Mcdonalds Marketing Intelligence System Marketing Essay

Mcdonalds Marketing Intelligence System Marketing Essay The driving forces behind the urgency to have quality marketing research and marketing information are hinged on the two factors. The continued decline in the unit cost of computer hardware and steady improvement in the flexibility and power of computer software, (Vitale, Ives, and Beath, 1989) and the quick pace in which environment changes, (Miles and Snow, 1987). The purpose of marketing research is to assist and improve marketing decision. Market research narrows the gap between producer and consumer, and increase the chance of successful decisions. In any field, the basis of decision making is having effective information available and using it. Processed, analysed and correctly used, market information can reduce risk, time and waste by providing the best basis for decision, (Tinniswood, 1986). Naturally, it seems, this leads to well defined marketing strategy. However, (Assad, 1990) posited marketing research must be conducted vigorously and systematically to fulfil its intended role, which is only vigorously when data collected are valid, reliable and representative. 2.0 The Quality of Marketing Research and Marketing Information What is Quality Marketing Research and Marketing Information? We will tackle this question by first collecting related framework, model and system and then discuss the issues of accuracy, reliability, amount of information required and data analysis complication that affect the quality of marketing research and marketing information. Mcdonalds Marketing Intelligence System Dr. Malcolm Mcdonalds concept of marketing intelligence system is depicted in fig. 1. As explained by Mcdonald, marketing research and marketing information are inseparable and hence synergistically entwined to effect a good marketing strategy. From the above, data from the market through marketing research are processed and analysed to form relevant marketing information which forms intelligence (knowledge) to make quality decision focuses on key determinants for example, the significance of market share or correct service levels for profitable growth. In marketing, these can be realised with a shrewd marketing mix (i.e. the 7 Ps). Hattons Information Priority Framework Marketing research is just one source of information available to the business planner. Also, the collection of new data can be very expensive. It is therefore imperative for the marketer to go through the process of identifying the priority for information need as in fig 2. The easy and hard can be defined by either time or cost. Weicks Theory of Marketing Research Limits On the same vein, (Weick, 1984) felt similar concern espoused a model with three criteria , (fig 3) to keep within the research limits i.e. generality, accuracy and simplicity. He provokes the thought of tradeoff among the three components. In reality, he stress that no all can be met at the same time but rather at most, any theory can meet two of these criteria. General accurate theories are complex, general simple theories are inaccurate, and simple accurate theories have no generality. The strategic implication of McDonald, Hatton and Weicks theory is that marketing researcher and the marketing manager have to work hand in hand to define problem correctly in the first place, prioritising information required and subtract, simplify, distil, (The Sunday Times, 18th May 1997) marketing information. This could improve the quality of information at optinium time and cost. All these certainly give us an indication of the complexity of the real world and management judgement is required. Lunns Database Marketing (DBM) Technology can increases the ease of data collection and provides new form of data analysis (Stone and Shaw, 1987). (Lunn, 1986)s thorough and ingenious DBM is a cut across functional boundaries system which can be a benchmarking tool to to information system designer. It helps in the linking of data collection to alternative marketing scenario which could lead to quality marketing strategies as depicted in fig 4. This system embraces organisational and cognitive process reliant on a solid IT foundation. 2.1 Accuracy of Marketing Research Most market research information does not have to totally accurate. For example, if a firm wants to know its market share, it will not matter whether the figure is 26 per cent or 27 per cent, but it will be important to discover whether it is 26 per cent or 50 per cent. Suppose a firm wants to know what portion of 10,000 person in a specific target group used their brand. They discover this information by asking everyone in the group. This is both expensive and time consuming Alternatively, they could take a proportion of the sample which should reflect the group. However, it is possible that the sample is not true reflection of the group and representative enough. The key to quality information is to have just enough information. Weicks theory come handy in this process. 2.3 Is there a need for more information? Elaborating on the above, it is easy to forget that market research is not usually needed for it own sake. In fact marketing research is not providing a direct recommendation about the correct decision to be taken. It usually provides indirect information about the environment, customers behaviour and attitude and so forth. In short, it will provide information which has to be combined with a mass of other already existed information before a final decision can be made. This indirectness can represent a potential problem. A question will arise is the present data not good enough? It is much more difficult to judge whether the information is really worth the cost and delayed involved, (Barron, and Targett, 1985). Although, the value of information can be calculated by comparing the profit available with and without the marketing research and its processed marketing information, for example, decision tree technique, it is unfortunately complicated and not reliable as the value will var y from situation to situation. One further problem is the calculations involve issues of probability and uncertainty which many people find difficult. An illustration of a survey on the likelihood of different sales level with three columns : sales, original probability estimate %, and revised probability estimate % as show in table 1 and could not find any change in it principle in making decision. For example for both estimates, the high portion of sales still fall in the region of  £40m  £50m. The revised probabilities make the decision process easier (is this quality enhancement ?), but they did not change the principle. Thus the important question is whether the revised odds would result in final decision. If not, the forecast is worthless. Hattons priority framework can provides a good guide to this consideration. 2.4 Data Analysis Accurate marketing research data needs not necessarily and automatically provides quality marketing information. Data have to be analysed. Most market researchers have learnt the art of data collection but there is certain room for improvement in the science of data analysis. (Drucker, 1992) also strongly advocates executives have become computer literate but data illiterate. As such, market reseachers should be urged to co-ordinate with the marketing manager and master the skill of interpreting data and re-look at the use of basic inferential procedures as an extra area to marketing decision making. It should use multivariate methods based on matching the technique to problem rather than the problem to the technique. The key issue here is not only to focus excessively on forecast accuracy but instead decision usefulness. For example building a consumer profile enables the firm to make quality and informed decisions. Thus, reducing the risk of making wrong decision on how to distribu te, promote and price its products. Lunns DBM model should be considered for overcoming some the above problems. Cost Issues Once data is collected and processed, the information must be distributed to the decision-makers. Its availability at the right time, right cost and its delivery in a user-friendly format will be critical to its usefulness and value. 3.0 Marketing Strategy and the Innovative use of Marketing Information (Bonoma, 1985) defines marketing strategy as the analysis of alternatives opportunities and risks to the firms, informed by environmental (e.g. competitive, social) and internal (e.g. production or people abilities) information, which leads management to choose a particular set of market, product, and customer goal. This administrative approaches carry the underlying assumptions that strategic marketing decisions are well understood and widely agreed upon within organisation (Skivimgton and Daft, 1991). At this junction we accept this unconditionally although many marketing experts discover inherent inadequacies of this nostrum, (Hamrick 1983, Mintzberg and McHugh 1985). This view holds that strategy drives structure, a strategic direction require the development of new market structure, effort and administrative mechanisms. Fig. 5 shows the corporate management spells out the mission and goals in which marketing strategy and plan are formulated after carefully evaluates the external and internal factors. Relatively, the quality of marketing strategy is definitely dependent of the marketing audit, in this case we can take as marketing research/marketing information sandwiched between the corporate mission and marketing strategy. Sharing the same view, (McDonald, 1995)s marketing planning process depicts below: According to him, marketing strategy is about the manipulation of 4 Ps Product, Price, Promotion and Place based on marketing theory (Structure, framework, models, etc.). These could include market research, market segmentation studies, response elasticities and the budgeting of resource allocation decision which may includes the distribution of people and money need to put marketing strategy into effect. (Lunn, 1986)s approach to database marketing (DBM) which allows market research data to be blended with the system database (derived from previous internal and external market research data) to enhance marketing information for predictive decision marketing by combining marketing managers intuitive skills. This would allows marketer to test the effect of difference marketing mixes on specific segments. In another words, positioning by creating an USP for target market defined by research. His marketing modelling is useful for the presentation of marketing research/marketing information defining the marketing strategy. One of the many such example is the success of General Motors innovative rebate programme which became an eye opener for company like Ford, Apple Computer, who follow similar program. Synthesising the concept of relationship marketing and the segmentation technique, General Motor groups customer by their purchasing level. Loyal, heavy and creditworthy users are being rewarded with free gifts, upgrades and allows accumulating rebates toward the purchase of new vehicles by tracking the researched database. The quality of this type of marketing information was confirmed with the result of 12 millions cards, (Berry, 1994) being issued in the United States. The strategic implicati on to this is the accuracy of GMs targeting which enables quality marketing strategy. Such are not possible without a quality marketing research, database system and the innovative use of interpreted information. 4.0 Power, politics and the dissemination of information There are many literatures elaborating power, politics and the dissemination of information which is centred to the quality of marketing strategy. However, what seems to be obscuring is its specific co-relation relative to marketing strategy. Let digress slightly to discuss these issues. Knowledge, derived from organised information, which in turn is interpreted from raw data, is power, (Francis Bacon, 1957). Building on this ground, (Emerson, 1962) espoused the beholder of knowledge is a powerful figure within the organisation. Further, (Piercy, 1985) argued and introduced the information-structure-power theory of marketing emphasising on the political aspect of information in the marketing environment. Such a view is compatible with (Bonoma, 1985)s claim that it is naÃÆ' ¯ve to belief that data, especially numerical data, are science-associated and therefore somehow purer than intuitions or qualitative statements. Adding he reiterated that there is nothing so politicised in management as the collection and use of quantitative information. Data or information in management, as in science is politicised, tortured, bent, and occasionally broken in the service of vested interests in the marketing organisation. For example, in my corporation, sales expense reports are put on hold by manager until call report are turned in at the end of every month. This is to use as a punitive mean to red-line salesmans moonlighting rather than use as a base for customer research or marketing intelligence gathering. There are also numerous cases, where divisional managers are under pressure to increase market share. These sales executives came up with a manipulated pricing plan of 30% increment in vo lume, supported by dressed marketing research information. What went conveniently unreported, however, was that the current fleet of equipment would be obsolete in a few month time; much earlier, because of the forced increased in capacity. One can imagine the future repercussion of having to fund the purchase of the new equipment which the top management is unaware of. In consistent with this, (Piercy, 1984) co-relates power and politics of marketing with marketing information seamlessly. He focuses on the implications for the management of marketing in organisations, where a political analysis suggests that the management of marketing should concentrate not only on techniques of marketing research or of rational, scientific decision making but also on structure and process, i.e on power and political systems, to influence and control outcomes. His works provide the empirical support that structures and decision making processes are frequently political in nature. Piercy builds on (Velasques and Cavanagh, 1983)s defense that politics in organisations are in someway bad in themselves, but in reality power goes to the politically able rather than others with more legitimate claims. This is due to organisational situation of high ambiguity relative to structure and process, as in the case of information gathering in strategic problem formulation, (L yles and Mitroff, 1984). For example, in the allocation of fund to even within the marketing department, top management may favours the lower level executives request for his endeavour due to him being a politically competent manager as against the request of the most effective superior with better marketing information supporting him. This is in reality possible as the strategic decision are often unstructured and broad in nature, (Hayes, 1984). With the awareness of the above, quality of marketing strategy is not narrow down to only quality information. What seems to define quality marketing strategy is the interconnectedness of power, politics which are structure and process related. 5.0 Quality Marketing Strategy and Corporate Strategy We have discussed marketing strategy with some reservations in section 3 on this paper. To further demonstrate the true meaning of quality marketing strategy we continue to elaborate more. (Levitt, 1960)s Marketing Myopia adds favour to it by arguing that customers buy solution to their needs, not products. A domestic example is our home grown Creativity Technology, a PC sound card maker is introducing new kit by solving customers upgrading problem by providing the next generation DVD solution, (Strait Times, 30th July 1997). Having all said and done about marketing strategy, then precisely what is quality marketing strategy? Robet Pirsigs Zen in his art of Motorcycle Maintenance provokes some unusual thinking. He do not use the term productivity in connection with marketing activities but prefers to use phrase like peace of mind and feeling good about the marketing actions undertaken. Pirsig would say that we move from being uncomfortably involved with what is going on to more comfort with events, people, and things by our acts. As we do this, we move toward Quality. In this view Quality is bred of caring, not just technical skill, and is the brother of involvement. Another school of thought came from (Gilbert,1978), who related quality with worthy performance, which he suggested, is associated with doing the most difficult thing best with the least effort. This, he said is measurable against the behaviour aspect which is difficult to qualify. (Bonoma, 1985) merges both concepts by using coping behaviour skill as a measure of output that meets Gilberts performance yardstick. Marketing effectiveness is then about managements coping quality and can be defined by referring to a comparison of achieved output with intended goals. We call this comparison satisfaction which is similar to Pirsig peace of mind and feel good about. Putting all these together, quality marketing strategy is about the triple interface of company, customer and trade. It is only achieved with satisfaction created with the least effort using coping skill to realise the intended goal. This leads us to (Skinner, 1969)s missing link which he suggests a kind of top-down approach, starting with the company and its competitive strategy, and its goal is to define tactical task (i.e marketing strategy) in support of the corporate strategy. In short, if marketing strategy defers from corporate strategy, it is not quality marketing strategy as it is not the intended goal of the corporation. We have discussed intensely that quality marketing strategy is not only about quality information as the latter is one of the many components that assist marketing decision-maker to be more effective. 6.0 Shortcomings of Marketing Research/Marketing Information On balance, not all marketing research/marketing information can help to define quality marketing strategy. These can be illustrated in the real-life examples that follows: In the early 1990s, American Express, decided to launch their resolving credit card, the Optima to compete with Visa and Master Card. In theory, the modelling of consumer profiles and credit histories from marketing research and datebase confirmed opportunities for new product line. It was a total failure with bad debts and American Express had to abandon this endeavour after 2 years. A postmortem analysis reveals (a case of reliable information yet inappropriate) although from same individuals, the various data was taken from the American Express card for corporate business travel expenses which are reclaimed or paid directly; whereas the Optima Card was used for personal expenses. Timely information is important in the defining of marketing strategy. (Stalk and Hout, 1990), in their espoused time to market strategy argues the reduction of time to gain significant competitive advantage. Collecting data requires time and too much of it may be resulted in redundancy and misinformation system, (Ackoff, 1967). This may also renders the firm to miss their market opportunity. A case in point is Levers introduction of Signal mouthwash. Signal was in the test markets for so long that it gave Scope a chance to emphasis the same benefit in a national advertising campaign and launch the new product successfully ahead of the originator. The starting point of the marketing research is to define the problem that researcher can help to solve. If the problem is defined wrongly, the result of the marketing research not only define sub-optimal marketing strategy but also lose the firms brand image which may takes years to recover or not at all. A classic example is that of Coca-Cola who focuses the wrong problem as the sweetness of Pepsi-Cola instead of the quantity. The ideal research should instead focus on the positioning of size rather than taste. This case illustrates how experienced marketer can overlook vital consumer behaviour and that the perception is stronger than reality Original Coke is the real thing. How can anything taste better than the real thing? In cases where requirement is to be entrepreneurial in nature, innovation, gut feeling and decisiveness (Drucker, 1986) may also has competitive advantage, without the need for marketing research. An example of the victory which does not belong to the side that does a better job of marketing research is American Motors. The company ignores customer needs develops the Jeep, a product borrowed from the military. No focus group is likely to have conjunct up that idea, nor is the identifying of customer need is going to have any co-relation with it, but it is a winner. 7.0 Conclusion A quality marketing research/marketing information involves the accuracy, relevancy, reliability, its time delaying elements and its cost attached with it. As traditional costing is about economic cost, a new look into the future (Farlan, 1984), involves the concern of forward looking marketing opportunity rather the present. This assignment has demonstrated other means of innovative concept such as strategic management cost encompassing the value chain analysis, cost driver analysis and competitive analysis as a better alternative evaluation of marketing research/marketing information investment. Concerns of quality marketing information is in the area of data analysis, data interpretation and decision usefulness to provide solution rather than the research and information per see. There are also two missing links from the input of marketing research to the output of quality marketing strategy. On one hand, the problem of information dissemination involving the power structure organisation. On the other, the alignment and co-ordination of corporate strategy and operations strategy (Skinner, 1969), in which marketing strategy and information system strategy becomes more blurry, (Earl, 1989, Ward, 1996). To a certain extent, technology can improve data analysis and assist the clumsiness of co-ordinating organisation, inter-organisation and external differences, but it is the innovative use of information (Keen, 1993) that put forward the marketing edge. Examples and solution to the opportunities and concerns are discussed and illustrated. In sum, strategically, in the context of marketing management, the quality of market research/marketing information related to marketing strategy narrowed to the outcome of new opportunities derived from fulfilling the perceived unfilled needs or problems of the customer. This should be done by offering creative product based on the researched information to provide benefit and solution to the end-user, the so-called marketing myopia by (Levitt, 1960) in their relationship with the market place and the relative worthiness involves the cost- and profit myopia, (Piercy, N., 1982) of the investment in their goal setting and strategic decision marking; to achieve what is required, they must also be wary of the missing links and political myopia; in implementing marketing strategies with regard to alignments and co-ordinations of the corporate strategy and the timely disseminating of information.