Back Forum Reply New

Information Systems for Marketing Decisions

Since the advent of personal computers, the world has experienced an information
explosion, and all industries have made substantial advances in information
collection, analysis, storage, and retrieval. The hospitality industry was
very much a part of this trend. As the external environment becomes more
intricate and more competitive, informational needs become more complex.
Organizations that employ a systematic approach to collecting, analyzing, storing,
retrieving, and using information effectively and efficiently are likely to
be the most successful in the future. Without the proper types of information
available on a timely basis, management is more likely to make decisions that
will adversely affect the performance of the organization.
A simple example will illustrate this point. Suppose that the management
of a small restaurant chain must make a decision concerning the allocation of
the advertising budget among the available media for the upcoming quarter.
The advertising objectives of this restaurant are to increase the rate of repeat
patronage by 10 percent by reinforcing the chain’s high level of perceived value
among current customers, and to increase the number of customers who are
patronizing one of the chain’s restaurants for the first time by 10 percent. To
make an effective decision about media allocation, the management of this
chain has specific informational needs. Management needs access to the following
types of information:
• The characteristics of the current clientele
• The characteristics of the target market segments most likely to patronize
the chain’s restaurants for the first time
• The media habits of both of these groups
• The profile of the consumers of all available media (e.g., television, radio,
print) and the individual media vehicles (e.g., individual radio stations)
Without all of this information, the management of this restaurant chain
will increase the uncertainty surrounding the decision. The results of a lessinformed
decision could adversely affect the advertising effectiveness of the
organization and directly affect its financial performance.
All too often, management is forced to make critical decisions without
the necessary marketing information. On many occasions, managers must
work with information that is not complete, or information that is not in the
desired form. The new versions of hotel reservation systems and restaurant
point-of-sale systems are capable of obtaining more forms of data that can
be used in making managerial decisions. Revenue-management and yieldmanagement
software is available to help organize data for pricing decisions,
and statistical programs are available for analyzing data and making
forecasts.
Share |
What is  Marketing Information System
A marketing information system (MIS) is the structure of people, equipment,
and procedures used to gather, analyze, and distribute information needed by an
organization. These are the data to be used as a basis for marketing decisions.
Marketing information system is a broader and more encompassing term than market
research and a variation of the term management information system. Market
research indicates that information is collected for a specific reason or project;
the major objective is a one-time use. For example, a potential restaurant owner
may undertake a feasibility study and use market research to determine whether
to build a new restaurant. Such an information-gathering study is designed to
answer a very specific question: “Should we open a restaurant in this area?”
A marketing information system, on the other hand, is part of an ongoing
data-gathering process involving initial data collection as well as routine and systematic
data collection procedures. For example, a hotel manager may choose to
collect data by means of a zip code analysis of guest registration information to
determine the geographic profile of the guests of a hotel. This systematic and routine
information gathering is not intended to address one specific question but is
instead part of an overall system designed to monitor the degree of marketing
success that the operation is able to achieve.
A well-designed marketing information system satisfies four basic
criteria:
• It must include a structured organization or established system of people
and information-gathering procedures.
• The system should be designed to generate a continuous flow of information
to provide accurate and current marketing information for
management.
• Information should be gathered from inside and outside the organization.
External information-gathering methods include consumer surveys while
internal information-gathering methods involve employee meetings, guest
comment cards, analysis of point-of-sale data, all guest registration information,
and in-house guest surveys.
• Information should be compiled so that management can use it as a basis
for marketing decisions.
It would be extremely difficult and quite hazardous for the management
of a hospitality organization to make decisions without accurate and up-todate
marketing information. Professional management demands that decisions
be based on sound information. Managers can reduce the uncertainty
surrounding marketing decisions when valuable information is available.
Marriott International serves as a good example. For many years this corporation
has relied upon a widely based decision-making process. The resulting
decisions have consistently been very good and have allowed Marriott to establish
and maintain a leadership position in the hospitality industry. This is
not to say that a very good marketing information system alone will allow an
organization to achieve financial success, but it will be of tremendous benefit
to management.
Components of a Marketing Information System
A key component of an effective marketing information system is having accurate
information about the environment. The foundation for this data collection
is environmental scanning, which refers to a process whereby external
factors that could affect an organization are continually evaluated. Based on
an initial evaluation, those factors with the greatest potential impact, either
positive or negative, are examined in greater detail. From a theoretical standpoint,
if management is to make rational decisions, all information that could
affect the hospitality organization should be examined and evaluated. Realistically,
however, this is not possible because of the finite limits on the valuable
resources of time, money, and personnel. Instead, only those environmental
variables that appear to be the most important or most critical are
examined in greater detail.
In short, a marketing information system that uses environmental scanning
provides an overview of the entire environment as well as further detail
concerning those variables within the environment that are most critical to
the successful operation of the hospitality organization. The firm’s overall environment
can be divided into three subenvironments: the macroenvironment,
the competitive environment, and the organizational environment.
A conceptual model of the components of a marketing information system
is shown in Figure 1. Data are generated for each of the three subenvironments
through an environmental scanning process. The data are then
compiled, summarized, and stored until needed by management. At the appropriate
time, management can readily retrieve data summaries, evaluate
marketing trends, and formulate marketing plans and strategies. The overriding
objectives of a marketing information system are:
1. To collect relevant data concerning each of these subenvironments
2.To compile, summarize, and store the data
3. To have data readily available for management on a timely basis
1.jpg
5-19-2009 06:32

figure 1 • Components of a marketing information system
MACROENVIRONMENT. The macroenvironment concerns the broadest
possible effects. Macroenvironmental effects are those that the individual hospitality
organization is almost powerless to control and include economic, social,
political, and technological aspects of the environment. As conditions
change within the macroenvironment, the management of hospitality organizations
should collect data concerning these changes. Knowledge of existing
conditions will provide a basis for calculating the impact that these vari-
ables will have on the operation of the firm. For example, if the federal tax
deductibility of business meals is further reduced or if the annual inflation
rate rises by 3 to 4 percent, what impact is this likely to have on sales volume?
Nearly 20 percent of the population moves each year—how will these demographic
changes affect a hospitality organization? These are influences that
the management of a hospitality organization is virtually powerless to control.
At best, management can monitor the variables of the macroenvironment
and gauge the effects they might have on business.
COMPETITIVE ENVIRONMENT. The competitive environment immediately
surrounds the hospitality organization. The organization exerts some
degree of control over this environment but can never control it totally. The
major concern for management is to monitor closely the marketing and operational
actions taken by direct and indirect competitors. Attention should
be focused initially on changes made in the marketing mix, guest profile, room
and menu prices, and sales volume as measured in both dollars and in guest
counts. Management should also be concerned with the degree of concentration
of competition, entries and exits among competitors, and changes in market
share among competitors. Exact figures are not likely to be available, but
all competitors should be monitored closely so that management can be prepared
for changes before or when they occur, rather than weeks or months
later. By monitoring competition in this way, management can prepare an appropriate
competitive response, thereby gaining a differential competitive
advantage.
The two other aspects of the competitive environment for a marketing information
system are market research activities and marketing audits. Market
research encompasses a wide range of activities undertaken to generate
information about a firm’s products, customers, and external environment.
Marketing audits are evaluations of the effectiveness of current marketing
practices. In particular, marketing audits are used to monitor marketing plans
on an annual basis.
ORGANIZATIONAL ENVIRONMENT. The third subenvironment that
is a part of a marketing information system is the organizational environment.
Data collection in this subenvironment involves examining all relevant information
sources within the hospitality organization. The basis for data collection
in this subenvironment is guest histories, although information can be
generated from other sources as well. Guest histories are records that a hotel
maintains for all types of guests, both individual and groups. In addition, histories
should be maintained within all retail outlets, especially food and beverage.
Within the food and beverage area, all sales should be recorded, broken
down by menu group and menu item. Only when managers have access
to records of previous sales are they able to make informed decisions concerning
the product-service mix for the organization.
Requirements for a Successful Marketing Information System
The basic task of gathering data is important to an organization, but an effective
marketing information system is one that is able to organize this task
and supply the firm with useful information. To generate data that are useful
for managers and decision makers, a marketing information system should
fulfill three requirements:
• It should be objective. Management should be able to quantify and analyze
the information gathered. Management needs as much purely objective
data as possible to make sound decisions. For example, which of these
two statements seems to provide better information for decision-making
purposes?
Statement A: “As the owner of this restaurant, I think we should modify
our menu so that we can appeal to more family business.”
Statement B: “A recent study has indicated a 10 percent increase in the
number of families with children under the age of ten in our area.”
Statement B would appear to be more objective and to offer quantitative
data on which to base a decision. On the other hand, Statement A is merely
an opinion and is not supported by any quantitative data.
Too many hospitality managers rely heavily on subjective opinions for
decision-making purposes, and their decisions are often incorrect. Decisions
based on purely personal opinion are often less than successful when implemented.
Decisions based on a combination of data and managerial insight and
experience generally yield higher-quality decisions.
• It should be systematic. The marketing information system is not an on-off
process; it is a system that should be designed to provide a continuing information
source for management. When information is collected in a systematic
and continuous manner, the quality and quantity of data improve.
• It should be useful. Many studies produce information that is of little
value. This is obviously not the purpose of a marketing information
system. One rule of thumb to follow is this: collect, compile, and store
information only if it is used actively; do not collect information and
then file it away without using it. This is a needless and expensive waste
of time and effort, yet many hospitality operators, in an attempt to
gather any quantitative information, maintain data that are never used
and are truly useless. The advent of low-cost and increased-capacity
hard disk storage within personal computers has partially encouraged
this storage of little-used data. Every effort should be made to collect
and store only information that is useful.
Back Forum