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Theoretical and operational marketing information systems.

Theoretical and Operational Marketing Information Systems

Introduction

A marketing Information System (MKIS) has traditionally been proposed to provide marketing managers a thorough process of intelligence gathering. The purpose of this article is to examine the scope of MKISs and to compare them to those observed in implemented intelligence systems. From this examination, it will be possible to determine the extent and acceptance of investigative tools currently utilized within Marketing Information Systems. If operational MKISs do not meet the expectations of the theorists proposing such instruments, it is possible that these processes may not provide the necessary assistance in implementing marketing strategies or that the instruments are operationally inadequate. The examination will subsequently provide the mechanism to assess whether existing Marketing Information Systems meet the criteria established within the marketing literature, and whether the components traditionally considered important in a MKISs are actually utilized.

Advances which provide the marketer opportunities to accumulate and communicate intra-organizational information have generally been ignored by the marketing literature.[1] The importance of this type of information is evidenced by marketing managers who must continually assess marketplace opportunities and dangers which exist in competitive environments. To accomplish this objective, the Marketing Information System should systematically and expeditiously provide sophisticated informational support for managerial decisions.[11] Despite the apparent importance of timely market information, a lack of information concerning organizations' capabilities and operational procedures to utilize an intelligence system continues to exist.

A hypothesis originated by Gorry and Morton suggested that there generally is a lack of progress in exploring the usage of Marketing Information Systems.[2] This conclusion remains true even today. For example, the potential attributes of Marketing Information Systems currently being utilized have not been examined. While the outcome of this type of research would clearly have an impact on researchers and marketing practitioners, a review of the current literature suggests that no progress in this area has been accomplished since the Gorry and Morton article.

What Is a Marketing Information

System?

A Marketing Information System should provide an operational basis of information for the marketer through an on-going marketplace intelligence process. The intelligence in the system signifies the degree to which the manager is able to rapidly obtain new market information to solve problems inherent to marketing organizations.[9] The flow of information to the marketing manager takes place through the Marketing Information System. Because a successful MKIS requires a continual flow of information, it is necessary that the process be dynamic in the method in which it provides data about the operating environment. This is a crucial requirement since it is the environment which is most likely to be a constraint to marketers.[12] As the operational environment changes, the reporting mechanism should be able to retain the ability to receive the information under a variety of marketplace conditions, allowing the manager to continually develop ongoing strategic actions and responses.

Since this information remains continuous, the manager is able to analyze, evaluate, sort, and distribute important, accurate, and timely data required to make decisions. Due to the interactive nature of this information, the manager is capable of better planning, control, and implementation of marketing efforts.[4] While a Marketing Information System may include a vast array of elements (e.g., internal and external), the focus of this research is to examine external environmental factors which remains outside of the immediate confines of the organization.

Figure 1 on page 27 illustrates the proposed relationship of the manager (firm), external environment, and Marketing Information System. The MKIS interacts constantly with the manager and the external environment. While the manager can interact directly with the environment (dotted line), the information is likely to be distorted since there is no formal intervention process by which data are collected and analyzed. An informal approach increases the probability of important information not being effectively utilized.

Informational Mechanisms Within

a MKIS

Montgomery and Weinberg have provided to date the most extensive survey concerning the collection of information by an intelligence system.[10] Data were classified overall as defensive (to avoid surprises in the marketplace), passive (to provide information which can be utilized for an evaluation of the progress made toward objectives), and offensive (to isolate potential opportunities). To effectively collect these types of information, Montgomery and Weinberg proposed that the areas of focus in an intelligence system should specifically gather competitive, technological, customer, economic, political and regulatory, and social environmental information.

A review of current research reinforces the conclusion that these functional areas should be included in a Marketing Information System, and therefore merit attention in this research.[3,6,8] These areas are identified by the major headings listed in Table 1 on page 28.

Table : Table 1. Elements Used in the Study of Marketing Information Systems

Competitive: Major Competitors and Strategies They
 Utilize
 * Strategic Programs on Competitors
 * Competitors' Prices
 * Competitors' Geographic Coverage


Technological: Impact of Changing Technology on
 Existing and New Products
 * Technological Advances


Customer: Traits of Buyers
 * Existing Customers
 * Past Customers


Economic: National (e.g., GNP) and Regional
 Issues (e.g., drought) that Affect Buyer
 and Seller Conditions
 * U.S. Economic Conditions


Political and Intervention of Regulatory (Legal) and

Regulatory: Political Constraints
 * U.S. Political Climate
 * U.S. Regulatory Environment


Social: Values in our Society as Well as Other
 Impending Societal Issues
 * U.S. Social Climate
 * Public Attitude Toward Your Firm


However, the proposed general usage of these focal areas within a MKIS still leaves a number of points unanswered. For example, these areas were originally recommended by executives and continue to be supported by executives and academicians.[10] Yet, responses of executives do not necessarily reflect the beliefs held by marketing managers who are the operational users of the information. Furthermore, because the magnitude of the Montgomery and Weinberg study was quite small (only 30 companies were represented), it is necessary to question the representativeness of the original list.

Finally, an effective support system allows the manager to operate within a changing environment. For example, information gathered during a metamorphic growth stage of a firm should permit the manager to be in a position to take a specific action with respect to the knowledge uncovered.[7] However, the importance that each manager puts upon specific information may vary by the manager's position as well as the environment. Since the purpose of this study is to examine the operational worth of existing Marketing Information Systems from the marketing managers' perspective, two questions arise. First, which elements identified in Table 1 are believed by marketing managers to be important in a MKIS? Second, which of these elements are actually employed by firms? It is a logical perspective from which to view such a study, since the role of the marketing manager is to be responsible "to regulate the level, timing, and character of demand for the organization's products in terms of its objectives."[4]

Empirical Investigation

There are two potentially refutable hypotheses implied by the theoretical structure presented previously. The first hypothesis examines the elements defined in the marketing literature to be important elements in a MKIS. The second hypothesis addresses those elements of a Marketing Information System which are actually used by marketing managers.

* Hypothesis 1. The elements of competition,

technology, customers, economic environments,

political and regulatory environment, and the

social environment are all important or very

important factors in a MKIS. * Hypothesis 2. The elements of competition,

technology, customers, economic environments,

political and regulatory environment, and the

social environment are factors highly or extensively

used in a MKIS.

The Data

In order to empirically test these hypotheses, a questionnaire was developed and sent to the marketing managers of 281 randomly selected firms that were judged to be sufficiently large (firms that had over 20 million dollars in annual sales) to utilize some form of a Marketing Information System. Each questionnaire asked the respondent to rate on a five-point scale the degree to which the marketing manager believed each scale item from Table 1 should exist in an effective Marketing Information System. The actual scale and weights for the "Importance Scale" were: 1 = Very Unimportant; 2 = Unimportant; 3 = Neutral; 4 = Important; and 5 = Very Important.

The individuals were also asked to respond to the degree that their firms utilized these same elements in their Marketing Information Systems. This "Utilization Scale" assigned weights were: 1 = No Utilization; 2 = Low Utilization; 3 = Neutral; 4 = High Utilization; and 5 = Extensive Utilization. The questionnaire was sent directly to the marketing managers because these individuals traditionally have both an important operational need for a Marketing Information System, as well as knowledge about this system. The sales of these firms ranged from just under $25 million annually to over $350 million annually. The returned, usable questionnaires numbered 126, providing a response rate of 45 percent.

Hypothesis 1. In order to examine those elements which the marketing managers believed important in a Marketing Information System, the mean responses to the appropriate questions on the questionnaire were computed and reported in the column labeled "Importance Mean" in Table 2 on page 28. [Tabular Data Omitted]

The element perceived as most important in a Marketing Information System was information about competitors' prices. Marketing managers rated knowledge of competitors' prices at a mean of 4.46. This mean indicates that the managers believed information concerning competitors' prices to be an important element in a Marketing Information System. The element perceived to be the least important in a Marketing Information System was the social climate of the U.S. Marketing managers rated knowledge of the U.S. social climate at a mean of 3.26. Such a mean value indicates that the marketing managers believed that information concerning the U.S. social climate was a neutral element of a Marketing Information System.

Examining the remaining elements, none had a mean indicating it was perceived as a very important element in a Marketing Information System. Similarly, no element was perceived as unimportant or very unimportant. The elements of strategic programs on competitors, technological advances, existing customers, U.S. economic conditions, U.S. regulatory environment, and the public's attitude with respect to their firm all had high mean ratings. Such values indicate that these elements were perceived as important elements in a Marketing Information System. The elements of competitor's geographic coverage, past customers, and the U.S. political climate all had means indicating that these elements were perceived by marketing managers to be neutral elements of a Marketing Information System.

Hypothesis 2. In order to examine those elements which are actually employed in the Marketing Information Systems of the firms studied, the mean responses by the marketing managers to the appropriate questions on the questionnaire were computed and reported in the column labelled "Utilization Mean" in Table 2.

The most utilized elements in these Marketing Information Systems were existing customers and technological advances. The firms surveyed utilized information about these elements to a degree that marketing managers rated the elements with a mean of 4.18. The element rated as the least utilized in Marketing Information Systems was the social climate of the U.S. Marketing managers rated the use of the U.S. social climate at a mean value of 2.88.

Examining the remaining elements, none received a mean indicating it was extensively utilized in these Marketing Information Systems. Similarly, no element was rated as not being utilized or as having low utilization. The elements of strategic programs on competitors, competitors' prices, U.S. regulatory environment, and the public's attitude with respect to their firm all had means indicating that these were highly utilized elements in a Marketing Information System. The elements of competitors' geographic coverage, past customers, U.S. economic conditions, and the U.S. political climate all had means indicating that these elements were utilized by marketing managers as neutral elements of their Marketing Information System.

Comparison

Hypotheses 1 and 2 invite a comparison between those elements which were perceived by marketing managers as important and the degree to which these elements were actually utilized in their Marketing Information System. The rationale for this comparison is that those elements believed important in a Marketing Information System should be employed in such a system. It is expected that each element will not differ significantly between its perceived importance in a Marketing Information System and its actual use. This expectation does appear to have some empirical validity. Correlation coefficients between perceived importance and utilization were computed for each of the 11 scale items. As expected, all 11 correlation coefficients were positive, and their values ranged from .50 to .73. Specifically, these values were: strategic programs on competitors, .57; competitors' prices, .59; competitors' geographic coverage, .67; technological advances, .70; existing customers, .64; past customers, .73; U.S. economic conditions, .50; U.S. political climate, .59; U.S. regulatory climate, .73; U.S. social climate, .59; and public attitude toward your firm, .72.

Comparing the "Importance Mean" and "Utilization Mean" columns from Table 2 yields several insights. First, the U.S. social climate was perceived to be the least important and was the least utilized element of all those studied. Second, no elements were perceived to be very important, unimportant, or very unimportant. Third, no elements were rated as having extensive utilization, low utilization, or no utilization. Further, the elements concerning strategic programs on competitors, competitors' prices, technological advances, existing customers, U.S. regulatory climate, and public attitude with respect to their firm were all perceived as important and highly utilized. The elements of competitors' geographic coverage, past customers, U.S. political environment, and U.S. social environment were all perceived and utilized as neutral.

Several differences between the perception and utilization of these elements are also evident from the comparison. The element of U.S. economic conditions was perceived as important to a Marketing Information System yet was utilized as a neutral element. Competitors' prices were perceived to be the most important element in a Marketing Information System while information about existing customers and technological advances were the most utilized. Furthermore, each element had a mean which was greater for its perceived importance than its degree of utilization.

In order to statistically test the difference in the ratings of utilization and perceived importance, each marketing manager's ratings of importance and utilization for each element were paired. In each pair, a difference was computed by subtracting the utilization rating from the perceived importance rating. Then, for each element, a t-test was performed to determine if this correlated difference was statistically different from zero. Thus, the tests were designed to capture any meaningful difference in perceived importance and utilization for each element. The mean difference and the t-test results are reported in the column labelled "Mean Difference" in Table 2.

Table : Table 2. Importance and Utilization of Elements in a Marketing

Table : Information System
 Importance Utilization
 Mean Mean Mean
 (n=126) (n=126) Difference


Competitive * Strategic Programs on
Competitors 4.20 3.75 .48*
* Competitors' Prices 4.46 4.14 .32*


* Competitors'Geographic

Coverage 3.44 3.18 .26*

Technological * Technological Advances 4.38 4.18 .20*

Customer
* Existing Customers 4.43 4.18 .25*
* Past Customers 3.44 3.11 .33*


Economic * U.S. Economic

Conditions 3.75 3.38 .37*

Political and Regulatory * U.S. Political Climate 3.49 3.08

.41** * U.S Regulatory Environment Social * U.S. Social Climate

3.26 2.88 .38* * Public Attutude Toward

Your Firm 4.31 4.01 .30* (*)= significant past the 1 percent level (2 tailed test).

From Table 2, all the t-tests are statistically significant at past the one percent level of significance. The positive means indicate that, on average, marketing managers' perceived importance of each element was greater that its degree of utilization. Thus, from this study it is hypothesized that marketing managers believe that Marketing Information Systems are under-utilized.

Conclusion

There exists a statistically significant difference between those elements of a Marketing Information System which are perceived by marketing managers to be important and the degree to which these elements are utilized. This finding leads to questions for future research. In greater detail, what causes these differences between perceived importance and utilization? Further, since Marketing Information Systems have been found to be useful to marketers, why would managers and firms not fully utilize such a system?

References

[1.] Charnes, A., W.W. Cooper, D.G. Learner and F.Y. Phillips. "Management Science and Marketing Management." Journal of Marketing, Vol. 49, Spring 1985, pp 93-105.

[2.] Gorry, G. Anthony and Michael S. Scott Morton. "A Framework for Management Information Systems." Sloan Management Review, Vol. 13, Fall 1971, pp 55-70.

[3.] Grabowski, Daniel P. "Building An Effective Competitive Intelligence System." The Journal of Business and Industrial Marketing, Vol. 2, Winter 1987, pp. 39-43.

[4.] Kotler, Philip. Marketing Management. Englewood Cliffs: Prentice-Hall, Inc., 1984.

[5.] ______________. "The Major Tasks of Marketing Management." Journal of Marketing, Vol. 37, October 1973, pp. 42-49.

[6.] Laczniak, Gene R. and Robert R. Lusch. "Environment and Strategy in 1995: A Survey of High-Level Executives." The Journal of Business and Industrial Marketing, Vol. 2, Winter 1987, pp. 5-23.

[7.] Little, John D. "Decision Support Systems for Marketing Managers." Journal of Marketing, Vol. 43, Summer 1979, pp. 9-26.

[8.] Michman, Ronald D. "Linking Futuristic with Marketing Planning, Forecasting, and Strategy." The Journal of Business and Industrial Marketing, Vol. 2, Spring 1987, pp. 61-67.

[9.] Miner, John B. The Challenge of Managing. Philadelphia: B. Saunders Company, 1975.

[10.] Montgomery, David B. and Charles B. Weinberg. "Toward Strategic Intelligence Systems." Journal of Marketing, Vol. 43, Fall 1979, pp. 41-52.

[11.] Park, C. Whan and Gerald Zaltman. Marketing Management. Chicago: The Dryden Press, 1987.

[12.] Zeithaml, Carl P. and Valarie A. Zeithaml. "Environmental Management: Revising the Marketing Perspective." Journal of Marketing, Vol. 48, Spring 1984, pp. 46-53.

Robert W. Stone is Associate Professor of Management at Georgia Southern College in Statesboro, Georgia. David J. Good is Associate Professor of Marketing at Central Missouri State University in Warrensburg, Missouri.

PHOTO : Figure 1. Interactional Relationships of MKIS
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Author:Stone, Robert W.; Good, David J.
Publication:Review of Business
Date:Dec 22, 1989
Words:2983
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