Multimedia Marketing/Marketing.iso/market/chapter4.3p

Text File | 1996-08-22 | 14KB | 306 lines

SECTION 4.3  Developing a MIS

INSTRUCTIONS Think about how you would set up a MIS in a company. Then go into
this section for insights on how this might be accomplished.

EXAMPLE

A producer of hard liquor has installed a very modern MIS that
enables key managers to retrieve figures on current and past
sales, along with inventory levels for all brands and package
sizes for each of 400 distributors. Computer terminals allow the
information to be retrieved at a moment's notice.

Before installing the system, MIS personnel asked managers what
information they needed, in order to carry out their responsibilities
effectively. The managers replied that they critically needed figures
on sales and inventory, broken down at the distributor level. This
would allow them to adjust their strategies in accordance with
developments in the market and by competitors. To date, this information
has been very useful and the managers are satisfied with the results.

DETAILS

The starting point of MIS development is determining what types of
information management needs. The primary criterion to use in this
regard is its usefulness for decision making. Usually, the goal of
collecting information for a MIS is to obtain it from existing
sources and integrate it in a central location so that it can be
readily reported and accessed by management as needed. Most companies
ask marketing managers what information they will need in this
central location, when they are forming the MIS.

As a point of clarification, data may be classified into two types:
primary and secondary. Primary data are originated for a particular
study as when a magazine collects statistics on sales generated by
a new sales brochure. Secondary data already exist and were collected
for some other purpose. An example is U.S. census data.

The specific information needs of managers vary from company to
company. There are two sources of information inputs--internal and
external.

The first arises from within the company and consists of such sources
as sales records, warranty cards, past research  , shipping records,
and other company accounting records. If the firm has not already set
up adequate records to help in decision making, they should be
established. It may be recommended, for example that sales data be
broken down by product class, customer type, or geographic area.

An MIS differs from an accounting system in that it also includes
the integration of information originating outside of the firm.
There are two major sources of such external secondary data:
government publications and private publications and reports. Federal,
state, and local government documents are especially useful sources
of relevant MIS data.

PROBLEM 1

A facial tissues manufacturer is in the process of setting up a MIS.
In deciding what information to acquire, the prime criterion is:

A. the accuracy of the information.
B. The timeliness of the information.
C. The cost of the information.
D. Usefulness in decision making.

WORKED

If a facial tissue manufacturer is in the process of setting up a
MIS, the prime consideration in deciding what information to include
is usefulness in decision making. If information fails this test,
it should not be collected.

The manufacturer is setting up the system specifically for one
purpose--to improve decision making. Information on sales of company
and competitors' products, share of market, advertising expenditures,
and consumer brand loyalty are all likely to be useful. It is this
kind of inputs that MIS personnel seek.

ANSWER  D

INSTRUCTIONS Think about how you would set up a MIS in a company. Then go into
this section for insights on how this might be accomplished.

EXAMPLE

A producer of hard liquor has installed a very modern MIS that
enables key managers to retrieve figures on current and past
sales, along with inventory levels for all brands and package
sizes for each of 400 distributors. Computer terminals allow the
information to be retrieved at a moment's notice.

Before installing the system, MIS personnel asked managers what
information they needed, in order to carry out their responsibilities
effectively. The managers replied that they critically needed figures
on sales and inventory, broken down at the distributor level. This
would allow them to adjust their strategies in accordance with
developments in the market and by competitors. To date, this information
has been very useful and the managers are satisfied with the results.

DETAILS

Integrating both internally and externally generated information
into one source represents a big step forward in providing management
with needed decision making information. An MIS is designed to collect
information from selected sources. One means of collection is through
environmental screening. This is continuous monitoring of the
environment through multiple sources, such as sales reports, trade
journals, and published governmental statistics. Another source
includes past marketing research projects the firm has initiated
from time to time to yield specific primary data.

Environmental screening can be a very useful function to the firm.
The environment is an important element to consider in devising and
in revising marketing strategy. Screeners assess what is happening
in the economic, technical, social, cultural, and competitive
environments. This information must be fed into the MIS data
processor in a timely fashion, so that it might be of the greatest
value to management.

Most seasoned managers agree that the environment is subject to more
rapid change today than it was in the past. And this trend seems to
be accelerating. This would make environmental screening an even
more important function in the future.


PROBLEM 2

The marketing manager of a fast foods chain has heard of the benefits
of environmental screening. This process:

A. Collects information from a few select sources.
B. Is implemented whenever marketing managers face a decision problem
   and need data.
C. Involves continuous monitering of the environment.
D. Is synonomous with marketing research.

WORKED

The marketing manager of a fast foods chain has heard of the benefits
of environmental screening. This process involves continuous monitering
of the environment. Screening is continuous--not intermittant like
marketing research. Often, particular personnel are assigned the
screening duties. They might read articles in the trade press,
collect information obtained from sales representatives, ask company
service personnel for complaints they have heard from customers,
and pursue many other potential sources of inputs from the
environment.

ANSWER  C
INSTRUCTIONS Think about how you would set up a MIS in a company. Then go into
this section for insights on how this might be accomplished.

EXAMPLE

A producer of hard liquor has installed a very modern MIS that
enables key managers to retrieve figures on current and past
sales, along with inventory levels for all brands and package
sizes for each of 400 distributors. Computer terminals allow the
information to be retrieved at a moment's notice.

Before installing the system, MIS personnel asked managers what
information they needed, in order to carry out their responsibilities
effectively. The managers replied that they critically needed figures
on sales and inventory, broken down at the distributor level. This
would allow them to adjust their strategies in accordance with
developments in the market and by competitors. To date, this information
has been very useful and the managers are satisfied with the results.

DETAILS

When developing an MIS data base, the firm should avoid aggregating
data (reducing detailed data to summary measures). Facts should be
stored in as much detail as possible. Aggregation lessens management's
ability to later search for causes and relationships. Detailed facts
are needed to answer such questions as "Have profits eroded because
sales have declined?" For which products? Which territories? Which
kinds of customers? What time of year? Which day of the week?"
Aggregation only serves to conceal underlying influences. And if the
data have been aggregated for purposes of current decision making,
this may make them unusable for future planning.

Soaring computer technology has greatly advanced the development
of the MIS. Advanced generation mainframes, sophisticated PC's,
desktop terminals, and user-friendly software have enabled companies
to maintain, analyze, and report more information  than they could
even dream about in the past. And the proliferation of this technology
will spur future MIS development.

Small companies should consider using an MIS, especially since PC's
can now do work once reserved to mainframes. Smaller companies
normally must be more selective about the kinds and volume of
information included. Still they are capable of doing what only the
larger companies with larger systems did only a few years ago.

PROBLEM 3

If a hard-candy manufacturer uses a MIS with aggregated data, a
problem may develop because:

A. Such data are very difficult for management to analyze.
B. Such data lessen management's ability to later search for causes
   and relationships.
C. Such data cost more to store than disaggregated data.
D. Such data require more computer memory than disaggregated data.

WORKED

If a hard-candy manufacturer employs a MIS with agreggated data,
management may experience difficulty in later searching for causes
and relationships. It is very possible that company management will,
at some time in the future, think of new ways to combine and compare
the data. If it has been agreggated, however, this may be impossible
because the new variables to be studied may differ from those used
when the data was agreggated. This lack of flexibility signals the
need for management to keep the data in its raw form.

ANSWER  B

INSTRUCTIONS Think about how you would set up a MIS in a company. Then go into
this section for insights on how this might be accomplished.

EXAMPLE

A producer of hard liquor has installed a very modern MIS that
enables key managers to retrieve figures on current and past
sales, along with inventory levels for all brands and package
sizes for each of 400 distributors. Computer terminals allow the
information to be retrieved at a moment's notice.

Before installing the system, MIS personnel asked managers what
information they needed, in order to carry out their responsibilities
effectively. The managers replied that they critically needed figures
on sales and inventory, broken down at the distributor level. This
would allow them to adjust their strategies in accordance with
developments in the market and by competitors. To date, this information
has been very useful and the managers are satisfied with the results.

DETAILS

The final step in developing a MIS consists of determining the
ways to report information to key decision makers. There are
three types of information a MIS reports to managers: control
information, planning information, and information needed for
marketing research.

Control information permits continuous monitoring of marketing
activities. It allows managers to spot trends, symptoms of
problems, and even market opportunities before it becomes too
late to take needed action.

For instance, a supplier of many parts to the auto industry uses
a system where management can use desktop computer terminals to
gain access to many important pieces of information, such as sales
of any part, current inventory levels, orders to suppliers, current
sales forecasts for any part, and other similar information. The
system enables management to anticipate potential problems before
they arise and take timely corrective action.

Planning information is useful for the effective development of
marketing strategy. The information includes characteristics of
target markets, market positions of the company's as well as
competitor products, emerging environmental trends, and other inputs
useful in sound strategy formulation.

An MIS also provides information to serve as a springboard of
knowledge for marketing researchers. This is especially important
during the initial phases of the research process.

The specific ways a MIS reports information to management varies
from company to company, depending on needs and the system's
capabilities. Most systems include some combination of both
regularly printed reports and various means of handling special
information requests.

PROBLEM 4

A product manager for a division of a company that produces
mouthwash uses information for control purposes. Which of
the following would fall into that category?

A. Characteristics of target consumers.
B. Sales representatives expenses.
C. Advertising objectives and goals.
D. Pricing objectives.

WORKED

Companies use information on sales representatives expenses for
control. A division of a company that produces mouthwash would
want to moniter the expenses of sales representatives to make
sure that they are in control. If the expenses are too great,
steps must be made to curtail them, if economically possible.
If the expenses are too small, this may indicate that sales
representatives are not calling on enough customers or entertaining
clients enough. Either way, management can take corrective action
before the problem gets out of proportion.

ANSWER  B