Chapter Five Marketing Decision Support Systems Copyright 2006

Chapter Five Marketing Decision Support Systems Copyright © 2006 Mc. Graw-Hill/Irwin

Value of the Marketing Decision Support System Understand the purpose of a marketing decision support system (MDSS) • Competitively Uncertain Situations – Select the best action to solve the problem – Manager’s ability to use information decisively – Information interpretation begins with • An understanding of where the information comes from • How the information is obtained • The relevancy of the information to the business situation being examined Mc. Graw-Hill/Irwin 2

Value of the Marketing Decision Support System Understand the purpose of a marketing decision support system (MDSS) – Correct interpretation of information is affected by time • Information must be collected in a timely, ongoing manner • Systematic gathering of information on a longitudinal basis – Correct Interpretation of information centers on its accuracy • Avoid biased information—collect from several sources or use several different approaches Mc. Graw-Hill/Irwin 3

CRM and the Marketing Decision Support System Understand the purpose of a marketing decision support system (MDSS) • Customer Relationship Management (CRM) – Growth in the electronic marketplace – Purpose of automating Customer operational procedures – CRM process strategic outcome Mc. Graw-Hill/Irwin 4

Marketing Decision Support System Describe the various information requirements used to design an MDSS • Marketing Decision Support System (MDSS) • A computer based system intended for use by particular marketing personnel at any functional level for the purpose of solving semi -structured problems – Unique Characteristics to the MDSS Mc. Graw-Hill/Irwin 5

Exhibit 5. 1 Mc. Graw-Hill/Irwin Describe the various information requirements used to design an MDSS 6

Marketing Decision Support System Describe the various information requirements used to design an MDSS • Marketing Decision Support System Diagram – Stores and Categorizing Three Groups of Marketing Groups of Market-driven Info • Environmental • Transactional • competitive Mc. Graw-Hill/Irwin 7

Marketing Decision Support System Describe the various information requirements used to design an MDSS – Information is Contained Using • Computer • Marketing research database • Specialized software – Information Processing System • Manipulates information and provides output – Specialized reports – Responses to database queries – Model simulations Mc. Graw-Hill/Irwin 8

Marketing Decision Support System Describe the various information requirements used to design an MDSS • Information requirements – Information in MDSS—Secondary Data – MDSS Designed to Provide Solutions to Current Problems • Contains actual market data not intentions or attitudes • Provides a picture of what happened in the past • The present and the future can be put in perspective Mc. Graw-Hill/Irwin 9

Marketing Decision Support System Describe the various information requirements used to design an MDSS • Environmental Information – Information on Supplies • Helps insure that the company has the necessary raw materials and service to react to changes in the market • Reliable information—considerations such as cost, quality, and product reliability Mc. Graw-Hill/Irwin 10

Marketing Decision Support System Describe the various information requirements used to design an MDSS – Criteria Established and Used to Evaluate Suppliers • • • Dollar volume by season and year Growth or shrinkage of annual dollar volume Accuracy of shipping and billing Timeliness of deliveries Price terms and allowance Returns and procedures – Greatest Advantage • Supplier can be selected or replaced immediately Mc. Graw-Hill/Irwin 11

Exhibit 5. 2 Mc. Graw-Hill/Irwin Describe the various information requirements used to design an MDSS 12

Marketing Decision Support System Describe the various information requirements used to design an MDSS • Distribution Partners – Distributors/Wholesales • Advantages over selling direct to retailer – – Mc. Graw-Hill/Irwin Offer packaging and shipping services Reduce inventory carrying needs Reduce credit risks Simplify bookkeeping 13

Marketing Decision Support System Describe the various information requirements used to design an MDSS – Hard Data Related to Wholesalers • Levels of inventory carried by various wholesalers • On-time delivery performance • Minimum ordering requirements • Transportation costs • Repairs, allowances, and adjustments • Level of service Mc. Graw-Hill/Irwin 14

Exhibit 5. 3 Mc. Graw-Hill/Irwin Describe the various information requirements used to design an MDSS 15

Marketing Decision Support System Understand the role of transactional data in MDSS • Business Intelligence • Procedure for collecting daily operational information pertinent to the company and the markets it services – Collection Process • Transactional Data • Information resulting from a transaction usually by consumers and the retailer Mc. Graw-Hill/Irwin 16

Marketing Decision Support System Understand the role of transactional data in MDSS – Five Technologies—Collect and Maintain Transactional Data • Bar Coding • Optical Scanners – Universal Product Code (UPC) – Shipper Container Marking (SCM) • Automatic Replenishment System (ARS) • Electronic Data Interchange (EDI) – Direct Data Interchange – Third-party Networks • Reader Sorter Mc. Graw-Hill/Irwin 17

Exhibit 5. 4 Mc. Graw-Hill/Irwin Describe the various information requirements used to design an MDSS 18

Exhibit 5. 4 Mc. Graw-Hill/Irwin Describe the various information requirements used to design an MDSS 19

Information Processing and the MDSS • 3 Key Elements of the MDSS – Database – Computer Facilities – Software System • Primary Function MDSS – Produce Reports Mc. Graw-Hill/Irwin Explain the relationship between the decision support system and business – Computer and Software System • Reflect the need of the user • Provide reports quickly • Sort and print specific data • Be easy to read, use, and manipulate • Be custom-made versus prewritten systems 20

Information Processing and the MDSS Explain the relationship between the decision support system and business • Statistical Software systems • Analyze large volumes of data and compute basic statistics such as means and standard deviations • Managerial Function Software Systems – Forecasting Systems – Product/brand Management Software Systems – Promotional Budget System Mc. Graw-Hill/Irwin 21

MDSS Models and Output Understand the Various models used in an MDSS • Model • Abstraction that explains some phenomenon or activity – Purpose of the output • To provide a solution to the problem, the solution effort was generated by modeling techniques Mc. Graw-Hill/Irwin 22

Exhibit 5. 7 Mc. Graw-Hill/Irwin Provide examples of output from an MDSS 23

Exhibit 5. 8 Mc. Graw-Hill/Irwin Provide examples of output from an MDSS 24

MDSS Models and Output Understand the Various models used in an MDSS • Geographic Information System • Simulation that uses a spatial modeling technique in conjunction with data drawn from the MDSS • Can analyze market areas and learn where certain defined demographic characteristics overlap • Sets geographic parameters • Can create “what if” scenarios Mc. Graw-Hill/Irwin 25

Exhibit 5. 9 Mc. Graw-Hill/Irwin Understand the Various models used in an MDSS 26

MDSS Models and Output Understand the Various models used in an MDSS • MDSS and Queries as an Output Resource – Queries • Can retrieve information from the system— requiring no special software – Queries arise after data are presented to the analyst Mc. Graw-Hill/Irwin 27

Business Intelligence Programs Relationship that exists between the decision support system and business intelligence • Business Intelligence Program (BIP) • Formal continuously evolving process—to assess the evolution of its industry and the capabilities of current and potential competitors – Tools and Techniques • • Governmental agencies On-line databases Company and investment community resources Surveys and interview Drive-by and on-site observations Benchmarking Defensive Competitive Intelligence Reverse engineering Mc. Graw-Hill/Irwin 28

Summary • Value of the Marketing Decision Support System • CRM and the Marketing Decision Support System • The Marketing Decision Support System • Information Process and MDSS • MDSS Models and Output • Business Intelligence Programs Mc. Graw-Hill/Irwin 29