Chapter FiveChapter Five

Copyright © 2006McGraw-Hill/Irwin

Marketing Decision Support Systems

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• 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

Value of the Marketing Decision Support System

Understand the purpose of a marketing decision support system (MDSS)

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– Correct interpretation of information is affected by time• Information must be collected in a timely, on-

going 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

Value of the Marketing Decision Support System

Understand the purpose of a marketing decision support system (MDSS)

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• Customer Relationship Management (CRM)– Growth in the electronic marketplace– Purpose of automating Customer

operational procedures– CRM process strategic outcome

CRM and the Marketing Decision Support System

Understand the purpose of a marketing decision support system (MDSS)

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• 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

Marketing Decision Support System

Describe the various information requirements used

to design an MDSS

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Describe the various information requirements used

to design an MDSSExhibit 5.1

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• Marketing Decision Support System Diagram– Stores and Categorizing Three Groups of

Marketing Groups of Market-driven Info• Environmental• Transactional • competitive

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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– 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

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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• 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

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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• 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

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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– 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

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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Describe the various information requirements used

to design an MDSSExhibit 5.2

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• Distribution Partners– Distributors/Wholesales• Advantages over selling direct to retailer

– Offer packaging and shipping services– Reduce inventory carrying needs– Reduce credit risks– Simplify bookkeeping

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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– 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

Describe the various information requirements used

to design an MDSS

Marketing Decision Support System

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Describe the various information requirements used

to design an MDSSExhibit 5.3

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• 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

Understand the role of transactional data in MDSS

Marketing Decision Support System

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– 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

Marketing Decision Support System

Understand the role of transactional data in MDSS

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Describe the various information requirements used

to design an MDSSExhibit 5.4

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Describe the various information requirements used

to design an MDSSExhibit 5.4

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• 3 Key Elements of the MDSS– Database– Computer Facilities– Software System

• Primary Function MDSS– Produce Reports

– 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

Explain the relationship between the decision support

system and business

Information Processing and the MDSS

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• 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

Explain the relationship between the decision support

system and business

Information Processing and the MDSS

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• 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

MDSS Models and Output

Understand the Various models used in an MDSS

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Exhibit 5.7 Provide examples of output from an MDSS

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Exhibit 5.8 Provide examples of output from an MDSS

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• 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

MDSS Models and Output

Understand the Various models used in an MDSS

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Exhibit 5.9 Understand the Various models used in an MDSS

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• 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

MDSS Models and Output

Understand the Various models used in an MDSS

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• 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

Business Intelligence Programs

Relationship that exists between the decision support system and

business intelligence

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• 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

Summary