form of the industry. One commonly used concentration ratio is the four-firm concentration ratio, which consists of the market share, as a percentage, of the four largest firms in the industry. In general, the N-firm concentration ratio is the percentage of market output generated by the N largest firms in the industry.

The concentration ratio has a fair amount of correlation to the Herfindahl index, another indicator of firm size.

See also

 

Economic Growth is the increase in value of the goods and services produced by an economy. It is generally a factor in an increase in the income, of a nation. It is conventionally measured as the percent rate of increase in real gross domestic product, or GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced. In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment," which is caused by growth in aggregate demand or observed output.

As economic growth is measured as the annual percent change of National Income it has all the advantages and drawbacks of that level variable. But people tend to attach a particular value to the annual percentage change, perhaps since it tells them what happens to their wage cheque.

Improved Public Governance in Middle East Could Boost Economic Growth

Business Forecasting

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A Prediction or Forecast is a statement or claim that a particular event will occur in the future.

The etymology of this word is Latin (from præ- "before" plus dicere "to say").

Aggregate Demand

Larger Map

Aggregate Demand In microeconomic theory, the partial equilibrium supply and demand economic model originally developed by Alfred Marshall attempts to describe, explain, and predict changes in the price and quantity of goods sold in competitive markets. The model is only a first approximation for describing an imperfectly competitive market. It formalizes the theories used by some economists before Marshall and is one of the most fundamental models of some modern economic schools, widely used as a basic building block in a wide range of more detailed economic models and theories. The theory of supply and demand is important for some economic schools' understanding of a market economy in that it is an explanation of the mechanism by which many resource allocation decisions are made. However, unlike general equilibrium models, supply schedules in this partial equilibrium model are fixed by unexplained forces.

 

Competition is the act of striving against another force for the purpose of achieving dominance or attaining a reward or goal, or out of a biological imperative such as survival. Competition yuyuytis a term widely used in several fields, including biochemistry, ecology, economics, business, politics, and sports. Competition may be between two or more forces, life forms, agents, systems, individuals, or groups, depending on the context in which the term is used.

Competition may yield various results to the participants, including both intrinsic and extrinsic rewards. Some, such as survival advantages, including favorable territory, are intrinsic biological factors that occur as a result of ecological competition between organisms. Others, such as competition in business and politics, involve competition between humans. In addition, extrinsic symbols, such as trophies, plaques, ribbons, prizes, or laudations, may be given to the winner(s). Such symbolic rewards are commonly used wherever the rewards inherent in the competition are primarily intrinsic, such as at human sporting and academic competitions. In general, the rewards range widely but usually help reinforce the advantage that one participant has over the other participant(s).

 Porter's Five Forces

 

Activities

A significant increase in world oil prices

Lottery

Image copyright: Andy Culpin

Bush

Image: Some of these markets were extremely
efficient in predicting the winner of the US presidential
election in 2004; in some cases they were able to
predict accurately which party would win which state
and even the proportion of votes the parties gained!
Title: Bush Celebrates 4th Of July In West Virginia.
Copyright: Getty Images, available from Education Image Gallery

 

Customer Satisfaction and Feedback

 

Introduction

Customer Experience Management (CEM) is "the process of strategically managing a customer's entire experience with a product or a company" (Schmitt, 2003, p. 17).

Marketing research has shown that about 70 to 80% of all products are perceived as commodities, that is, seen as being more-or-less the same as competing products. This makes marketing the product difficult. Marketers have taken various approaches to this problem including: branding, product differentiation, market segmentation, and relationship marketing.

Relationship marketing, (also called loyalty marketing) focuses on establishing and building a long term relationship between a company and a customer. There are several approaches that have been espoused including customer experience management, customer relationship management, loyalty programs, and database marketing.

 Introduction to Customer Experience Management

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Main Customer Satisfaction Determinants

Customer Satisfaction is a business term which is used to capture the idea of measuring how satisfied an enterprise's customers are with the organization's efforts in a marketplace.

Every organization has customers of some kind. The organization provides products (goods and/or services) of some kind to its customers through the mechanism of a marketplace. The products the organization provides are subject to competition whether by similar products or by substitution products.

The reason an organization is interested in the satisfaction of its customers is because customers purchase the organization's products. The organization is interested in retaining its existing customers and increasing the number of its customers.

Customer satisfaction is an ambiguious and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person. The state of satisfaction depends on a number of both psychological and physical variables. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products.

Because satisfaction is basically a psychological state, it is a difficult thing to measure quantitatively. In other words, there are no units of satisfaction that have been defined. The usual measures of customer satisfaction involve a survey instrument with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement and then select from a scale how much the customer agrees or disagrees with the statement.

MORI's Approach to Customer Satisfaction Research

 

Organisational Performance

Customer Service is the provision of labour and other resources, for the purpose of increasing the value that buyers receive from their purchases and from the processes leading up to the purchase. With the rising dominance of the service sector in the global economy, customer service has grown in importance, as its impact on individuals, households, firms, and societies has become widespread.

Customer Care

Customer Retention Driver Network

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Images: What would give greater utility to you - spending £60 on a DVD player or watching Chelsea play?
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Resources

Competitive, Business and Market Intelligence

 

Journal of Consumer Behaviour