The market intelligence system - Marketing Management

The market intelligence system is concerned with collection and analysis of ongoing developments in the marketing environment. This is normally regarded as a sub-set under marketing research where it is referred to as ‘desk research’. However, we are considering this as a component part of the MkIS, so it is logical that it is included here, and marketing research follows later. The main sources are secondary data sources, the principal ones of which are now summarized.

Government sources

In most developed countries of the world government-supplied information is probably the most valuable of external sources of secondary data. The more potentially useful types of government information include:

  • Census data: most governments conduct a regular census of their citizens. Census data is necessary for government planning and policy making but it is also a valuable source of information for the marketer. Census information includes information on numbers in the population, household and individual data such as number in household, age, sex, marital status, socioeconomic class, country of birth, education and economic activity.
  • Economic activity: most governments collect and publish statistics about occupations and the employed population classified into branches of industry. In most developed countries key statistics, covering age, distribution, socio-economic status, housing conditions, housing tenure, car ownership and many others are available. These statistics are used by marketing organizations to evaluate potential markets and often form the basis of segmentation and targeting strategies.
  • Income and expenditure statistics contain information on national income and expenditure; population statistics; labour; social services; production; agriculture and food; energy; chemicals; textiles; construction; retailing and catering; transport; external trade; wages and prices; entertainment and overseas and home finance.
  • Social statistics usually contain information on aspects of social conditions and services and education.
  • Distribution statistics: governments also collect and publish information on distribution such as information on numbers, sizes, type and turnover of different types of retail outlets.
  • Production statistics provide information on employment; wages and salaries; stocks; capital expenditure; purchases of materials and fuel; sales and work done.
  • Economic trends usually contain information on aspects such as the value of imports and exports; volume of retail sales; index of production; retail prices; gross domestic product; personal disposal of income; saving and borrowing; consumer expenditure; investment; relationship of stocks and output and changes in stocks.
  • Household expenditure: these types of government surveys collect information on household expenditure on about 100 grouped items and are analysed by factors such as household income, household composition, occupation and age of the head of the household.
  • Overseas trade statistics involve a summary of imports and exports by commodities and countries.
  • Business monitors: the object of individual business monitors is to bring together the most upto- date official statistical information covering production, imports and exports relating to a particular industry. Most countries produce such information, and in the UK, such monitors cover:
  • The Production Series detailing such items as food, drink and tobacco; coal and petroleum products; chemicals and allied industries; metal manufacture; engineering; textiles; clothing and footwear; printing and publishing; timber; furniture; pottery; glass and cement. – The Service and Distribution Series covering food shops; clothing and footwear shops; durable goods shops; catering trades; and finance houses.
  • The Miscellaneous Series detaining motor vehicle registrations; cinema; insurance companies; overseas travel and tourism; acquisitions and mergers and company finance.

Government statistics are collected for the purposes of government, and not specifically for marketing firms. Consequently, such data may not always fit a particular marketing purpose and may have to be extensively modified or re-tabulated to be of use. A further point is that many of these statistics have been collected by government for general macro-economic policy making. For such decision making, broad aggregates of data are usually sufficient, and various government agencies will often use a number of assumptions and conventions when compiling statistics which can affect their validity, especially when they are used out of context in situations other than those for which they were originally compiled. Government statistics are generally free of charge and are a useful information source which must be used prudently when making marketing plans. Detail of the range and sources of government-published information in different countries is beyond the scope of this text but can be found in appropriate marketing research texts.

Trade associations and other bodies

There is a wide variety of statistics on particular trades or industries issued by trade associations, chambers of commerce and other bodies. Generally, these statistics are issued only to the members of such associations, depending on what they make or sell. Data available from such sources are more detailed than government statistics and relate to a narrower field, e.g. statistics issued by a trade association for tool manufacturers would include figures for volume and value of the production of various tools. They will also show the destination of manufactured tools exported from rival countries, and this gives valuable leads as to the areas where there is a market for such products.

Other published information

Statistics are only part of desk research. A great deal of information can be obtained from published reports, yearbooks and reference books on relevant subjects. This is a wide field, but researchers know where to look for such information and find the information services of technical and reference libraries and city business libraries useful sources. Such sources, however, are researched and authored by consultants and there are cost implications in using them.

Official handbooks

In most countries or regions, ‘official’ books give a mass of general background information on that country e.g. Hong Kong – an Official Handbook, issued by the Hong Kong government. Similar publications are available for most countries and are normally provided free of charge from information departments of embassies. If one is carrying out research relating to a particular country, such a handbook will supply general background data.

Directories

A wide range of trade and regional directories lists information on businesses in a particular trade or a particular town or area. Even a classified telephone directory can yield a wealth of information in terms of listing contact details of companies providing a variety of products and services under different alphabetical headings e.g. electric motors; electrical appliances – rental and hire; electrical appliances repairs and parts; electrical components and wiring; electrical engineers; electrical inspecting and testing; electrical supplies, etc.

Economic surveys

As well as government, banks and Chambers of Commerce, stockbrokers often issue reports on a particular industry, mainly in relation to those firms whose shares are quoted. Sometimes findings of research sponsored by a firm or trade association are published and many such reports are provided by national or local newspapers.

International sources

The United Nations: apart from its political role, the UN operates through many agencies. Those which concern the industrial and trade researcher are the United Nations Development Programme (UNDP) and the United Nations Industrial Development Organization (UNIDO) both of which are mainly concerned with helping the progress of developing countries. Each has an international staff and is engaged in a wide variety of international operations. To support these operations, regular research is undertaken and reports are published on industrial and commercial problems throughout the world.

  • International bodies: apart from organizations sponsored by the UN there are some which are associated with the UN and others which are independent but co-operate. Such sources are generally very reliable and the main ones are:

Companies House

Information about all UK limited companies can be accessed at Companies House or in person or through agencies that conduct searches for a fee, or online. Most developed countries have their equivalent of Companies House whereby information can be found on registered companies in that country. There are many private suppliers of information on registered companies in different parts of the world.

Miscellaneous

Examples here include company annual reports, promotion and publicity literature and competitors’ price lists. Visits to trade exhibitions are a useful way of gathering this material as well as giving the opportunity to study competitors’ products and promotional material at first hand. A further source of information is published market research reports. These can be purchased when required, examples being Economic Intelligence Unit reports, Euromonitor (which produces reports on European markets), Henley Centre for Forecasting and MINTEL publications surveys whose reports cover a number of different markets, usually four or five in each publication, although periodically a whole issue is devoted to one market. They give many useful comments, statistics and predictions and the work of compilation is carried out by market researchers employed by MINTEL or commissioned from other professional market research firms.

‘Off–the-peg’ research data

In addition to the variety of published secondary research data, a company may decide to make use of syndicated research data usually purchased from a marketing research company which itself has carried out certain surveys. This type of data is a ‘hybrid’, falling somewhere between true secondary data and primary data. The difference between this type of data and primary data that is collected by the company itself through primary research, is that data are normally not collected for an individual client, but rather are sold to whoever will buy. For this reason, such data is often referred to as ‘off-the-peg’ research data. The following are examples of such data.

Consumer panels serve the purpose of providing marketers with a continuous check on the market and a record of the behaviour of consumers and their reactions to changes in household products, methods of marketing or advertising. They comprise a reasonably permanent set of consumers, consisting of a sample of consumers selected on a statistical basis to represent accurately a crosssection of the target market. In the UK, the Attwood Consumer Panel consists of 5,000 consumers in Great Britain and 500 women in Northern Ireland. Members of the panel are defined by age, ACORN group, social class and income group. Each member of the panel is given a diary in which he/she records information on all household product purchases such as products and brands bought prices paid, from which retailer, day and time of purchase, promotional offers, etc. This information is then fed back to the market research company, usually via a computer link, for detailed analysis, thus providing manufacturers and advertisers with a continuous check on the market and a record of the behaviour of consumers and their reactions to changes in products, methods of marketing or advertising.

Panellists return the diary to the market research organization who then sells reports of this activity to individual manufacturers. Diaries are intended to reveal:

  • the performance of brands;
  • the total number of people buying specific products;
  • sales volume by type of shop and geographical area;
  • the effect of promotions, price changes or competition;
  • consumer purchasing patterns concerning brand switching.

Brand barometers are a service offered by market research firms to subscribers on a quarterly basis. Each covers a particular market, e.g. the private motorist’s market or the household products market. In each market barometer, a range of products is covered; in the household products market, areas such as pet foods, bread, cereals and cleaning materials are included. Respondents are questioned regarding purchases or otherwise of each product category. Where respondents indicate they have purchased within a commodity class they will be questioned as to when, what brand and from which retail outlet. Data in brand barometers is analysed by geographical area, age, social class and Acorn categories.

Retail audit research is a well tried method of research that was first started by A.C. Nielsen Company in the USA, but is now applied in most countries. The principle is that an inventory is made at regular intervals of the stock and purchases of certain products at selected retail outlets in such fields as food, confectionery and cigarettes. This detailed inventory is carried out by field researchers with the co-operation of retailers, who are remunerated for their help. The audits are accurate and provide a picture of what the trade buys and sells and the quantities it carries in stock. Once the manufacturer’s products leave the company, there is a time lag before they are bought and consumed. The longer this gap becomes, the more difficult it is for the producer to exercise control over supply to meet changes in demand and modify production. By the process of adding purchase invoices to opening stocks and then deducting closing stocks, sales of each item can then be determined.
Reports issued to subscribers are along these lines:

  • retail purchases by brand and by product;
  • retail stocks by brand and by product;
  • consumer sales by brand and by product;
  • percentage of shops handling the product;
  • percentage of shops out of stock of various brands;
  • retail and wholesale prices of various products;
  • average size of retail order from average retailers;
  • proportion of retailers buying direct from manufacturers and from wholesalers;
  • display material, promotion and advertising carried out for various brands.

Nielsen claim this gives a better understanding of consumer behaviour and preferences; increases up-selling (i.e. satisfying the customer with a better and more expensive product than had been initially envisaged) and cross-selling opportunities (i.e. selling other products in addition to the ones that have been purchased); gains a comprehensive analysis covering consumers, brands, retailers and promotion and pricing practices; integrates sales, consumer profiles and attitudinal data; compares online and off-line performance and gains visibility into distribution gaps, competitive strongholds and pricing disparities to uncover tactical opportunities.

This is now a competitive market and several companies as well as Nielsen provide retail audit type services and data, increasingly providing information online. Websites enable the marketer to access a wide range of information sources quickly.


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