Modern marketing is a much more exact science than it was. In the past, marketing was essentially an art – depending almost entirely on the intuition and judgment of the entrepreneur who was an all-around expert in marketing, production, and finance.
Of course, the market environment was much less complex. The number of competitors and customers was smaller, the economy was not subject to as many dynamic forces, societal and cultural patterns evolved more slowly, and technological and political change was not as sudden. Consequently, marketing executives had a more stable environment within which to operate.
In the late nineteenth century, however, conditions started to change. Decision making became more complex, and choices had to be made more quickly. This situation continued to accelerate throughout the early part of the twentieth century.
The 1960s and 1970s were times in which the market was almost continually in a state of flux. Periods of prosperity, inflation, recession, and shortage evolved with surprising speed. Competitors, technological change, and new social and cultural modes came and went quickly too.
Although a feel for the market and executive judgment will always play a part in the decision-making process, its role had to decline as the issues became more complex. Informed management began to replace guesswork, and cold hard calculations pushed pure intuition aside.
Modern marketing management has become increasingly sophisticated. Marketing executives now demand only pertinent facts. Furthermore, they want accurate information or at least data whose probable accuracy can be determined.
Consequently, collecting and using market information is an increasingly vital aspect of the total marketing function.
Informational Needs for Marketing Decisions
Some people believe that actually collecting pertinent and accurate marketing data is not that hard. The difficult task is determining what information is really needed. This has, indeed, been a problem in marketing research.
All too often, an information gap exists between marketing researchers and decision-makers. Researchers talk in numbers, while executives speak in terms of abstract concepts.
Perhaps an even more pressing problem, however, is defining the limits on the needed information (see the table below). Determining the availability of data is also necessary.
- What types of decisions are you regularly called upon to make?
- What types of information do you need to make the decision?
- What types of information do you regularly get?
- What types of special studies do you periodically request?
- What types of information would you like to get but are not currently receiving?
- What information would you like to receive daily? Weekly? Monthly? Yearly?
- What magazines and trade journals would you like to receive regularly?
- What types of data analysis programs would you like to receive?
- What are four improvements you would like to see made in the present marketing information system?
What data can be collected, and from which sources?
Collecting data and transforming it into information is frequently a time-consuming and expensive process. Yet, there are a variety of data sources that can be utilized to make research more efficient.
At the very minimum, marketing decisions are made in product, distribution, promotion, and price planning. For each of the four elements of the marketing mix, there are literally numerous questions that must be answered.
Some are relatively simple, while others are exceedingly complex. Marketing executives must be attuned to the social, cultural, economic, and competitive environments to decide on marketing mix issues. Marketing decision making should be based on solid facts and rational thought processes.
Sources of Marketing Information
Within most decision-making processes, a variety of information is utilized. In a very broad sense, two types of information sources exist those generated within the firm and those in the market environment.
The following figure shows the sources of information to the decision-makers of a firm.
Certainly, one of the most significant sources of information for marketing decisions is within the firm itself. Internally prepared economic and sales forecasts, past sales records and estimates of market shares, and assorted cost schedules typically are useful pieces of information.
The second broad type of information source is the data generated outside the firm.
Private firms and public institutions collect and process data useful to marketing executives in their decision-making processes. Although the danger in using external sources is greater than in using company records, it often is necessary.