Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e
- Improving Decisions
with Marketing
Information
Text © The McGraw−Hill
Companies, 2002Improving Decisions with Marketing Information 243How Much Information Do You Need?
We have been talking about the benefits of good marketing information, but
dependable information can be expensive. A big company may spend millions
developing an information system. A large-scale survey can cost from $20,000 to
$100,000—or even more. The continuing research available from companies such
as Information Resources, Inc., can cost a company well over $100,000 a year.
And a market test for 6 to 12 months may cost $200,000 to $500,000 per test
market!
Companies that are willing and able to pay the cost often find that marketing
information pays for itself. They are more likely to select the right target market
and marketing mix—or they might see a potential problem before it becomes a
costly crisis.The high cost of good information must be balanced against its probable value
to management. Managers never get all the information they would like to have.
Very detailed surveys or experiments may be “too good” or “too expensive” or “too
late” if all the company needs is a rough sampling of retailer attitudes toward a new
pricing plan by tomorrow. Money is wasted if research shows that a manager’s guesses
are wrong and the manager ignores the facts.
Marketing managers must take risks because of incomplete information. That’s
part of their job and always will be. But they must weigh the cost of getting more
data against its likely value. If the risk is not too great, the cost of getting more
information may be greater than the potential loss from a poor decision. A decision
to expand into a new territory with the present marketing mix, for example, might
be made with more confidence after a $25,000 survey. But just sending a sales rep
into the territory for a few weeks to try to sell potential customers would be a lot
cheaper. And, if successful, the answer is in and so are some sales.^22Information is costly+
but reduces riskWhat is the value
of information?ConclusionMarketing managers face difficult decisions in select-
ing target markets and managing marketing mixes. And
managers rarely have all the information they would like
to have. This problem is usually worse for managers who
work with international markets. But they don’t have to
rely only on intuition. They can usually obtain good in-
formation to improve the quality of their decisions.
Computers and computer networks, like the Internet,
are helping marketing managers become full-fledged
members of the information age. Both large and small
firms are setting up intranets and marketing information
systems (MIS)—to be certain that routinely needed
data is available and accessible quickly.
Marketing managers deal with rapidly changing envi-
ronments. Available data is not always adequate to
answer the detailed questions that arise. Then a market-
ing research project may be required to gather new
information.Marketing research should be guided by the scientific
method. The scientific approach to solving marketing
problems involves five steps: defining the problem, ana-
lyzing the situation, obtaining data, interpreting data,
and solving the problem. This objective and organized
approach helps to keep research on target—reducing
the risk of doing costly research that isn’t necessary or
doesn’t solve the problem.
Our strategy planning framework can be helpful in
finding the real problem. By finding and focusing on the
real problem, the researcher and marketing manager
may be able to move quickly to a useful solution—with-
out the cost and risks of gathering primary data in a
formal research project. With imagination, they may
even be able to find the answers in their MIS or in other
readily available secondary data.