Marketing Information System and Marketing Research

2. Marketing Information System and Marketing Research Foreword: “Know your enemy and know yourself, and in a hundred battles you will never be in peril” -Sun-Tzu

3. OBJECTIVES After reading this chapter, you should be able to: • Explain the importance of information in gaining insights about the marketplace and customers. • Explain the marketing information system concept. • Outline the marketing research process, including defining problem & research objectives, developing the research plan, implementing the research plan, and interpreting and reporting the findings. • Explain how companies analyze and use marketing information.

4. Marketing Information Systems and Research Harrah’s • Companies everywhere covet the title “The world’s greatest” and casino operator Harrah’s Entertainment rightly claims that title in the gaming industry. • following acquisition of Caesars Entertainment, Harrah’s now captures $7.1 billion in revenue from 43 properties • Harrah’s portfolio includes such casino and gaming brands as Harrah’s, Caesars, Horseshoe, Bally’s, Flamingo, Showboat, and The World Series of Poker. • In the four years prior to the acquisition, Harrah’s annual sales grew 37% and profits soared 76%. tab

5. Marketing Information's Systems and Research Harrah’s • Why has Harrah’s been so successful? • everyone at Harrah’s will quickly tell you it’sall about managing customer relationships • What sets Harrah’s apart is the way it relates to its customers and creates customer loyalty. • during the past decade, Harrah’s has become themodel for good CRM & customer-loyalty management • At the heart of the Harrah’s CRM strategy is its pioneering card-based Total Rewards program. • the gaming industry’s first & by far most successful loyalty program tab

6. Marketing Information's Systems and Research Harrah’s • first, the company uses Total Rewards to collect amother lode of information about customers • it then mines this information to identify important customers and finely tune market offerings to theirspecific needs • Total Rewards members receive points based on the amount they spend at Harrah’s facilities. • points are redeemed for perks, such as cash, food, merchandise, rooms, and hotel show tickets • Total Rewards forms the basis for a two-part CRM process… tab

7. Marketing Information's Systems and Research Harrah’s • More than 80% of Harrah’s customers worldwide—40 million customers—use a Total Rewards card. • Information from every swipe of every card at each of Harrah’s forty-three casinos zips off to a central computer in Memphis, Tennessee. • analyzing this data gives Harrah’s detailed insights into casino operations • More importantly, the data provides insight into the characteristics & behavior of individual customers. • who they are, how often they visit, how long they stayand how much they gamble and entertain tab

8. Marketing Information's Systems and Research Harrah’s • From its Total Rewards data, Harrah’s has learned that 26% of its customers produce 82% of revenues. • And these best customers aren’t the high rollers that have long been the focus of the industry. • they are ordinary folks from all walks of life • Most often, these customers visit casinos for an evening rather than staying overnight at the hotel. • and are more likely to play at the slots than at tables • Using such insights, Harrah’s focuses its marketing and service development strategies on the needs of its best customers. tab

9. Marketing Information's Systems and Research Harrah’s • The data insights help Harrah’s do a better job of managing day-to-day customer relationships. • Harrah’s is now starting to process customer data in real time from the moment customers swipe their rewards cards. • an ideal link between data & customer experience Harrah’s chief information officer calls “operational CRM” • Happy customers are much more loyal. • where customer spending decreases by 10% based onan unhappy casino experience, it increases by 24% witha happy experience tab

10. Marketing Information's Systems and Research Harrah’s • With Total Rewards, Harrah’s has seen its share of customers average gambling budgets rise 20%. • revenue from customers gambling at Harrah’s ratherthan their “home casino” has risen 18% • Harrah’s CEO Gary Loveman says Total Rewards “touches in some form or fashion 85% of our revenue.” • Through smart CRM investments, Harrah’s shows how marketers can use information to gainpowerful customer market insights. tab

11. Marketing Information's Systems and Research Marketing Information and Customer Insights • To create value for customers & build meaningful relationships with them, marketers must gain fresh, deep insights into what customers need and want. • such insights come from the good marketing information • While these insights are important for building value and relationships, they can be very difficult to obtain. • customer needs & motives are often anything but obvious • Marketers must effectively manage marketing information from a wide range of sources. • with information technologies, companies cannow generate information in great quantities tab

12. Marketing Information's Systems and Research Marketing Information and Customer Insights • Most marketing managers are overloaded with data and often overwhelmed by it, yet complain they lack enough information of the right kind. • They don’t need more information—they need better information — and to make better use of information they already have. • a company’s marketing research & information system must do more than just generate lots of data • The real value of marketing research and marketing information lies in how it is used—in the customer insights that it provides. tab

13. Marketing Information's Systems and Research Marketing Information and Customer Insights • Many companies are now restructuring & renaming their marketing research and information functions. • Customer insight groups collect customer & market information and use the marketing information to develop important customer insights from which the company can create more value for its customers. • one customer insights group states its mission simply as “getting better at understanding our consumers and meeting their needs.” tab

14. Marketing Information's Systems and Research The Marketing Information System • it interacts with managers to assess their information needs • it develops needed information from internal company records, marketing intelligence activities, and the marketing research process • analysts process information to make it more useful • the MIS distributes information to managers in the right form, at the right time to help in marketing planning, implementation, and control • 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. tab

15. Figure 5-1 Marketing Information System Marketing Information's Systems and Research The Marketing Information System tab

16. The Marketing Information System Assessing Information Needs • A good marketing information system balances information managers would like to have againstthat which they really need & is feasible to obtain. • Some managers ask for whatever data they can get without thinking carefully about cost or usefulness. • too much information can be as harmful as too little • Other busy managers may fail to ask for things they need to know, or managers may not ask for some types of information that they should have. tab

17. The Marketing Information System Obtaining Data • The costs of obtaining, processing, storing, and delivering information can add up quickly. • The company must estimate the value of having an item of information against the costs of obtaining it. • value depends on how it will be used, and this judgmentis highly subjective • Sometimes additional information contributes littleto improving a manager’s decision • the cost may exceed the benefit tab

18. Table 5-1 Questions for Assessing Marketing Information Needs The Marketing Information System Developing Information • The answers to the questions in Table 5–1 will help managers assess their marketing information needs. tab

19. The Marketing Information System Developing Information - Internal Data • Many companies build extensive internal databases,of consumer & market information obtained fromdata sources within the company network. • information in the database can come from many sources • Internal data are accessed more quickly & cheaply than other sources, but presents some problems. • it may be incomplete or in the wrong form for marketing • data also age quickly; keeping the database current requires a major effort • Every company contains more information than any manager can possibly know or analyze. tab

20. The Marketing Information System Developing Information - Internal Data • The company brings order to its information gold mine, so its managers can easily make informed decisions. • Increasingly, companies are creating data warehouses to house customer data in an accessible location. • using powerful data mining techniques, they search for meaningful patterns & communicate them to managers • Managers can use information gathered from these and other sources to evaluate performance and detect problems and opportunities. tab

21. The Marketing Information System Developing Information - Guest History Information • improving service • creating effective advertising & sales promotion programs • developing new products • improving existing products • developing marketing and sales plans • development & use of an effective revenue management program • Guest information is vital to… • Unfortunately, far too many hospitality firms have only a vague idea of who their guests are. tab

22. The Marketing Information System Developing Information - Guest History Information • Specific guest information needs may include any or all of the data shown in Table 5–2 on Page 116. • While this list may seem overbearing and unduly inquisitive, hospitality companies increasinglycollect and use this type of information. • a hospitality company must be very careful not toinfringe on privacy rights of guests or to disturb them • An amazing amount of this information is available from internal records, which requires interfacingwith other departments, such as reservations and accounting. tab

23. The Marketing Information System Developing Information - Guest Information Trends • booking patterns • cancellations • conversion percentages (percentage of inquiries to reservations) • overbooking patterns • historical trends on occupancy for prime, shoulder, and low seasons • yield patterns by season • Information concerning guest trends is vital to planning and revenue/yield management, andinclude the following: tab

24. The Marketing Information System Guest Information Management - Acquisition • A system for obtaining guest information may include any or all of these techniques: • Handwritten Journals, Card Files from Guest Registrations and Personal Observations. • despite an apparent 19th-century style, thisis often adequate for small enterprises • Guest Comment Cards. • provide useful information & insights into problem areas • Listening to & Speaking with Guests. • an excellent way to find out what guests think, and management hears it firsthand tab

25. The Marketing Information System Guest Information Management - Acquisition • Automated Systems. • decreasing cost & increasing capacity of automated guest history systems will allow hotels to create close relationships with their customers once again • Mystery Shoppers—a $1.5-billion industry. • companies often hire disguised or mystery shoppers to pose as customers and report back on their experience • A mystery shopper works best if there is a possibilityfor recognition and reward for good job performance • Company Records. • one of the most misused sources of information tab

26. The Marketing Information System Guest Information Management - Acquisition • Point-of-Sale Information. • a POS system can collect information about individual restaurant patrons where credit cards are used tab

27. Marketing Intelligence Internal & External Sources • Marketing intelligence includes everyday data about developments that helps managers prepare and adjust marketing plans and short-run tactics. • It can be gathered by executives, front-desk staff, service staff, purchasing agents, and sales force. • Hotel owners and managers are essential parts of a marketing intelligence system. • managers should debrief contact personnel regularly • A hospitality company must encourage suppliers, convention and tourist bureaus, and travel agenciesto pass along important intelligence. tab

28. Marketing Intelligence External Sources • The three types of external marketing information & their sources are shown in Table 5–3 on page 123. • macromarket information; competitive information; new innovation and trends • It is worthwhile to encourage gathering of this data by treating vendors, salespeople, and potential employees in a friendly and receptive manner. • Members of management should be encouraged to join community and professional organizations. • where they are likely to obtain essential marketing information tab

29. Marketing Intelligence Sources of Competitive Information • Competitive intelligence is available from trade magazine articles, competitors’ reports, speeches, press releases, brochures, and advertisements. • managers should also visit competitors’ premises regularly • Using the Internet, marketers can search competitor names, events, or trends & see what turns up. • Companies can subscribe online databases and information search services. • Dialog, DataStar, LEXIS-NEXIS, Dow Jones News Retrieval, UMI ProQuest, and Dun & Bradstreet’s Online Access tab

30. Marketing Intelligence Sources of Competitive Information • Hospitality managers can subscribe to newsletters such as National Restaurant Association Smart Brief and hotelmarketing.com • Associations sometimes collect data from member companies, compile it, and make it available to members for a reasonable fee. • this data can be misleading because member companies may provide incorrect data or refuse to contribute statistics if they have a dominant market share tab

31. See this feature on page 124 of your textbook. tab

32. Figure 5-2 Marketing research process. Marketing Research Introduction • Casual marketing intelligence cannot answer some questions, and managers sometimes need to commission formal marketing research. • Marketing research identifies and defines marketing opportunities & problems, monitors and evaluates marketing actions & performance, and communicates the findings and implications to management. tab

33. Marketing Research 10 Common Activities • measurement of market potentials • market-share analysis • determination of market characteristics • sales analysis • studies of business trends • short-range forecasting • competitive product studies • long-range forecasting • marketing information systems studies • testing of existing products • The ten most common activities in which marketing researchers engage are... tab

34. Marketing Research Conducting Research • A company can conduct marketing research by employing its own researchers or hiring outside researchers. • Most large companies—more than 73%—have their own marketing research departments. • even companies with their own departments hire outside firms to do fieldwork and special tasks tab

35. Marketing Research Marriott • market segmentation and sizing • concept development and product testing • price-sensitivity assessment • advertising and promotions assessment • market tracking • customer satisfaction • Frank Camacho, former vice president of corporate marketing services for Marriott, listed Marriott’s research priorities as follows: tab

36. Marketing Research Defining the Problem and Research Objectives • Managers must work closely with researchers to define the problem & research objectives. • they must know enough about marketing researchto interpret the findings carefully • If they know little about marketing research, they may accept the wrong information, draw wrong conclusions, or request more data than they need. • marketing researchers can help the manager define the problem and use the findings correctly • Assuming the problem is well defined, the manager and researcher must set research objectives. tab

37. Marketing Research Defining the Problem and Research Objectives • exploratory research, to gather preliminary information that will help define the problem and suggest hypotheses • descriptive research, to describe size & composition of the market • causal research, to test hypotheses about cause-and-effect relationships • A marketing research project can have one of three types of objectives: tab

38. Marketing Research The Research Plan - Specific Information Needs • The second marketing research step is determining needed information & making a data collection plan. • research objectives must be translated into specific information needs • To meet a manager’s information needs, researchers can gather secondary data, primary data, or both. • primary data consist of information collected for the specific purpose at hand • secondary data consist of information already in existence somewhere, having been collected for another purpose tab

39. Marketing Research The Research Plan - Primary and Secondary Data • Researchers usually start by gathering secondary data, usually obtained more quickly and at a lower cost than primary data. • a good starting point for marketing research • When secondary sources can’t provide all the needed information, the company must collect primary data. tab

40. Table 5-4 Planning Primary Data Collection. Marketing Research The Research Plan - Primary and Secondary Data • Data collected casually can be useless or, even worse, misleading. • Designing a plan for primary data collection callsfor decisions about research approaches, contact methods, a sampling plan, and research instruments. tab

41. Marketing Research Research Approaches • this research can yield information people are normally unwilling or unable to provide • companies now use ethnographic research, observers who watch & interact with consumers • feelings, beliefs, and attitudes that motivate buying behavior cannot be observed. • long-run or infrequent behavior is also difficult to observe • Three basic research approaches are observations, surveys,and experiments. • Observational research is gathering of primary data by observing relevant people, actions, and situations. tab

42. Marketing Research Research Approaches • structured surveys use formal lists of questions askedof all respondents in the same way • unstructured surveys let the interviewer probe respondents and guide the interview according to their answers • the major advantage of survey research is its flexibility • sometimes people are can’t answer questions as they don’t remember or never thought about what they do & why • careful survey design can help minimize problems • Three basic research approaches are observations, surveys,and experiments. • Survey research, best suited to gathering descriptive information, can be structured or unstructured. tab

43. Marketing Research Research Approaches • the most scientifically valid research • experiments call for subjecting matched groups of subjects to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant • if the experiment is well designed & executed, managers can have confidence in the conclusions • Three basic research approaches are observations, surveys,and experiments. • Experimental Research is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. tab

44. Table 5-5 Strengths and Weaknesses of the Three Contact Methods. Marketing Research Contact Methods • Information can be collected by three methods. • mail questionnaires can collect large amounts of information at a low cost per respondent. • telephone interviewing allows quick data gathering • personal interviewing takes two forms: individual (intercept) and in-depth methods tab

45. Marketing Research Online Interviews • Online research is estimated to make up over 35% of all survey-based research. • Smart companies are using them to augment rather than replace more traditional methods. • a director of marketing states, “Online is not a solution in and of itself …but it does expand our toolkit.” • Internet surveys are quick and can be inexpensive. • response rate can be a problem if they are not properly designed and targeted • Simple technology for a consumer market is critical. • don’t expect respondents to wait for graphics to load tab

46. See this feature on page 131 of your textbook. tab

47. Marketing Research Focus Groups • Focus groups are usually conducted by inviting 6-10 people to gather with a trained moderator to talk about a product, service, or organization. • The moderator starts with broad questions before moving to more specific issues. • encouraging open and easy discussion to foster group dynamics that will bring out true feelings and thoughts • Focus group interviewing is becoming a major marketing research tool for gaining customer insight. • especially suited for use by managers of hotels and restaurants, who have easy access to their customers tab

48. Active Group has a feature called Client Lounge that allows members of the organization conducting the focus group. Managers can view the focus group live on the Internet and discuss the event just as if they were physically present at the event. Courtesy of Active Group. Used with permission. Marketing Research Focus Groups tab

49. Marketing Research In-Depth Interviews • In-depth surveys, another form of qualitative personal interviewing, can be used when it isdifficult to put together a focus group. • Another form of qualitative personal interviewing, individual interviews using open-ended questions. • they allow a researcher to probe & gain insight into consumer behavior • Qualitative research is useful to gain insight into definitions and concepts as well as insight into survey results. tab

50. Marketing Research Sampling Plan • who will be surveyed? • how many people should be surveyed? • how should the sample be chosen? • when will the survey be given? • Marketing researchers usually draw conclusions about large consumer groups by taking a sample. • a segment of the population selected to represent the population as a whole • Ideally, the sample should allow accurate estimates of the thoughts & behaviors of the larger population. • Designing the sample calls for four decisions. tab