Money

Money

Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another. Economists differentiate among three different types of money commodity money, fiat money, and bank money.

Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money. In most countries, commodity money has been replaced with fiat money.

Fiat money is a good, the value of which is less than the value it represents as money. Dollar bills are an example of fiat money because their value as slips of printed paper is less than their value as money.

Bank money consists of the book credit that banks extend to their depositors. Transactions made using checks drawn on deposits held at banks involve the use of bank money.

Function of Money

Medium of exchange

Money also acts as a medium of exchange or as a medium of payments. This function of money is served by anything that facilitates trade by being generally accepted by people in exchange for goods and services.  For example: pay for school fees, food, daily expenses, and insurance. Money will then reduce the time and energy spent in barter. The person who owned a cow can now simply sell it to the person who offers the most money for it and then buy the bullock cart from another person who offers him the best bargain. All trade may be considered barter, one good or services is traded for another good or service either directly, or indirectly with money acting as the intermediary. However, this function can only be performed properly if the value of money remains constant.

Unit of account

Money also functions as a unit of account, providing a common measure of the value of goods and services being exchanged. Knowing the value or price of a good, in terms of money, enables both the supplier and the purchaser of the good to make decisions about how much of the good to supply and how much of good to purchase.

Store of value

Money as a store of value that refers to money as an asset that holder of money used it to transporting purchasing power from one time period to another. Therefore, it serves as a store of wealth over time when it retains purchasing power and hold value over time. They keep money for investment. This function will be performed well as long as money retains a constant purchasing power.

Standard of deferred payment

Money allows existence of credit, possible for contract be agreed involving payment in the future. Examples of situations where future payments are to be made are pensions, principal and interest on debt and salaries.  As long as money maintains a constant value through time, it will overcome the problems associated with making future payments with specific commodities.

Motive of holding Money

Transaction motives:

The transactions motive for demanding money arises from the fact that most transactions involve an exchange of money. Because it is necessary to have money available for transactions, money will be demanded. The total number of transactions made in an economy tends to increase over time as income rises. Hence, as income or GDP rises, the transactions demand for money also rises. 

Precautionary motives:

People often demand money as a precaution against an uncertain future. Unexpected expenses, such as medical or car repair bills, often require immediate payment. The need to have money available in such situations is referred to as the precautionary motive for demanding money.  We also hold money in case we need to spend it.

Speculative motives:

Money, like other stores of value, is an asset. The demand for an asset depends on both its rate of return and its opportunity cost. Typically, money holdings provide no rate of return and often depreciate in value due to inflation. The speculative motive for demanding money arises in situations where holding money is perceived to be less risky than the alternative of lending the money or investing it in some other asset. The presence of a speculative motive for demanding money is also affected by expectations of future interest rates and inflation. If interest rates are expected to rise, the opportunity cost of holding money will become greater.

Money multiplier

The money multiplier is a measure of the extent to which the creation of money in the banking system causes the growth in the money supply to exceed growth in the monetary base. A money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money. That is, in a fractional-reserve banking system, the total amount of loans that commercial banks are allowed to extend is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.

Function of Central bank

1.     Supervision of the banking system:

Central bank supervises the banking system of the country. Central may be responsible for banking system. They collect information from commercial bank and take necessary decision by two ways:

a.) bank examine

b.) bank regulation

2.     Advising the government on monetary policy:

The decision on monetary policy may be taken by the central bank. Monetary policy refers to interest rates and money supply. The central bank will corporate with the government on economic policy generally and will produce advice on monetary policy and economic matters, including all the statistics.

3.     Issue of banknotes:

The central bank controls the issue of banknotes and coins. Most payment these days does not involve cash but cheques, standing order, direct debit, credit cards and so on. Nevertheless, cash is important as bank’s cash holdings are a constraint on creation of credit, as we have seen.

4.     Acting as banker to government:

Normally a central bank acts as the government’s banker. It receives revenues for Taxes and other income and pay out money for t6he government’s expenditure. Usually, it will not lend to the government but will help the government to borrow money by the sales of its bill and bonds.

How Central Bank control money supply

Required Reserve ratio

Required reserves are the percentages of deposit bank hold in cash or a deposit of Fed. If the reserve ratio decreases, the money supply increases and if the reserve ratio increase, the money supply decrease.  The Fed can lower required reserve rate which raises the multiplier effect of high powered money.

For example, it the required reserves went from 20% to 10%, the bank would only need to hold $10,000 in reserves for the initial injection of $100,000. The other $90,000 would be loaned out so at each stage in the multiplier chain, the banks would be loaning out more funds and the eventual increase in the money supply would be larger.

Discount Rate

The discount rate is the interest rate at which the Fed lends reserves to other banks. The Fed can lower the discount rate and lower the costs for banks holding low excess reserves which will lower the excess reserve rate. If discount rate increases, the supply of money will decrease and if the discount rate decreases, the supply of money will increase.

Open Market operations

Open market operations refer to the buying and selling of government bonds in order to change the supply of money. If the Fed sells bonds, the money supply decrease and if the Fed purchases bonds in the open market, increase the money supply by the price of the bonds. The Fed can buy or sell government securities.

For example, the Fed will contact its broker and announce it wants to buy $100,000 of government securities. The increase of $100,000 cash into the system will result in an increase in the money supply of $500,000.

Unemployment rate

Unemployment rate

The unemployment rate measures the percentage of the total civilian labor force that is currently unemployed. The civilian labor force consists of all civilians, 16 years of age or older:

Who work for pay, either for someone else or their own business, for one or more week

Who works without pay for 15 hours a week in a family business

Who has job but has been temporarily absent, with or without pay

The number of people unemployed is determined according to certain criteria. Furthermore, an unemployed worker must have been actively searching for work during the past month. Workers, who are not actively searching for work, referred to as discouraged workers, are not considered a part of the civilian labor force and therefore are not counted among the unemployed.

Types of Unemployment

Frictional unemployment

Frictional unemployment is the term used to describe unemployment that results from difficulties in matching qualified workers with new jobs. Many qualified workers seeking work are not able to find new jobs right away, usually because of a lack of complete information about new job openings. While it is likely that qualified workers will soon be matched with new jobs, these workers are considered frictionally unemployed during the time that they spend searching for their new jobs.

Structural unemployment

Structural unemployment results from structural changes in the economies that cause workers to lose jobs. The same structural changes also prevent these workers from obtaining new jobs. Structurally unemployed workers are not qualified for the new job openings that are available, mainly because they lack the education or training needed for the new jobs. Consequently, the structurally unemployed tend to be out of work for long periods of time, usually until they learn the skills needed for the new jobs or until they decide to relocate.

Classical Unemployment

Classical unemployment is also known as the real wage unemployment or disequilibrium unemployment. This type of unemployment occurs when trade unions and labor organization bargain for higher wages, which leads to fall in the demand for labor.

Cyclical Unemployment

Unemployment that is attributed to economic contraction is called cyclical unemployment. The economy has the capacity to create jobs which increases economic growth. Therefore, an expanding economy typically has lower levels of unemployment. Cyclic unemployment when there is a recession. When there is a downturn in an economy, the aggregate demand for goods and services decreases and demand for labor decreases. At the time of recession, unskilled and surplus labors become unemployed. When this happens there are more unemployed workers than job openings due to the breakdown of the economy. This type of unemployment is heavily concentrated on the activity in the economy.

Seasonal Unemployment

A type of unemployment that occurs due to the seasonal nature of the job is known as seasonal unemployment. The industries that are affected by seasonal unemployment are hospitality and tourism industries and also the fruit picking and catering industries.

Natural rate of Unemployment (NRU)

The natural rate of unemployment refers to the unemployment that occurs as a normal part of the functioning of the economy. The natural rate of unemployment is determined by looking at the rate people are finding jobs, compared with the rate of job separation, for example people quitting. In any given period, people are either employed or unemployed. As a result, the sum of structural and frictional unemployment is referred to as the natural rate of unemployment also called "full employment" unemployment rate. This is the average level of unemployment that is expected to prevail in an economy and in the absence of cyclical unemployment.

Cost of unemployment

Personal cost

Social cost

Economic cost

Political cost

International Marketing

International Marketing

• Known as Global Marketing
• It is the multinational process of:

1. –Planning
   
2. –Pricing
3. –Promotion
4. –Distribution of ideas, goods, and services

• It also the application of marketing principles to more than one country.

• It identify customer want and need, provide firm product and services to communicate, distributed and exchange it to foreign market.

• International marketing or global marketing are interchangeable. 

• Businesses choose to explore foreign markets for some reason:

1. Establish a business that will absorb overhead costs at home
2. Seek new markets when the domestic market is saturated
3. To make quick profit

• Companies choosing to market internationally do not share an overall profile, they seem to have two specific characteristics in common:

1. First, the products that they market abroad must have high earnings potential in foreign markets.
2. Second, the management of companies marketing internationally must be ready to make a commitment to these markets.

• Finally, they must be willing to educate themselves thoroughly on the particular countries they choose to enter and must understand the potential benefits and risks of a decision to market abroad

Improving International Marketing Performance

Increases sale

1. Penetrate existing international markets
2. Develop new international markets
3. Develop new products
4. Integrate global markets

Increases profits

1. Reduce production costs
2. Increase sales yield
3. Integrate global suppliers
4. Reduce investment intensity
5. Focus on selective markets

Benefits of International Marketing

1. It enhances the domestic competitiveness

• The enhances the domestic competitiveness takes advantage of international trade technology, increase sales and profits, extend sales, maintain cost competitiveness, enhance potential in business, gains a global market share, reduce dependence on existing markets, and stabilize seasonal market fluctuations.

2. Rapid industrialization

• Countries are economically dependent on one another. 
• Every country has to import goods or services and to export as well as import. Some of the countries are dependent on the western countries for superior technology to achieve faster economic growth. International marketing has become prominent because of international interdependence and growing industrialization.

3. Cultural exchanges

• Peaceful co-existence to a very great extent depends on economic, social and cultural exchanges. International relations can improve when people move to different countries on goodwill visits. Cultural differences separate the countries from one another. This gap can be well connected through international trade and exchange of culture.

4. Maintaining international prices

• It is not possible that varying prices will prevail in international marketing for long. Various countries market their goods at competitive rates. The comparative cost benefits enjoyed by one country in a particular item can be shared by other countries.

5. Helps both developed and developing countries

• International marketing is also required to narrow the gap between advanced countries and less developed or developing countries. 
• In turn, advances countries must provide concessional terms so that developing countries have no option but to import superior technical know how from developed countries to provide assistance to developing countries in their struggle towards economic growth. 

The limitation of International Marketing

1. Trade pattern variations

•  the company has to deal with the existing trade pattern among the various countries of the world when enter into international market.

2. National development policy

• Every country seeks to achieve self-sufficiency by exploiting its raw materials and other resources to the optimum but to achieve self sufficiency in industrial development has resulted into the creation of many trade barriers on the free flow of international trade.

3. Procedural complexities

• There is no common procedure relating to import and export, and every country has its own procedures, documents and practices relating to international trade. 
• These are complex and difficult essentially of international marketing these days, which pose, problems before the international marketing.

Example:

Malaysia Airlines

• The flag carrier of Malaysia
•  Start operated in early 1937 and  headquarters was located at Sultan Abdul Aziz Shah Airport in Subang.
• Airlines has grown into an award-winning airline with a fleet of more than 100 aircraft, servicing more than 110 destinations across six continents.
• Malaysian Airlines System Berhad is a corporation with a vision of global expansion.
• The organizational visions are “To be the largest, most successful and most respected airline in the world.”
• The airline's network will grow extensively in response to consumer demand for worldwide coverage, they set new world standards by:

1. enhanced in-flight services
2. reliable ground support
3. excellent infrastructure

• MAS intend to re-evaluate the effectiveness of its route network in both international and domestic.
• It involves reviewing the viability of the existing fare structure and routes, and the realigning and re-deploying of its aircraft capacity to markets that offer the greatest opportunities.
• MAS become ‘Transformation Programmed’, that encourages the whole company to work together in building long relationships with customers.

Mission:

This is the MH way to get you to your loved ones and to your home countries.

Company slogan

MH: Malaysia hospitality

Malaysia Airlines objective

To create greater awareness of Malaysia and went in line with the government's efforts to make Malaysia an internationally acclaimed travel destination and trading nation.

Malaysia Airlines Strategy

• MAS intend to re-evaluate the effectiveness of its route network in both international and domestic.
• It involves reviewing the viability of the existing fare structure and routes, and the realigning and re-deploying of its aircraft capacity to markets that offer the greatest opportunities.
• MAS become ‘Transformation Programmed’, that encourages the whole company to work together in building long relationships with customers.

Benefit of Malaysia Airlines

1. Online booking

• With International airline reservation is a user friendly and it becoming online booking service. Ticket can book from home with credit card, or go through a booking agent.
• Ticket rates changes according to the season and the days. 
• With advanced booking techniques available, you can just within tour budget for travel, and your destination, you can gain list of flights that suit in your budget. 

2. Revenue/Yield improvements

• For the passenger business, Malaysia Airlines improve revenue/yield namely the Route Profitability Project (RPP) and Revenue Enhancement Project (REP) 1.
• They set out to significantly close the yield gap against our key competitors and success do it. 
• As a result of this work, they improved their own yield or Revenue per Revenue Passenger Kilometer at lower value to higher value. 

Three types of tickets (class) are available

1. Benefits of Malaysian Air First Class:

• A limit of 40 KG checked-in baggage permitted for each first class passenger
• Luxury waiting area while you are waiting
• Get connected; Internet connection during your flight
• Chairs that tilt back seventy five degrees

2. On Business class passengers:

• 30 KG baggage for each passenger may be checked in without charge
• Relax in a special waiting room before leaving
• Big legroom

3. If a passenger flies Malaysian Airlines Economy:

• A 20 KG checked in baggage limit
• Quality service at a good price
• Reserve your seat on the web
• Personal entertainment system for every passenger

Problems that Malaysia Airlines facing

1. First unprofitably

• The airline suffered losses in million after earning a record-breaking  profit in the financial year 1996/1997.
• With this losses, the airline cut many unprofitably routes, such as Brussels, Darwin, Honolulu, Madrid, Munich and Vancouver. 
• The airline recovered from its losses in the year 2002/2003. 
• It achieved its then-highest profit in the year 2003/2004, totaling RM461 million. 

2. High cost of tickets 

• Due to the expensive tickets fare, many people choose to fly with Air Asia because of the cheap ticket. Thus, the demand of the Malaysia Airlines has been decreases compete to Air Asia.

3. Possibility of slower global macroeconomic growth

• The changes of economy’s growth due to a weakening housing sector may spill over and impact Asia’s economic growth.
• This could amplify the negative impact on developments in the aviation industry over the next couple of years. 

4. Low-cost competition is on the rise 

• The low-cost competitors dumping large numbers of very low priced seats in core markets in the hope of stimulating demand.

Conclusion

• International marketing is the complex, difficult due to the interaction among domestic, foreign, and international politics.
• When the domestic company enter foreign country, they be sensitive to that country’s political concerns. 
• As what Malaysian Airlines combine with international airlines, they are well organized and manage their services and their marketing achieved the success.
• Even thought we pay for the expensive fares in  Malaysia Airlines, but it worth and satisfied because they provide good service to all the passengers.

MARKETING INFORMATION SYSTEM & MARKETING RESEARCH

Marketing Information System (MIS)

• One of the source of information that may be available to decision makers is a system known as MIS which stands for Marketing Information System.

• An MIS is a structure consisting of PEOPLE, EQUIPMENT, and PROCEDURES to GATHER, SORT, ANALYSE, EVALUATE and DISTRIBUTE NEEDED, TIMELY and ACCURATE INFORMATION to marketing decision makers.

• It is often used to determine decision makers’ information needs, acquire the needed information, and distribute that information to the decision makers in a form and at a time when they can be used for decision making.

•  First, it interact with these managers to (I) ASSESS INFORMATION NEEDS. Next, it (ii) DEVELOP NEEDED INFORMATION from internal company records, marketing intelligence activities, and marketing research (subsystem of MIS). Then, in order the ensure the information is useful, it will gone through a process known as (iii) INFORMATION ANALYSIS PROCESS and finally, the MIS (iv) DISTRIBUTE INFORMATION to managers in the right form at the right time to help them make better marketing decisions.

• A good marketing information system balances the information managers would like to have against what they really need and what is feasible to offer.

• The company begins by interviewing managers to find out what information they would like. But managers do not always need all the information they ask for, and they may not ask for all they really need.

• Some managers will ask for whatever information they can get without thinking carefully what they really need therefore resulted to information overloaded which may affect the decision made. They should not assume that additional information will always be worth obtaining, rather they should weight carefully the costs and time of additional information against the benefits resulting from it.

• The MIS must watch the marketing environment in order to provide decisions makers with information they should have to make key marketing decisions. However, sometimes the company cannot provide the needed information due to certain constraints such as availability, time and cost.

• Most marketing managers use internal records and report regularly, especially for making day-to-day planning, implementation, and control decisions.

• Internal records information consists if information gathered from sources within the company to evaluate marketing performances and to identify marketing problems and opportunities.

• Example such as the accounting department prepares financial statements and keeps detailed records of sales, costs and cash flow and manufacturing reports on production schedules, shipments and inventories whereas marketing department maintains a database of customer demographics, psycho-graphics and buying behavior.

• Managers can use information gathered from these and other sources within the company to evaluate performance, detect problems, and create new marketing opportunities.

• Internal records usually can be accessed more quickly and cheaply than other information sources, but they also present some problems. It is because it was collected from other purposes, it may be incomplete or in the wrong form for making marketing decisions. In addition, a large company produces great amounts of information, and keeping track of it all is difficult.

• Therefore, the MIS must gather, organised, process, and index this mountain of information so that manager can find it quickly and easily.

• Marketing Intelligence is everyday information about developments in the marketing environment. The marketing intelligence system determines what intelligence is needed, collects it by searching the environment, and delivers it to marketing managers.

• It can be gathered from many sources. For example, from the company’s own personnel such as the executives, engineers, scientists, purchasing agents, and the sales force.

• But company people are often busy and fail to pass on important information. Therefore, the intelligence gatherers have to be trained to spot new developments as well as urge to report back to the company.

• In addition, the company must also get suppliers, re-sellers and customers to pass along important intelligence.

• Information on competitors can be obtained from what they said about themselves in annual reports, speeches, press releases and advertisements.

• Company can also buy intelligence information from outside suppliers. Eg: Nielsen Marketing Research sells data on brand shares, retail prices, and percentages of store stocking different brands. Besides that, company can also get information for a fee through online databases or information search services. Eg: Adtrack online database tracks all the advertisements of a quarter page or larger from 150 major consumer and business publications and Donnelly Demographics database provides demographics data from the U.S. Census plus their own demographics projections by state, city or zip code. 

• A readily available online database exists to fill almost any marketing information need. General database services such as CompuServe, Dialog, and Nexis put an incredible wealth of information at the fingertips of marketing decisions makers.

• Some companies set up a department to collect and circulate marketing intelligence. The staff scans major publications, summarizes important news, and sends bulletins to marketing managers. The department members develop a file of intelligence information and help managers evaluate new information. These services greatly improve the quality of information available to marketing managers.

• Managers cannot always wait for information to arrive in bits and pieces from the marketing intelligence system. They often require formal studies of specific situations.

• Marketing research acts as the function that links the marketers to consumers and the public through information. It is used to identify and define marketing opportunities and problems, to generate, refine and evaluate marketing actions; to monitor marketing performances; and to improve understanding of the marketing process.

• Every marketer needs research. Marketing researchers engage in a wide variety of activities, ranging from market potential and market share studies, to assessments of customer satisfaction and purchase behavior, to studies of pricing, product, distribution, and promotion activities.

• A company can conduct marketing research in its own research department or have some of it done outside. Whether a company uses outside firms depends on its own research skills and resources. Although most large companies have their own marketing research tasks or special studies. A company with no research department has to buy the services of research firms.

• Information gathered by the company’s marketing intelligence and marketing research systems often requires more analysis, and sometime managers may need more help to apply the information to their marketing problems and decisions.

•  This help may include advanced statistical analysis to learn more about both the relationships within a set of data and their statistical reliability. Such analysis allows managers to go beyond means and standard deviations in the data.

• It might also involve a collection of mathematical models that well help marketers make better decisions. Each model represents some real system, process and outcome. This models can help answer the questions of WHAT IF and WHICH IS BEST.

• Marketing information has no value until managers use it to make better marketing decisions. The information gathered through marketing intelligence and marketing research must be distributed to the RIGHT PERSON ie: marketing managers at the RIGHT TIME.

• Most companies have centralized marketing information systems that provide managers with regular performance reports, intelligence updates, and reports on the result of studies.

• Managers need this routine report for making regular planning, implementation, and control decisions. But marketing managers may also need non-routine information for special situations and on-the-spot decisions.In the company with centralized information systems, these managers must request the information from the MIS staff and wait. Often, the information arrives too late to be useful.

• Developments in information technology have caused a revolution in information distribution. With recent advances in computers, software, and telecommunication, most companies are decentralizing their marketing information systems. In many companies, marketing managers have direct access to the information network through personal computers and other means. Thus, it allowed the managers to get the information they need directly and quickly and to tailor to their needs.

• As more managers develop the skills needed to use such systems, and as improvements in the technology make them more economical, more and more marketing companies will use decentralized marketing information systems.

• In general, it is defined as formal studies of specific problems and opportunities, in which it involves systematic gathering, recording, and analysing of data about problems relating to the marketing of goods and services or specific marketing situation facing the company.

• It uses information to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. It communicates findings and their implications.

• Whereas, MARKET RESEARCH is a research or a systematic analysis of a single particular market which is just a component of marketing research.  

•  It should be carried out to assist in certain areas such as:-

• Date gathered should involved in:-

• The marketing research process (see figure 4.2 below) consists of FOUR STEPS: (1) DEFINING THE PROBLEM & RESEARCH OBJECTIVES, (2) DEVELOPING THE RESEARCH PLAN, (3) IMPLEMENTING THE RESEARCH PLAN and (4) INTERPRETING AND REPORTING THE FINDINGS

• The marketing manager and the researcher must work closely together to define the problem carefully, and they must agree on the research objectives.

• The manager best understands the decision for which information is needed; the researcher best understand marketing research and how to obtain the information.

• Defining the problem and research objectives is often the hardest step in the research process. The manager may know something is wrong but might not know what are the specific causes.

• After the problem has been defined carefully, the manager and researcher must set the research objectives. They must have 3 types of objectives.

• The objective of exploratory research is to gather preliminary information that will help define the problem and suggest hypotheses.

•  The objective of descriptive research is to describe things such as the market potential for a product or the demographics and attitudes of consumers who buy the product.

• The objective of casual research is to test hypotheses about cause-and-effect relationships.

• The statement of the problem and research objectives guides the entire research process. The manager and researchers should put the statement in writing to be certain that they agree on the purpose and expected results of the research.

• The 2^nd step of the marketing research process calls for determining the information needed, developing a plan for gathering it efficiently, and presenting the plan to marketing management. The plan outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather new data.

• Research objectives must be translated into specific information needs.

• To meet the managers information needs, the researcher can gather secondary data, primary data or both. Secondary data consist of information that already exists somewhere, having being collected for another purpose. Primary data consist of information collected for the specific purpose at hand.

• Sources of secondary data would be for instant the online information database provided by A.C. Nielsen for fees or Government Census provided in libraries for public viewing with or without fees.

• Researchers usually start with gathering secondary data because it can be obtain more quickly and at a lower cost than primary data. However, it may present problems in which the needed information may not exist and researchers can rarely obtain all the data they need from secondary sources.

• Therefore in most cases, however, the company must also collect primary data.

• Collecting relevant, unbiased, accurate and current primary data is essential so as to ensure effective decisions. Therefore, it will calls for a number of decisions on the (i) research approaches, (ii) contact methods, (iii) sampling plan and (iv) research instruments.

• In using observation methods, researchers record respondents' overt behaviour, taking note of physical conditions and events.

• Direct contact with respondents is avoided; instead, their action are examined and noted systematically.

• Observation may also combined with interviews.

• It can sometime be biased if the respondent is aware of the observation process.

• It can be placed in a natural market environment, such as grocery store, without biasing or influencing shoppers' actions.

• Mechanical observation devices can also be used Eg: installing video camera, recorders, electronic scanners, counting machines and equipment to record eye movements of respondents looking at an advertisement or to count the numbers of customers passing by the certain area.

The Role of MIS  

(I) ASSESS INFORMATION NEEDS

(II)             DEVELOPING INFORMATION

The Subsystem of MIS

The information needed by marketing managers can be obtained from (1) Internal company records, (2) Marketing intelligence and (3) Marketing research. The information analysis system then processes this information to make it more useful for managers.

1. Internal Records 

2 . Marketing Intelligence

3. Marketing Research

(iv)              Information Analysis

(III)    DISTRIBUTING INFORMATION

MARKET RESEARCH & MARKETING RESEARCH

                                                                                                (Dennis Adcock,1998)

                                                                                                (Phillip Kotler, 1987)

• -          New Product Development
  -          Promotion
  -          Pricing
  -          Packaging
  -          Distribution
  -          Competitive Action
  
  

-          Total market estimated size

-          Size and location of new potential market

-          Growth Rates

-          Market characteristics (ie:nature of demand)

-          Sales forecast

-          Potential customers and competitors

MARKETING RESEARCH PROCESS

STEP 1: DEFINING THE PROBLEM & RESEARCH OBJECTIVES

STEP 2: DEVELOPING THE RESEARCH PLAN

(i)                 Research Approaches 

- Several approaches such as observational research, survey research and experimental research.

Observation Methods

Survey Methods

·         It includes interviews by mail, telephone, e-mail, and personal interviews. Survey results are used to describe and analyse consumer behaviour.

·         Gathering information through surveys is becoming more difficult because response rates are declining.

·         Some causes of nonresponse are fear of invasion of privacy, overly long questionnaires, dull topics, time pressures, and general skepticism regarding the personal benefits of participating in research study.

·         Moreover, fear of crime makes respondents unwilling to trust personal interview and the use of sales techniques disguised as market surveys has also contributed to decreased respondent cooperation.

Experimental Method

·         It is best suited for gathering causal information. Experiments involves selecting matched groups or subjects, giving them different treatments, controlling unrelated factors and checking for differences in group responses.
·         Observation and surveys may be used to collect information in experimental research.



(ii)               Contact Methods

·         Information can be collected by mail, telephone, or personal interview. Below shows the strengths and weaknesses of each of these contact methods.

·         Mail questionnaires can be used to collect large amounts of information at low cost per respondent. Respondents may give more honest answers and no interviewer is involved to bias the respondents’ answers. However, it is not flexible, take longer time and low response rate as well as can’t detect who are the person responding their mails.
·         Telephone interviewing is the best method of gathering information quickly, and provides greater flexibility. Interviewers can explain difficult questions and can skip some questions depending on the responses or answer they received thus allow greater control. Its bad side would be high cost and the absent of interviewer bias as they may interpret and record responses differently.
·         Personal Interviewing takes 2 forms individual interviewing– talking face to face with people at their homes, offices, street or in shopping mall and group interviewing – inviting a group of people (6-10) to gather a few hours with a trained moderator to talk about a product, service or organisation. Advantages would be flexible because it can be conducted at anywhere and anytime as well as can obtained fairly quick or immediate responses. As for group interviewing, it can have better focus and group interaction will encouraged actual feelings and thoughts thus lowered down the rate of bias information. Disadvantage again, interviewer bias is greater, higher cost and takes time especially in grouping the respondents who posses different demographic variables.

(iii)             Sampling Plan

·         Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of total consumer population.
·         A SAMPLE is a segment of the population selected to present the population as a whole. Ideally, the sample should be representative so that the researcher can make accurate estimates of the thoughts and behaviours of the larger population.
·         It involved 3 decisions:-

(i)                 WHO is to be surveyed (WHAT SAMPLING UNIT)?
(ii)               HOW many people should be surveyed (WHAT SAMPLE SIZE)?
(iii)       HOW should the people in the sample be chosen (WHAT SAMPLING PROCEDURES)?


(iv) Research Instruments

·         In collecting primary data, researchers have a choice of TWO main research instruments – the questionnaire and mechanical devices.
·         The questionnaire, by far the most common instrument, is very flexible – there are many ways to ask questions. It must be developed carefully and tested before they can be used on a large scale.
·         In term of the form of question (ie: Open-ended or close-ended) is important as well as the wording and ordering of the questions should not be biased and indirect.
·         Apart from this, the mechanical instruments such as people meters and supermarket scanners can be used also. Another group of mechanical devices measures subjects’ physical responses eg: galvanometer measures the strength of interest or emotions aroused by a subject’s exposure to different stimuli for instant to an advertisement or pictures/posters.
·         In addition, the eye cameras are used to study respondents’ eye movements to determine at what points their eyes focus first and how long they linger on a given item.
·         After deciding on all of the above, the researchers should then summarise the plan in a written proposal. A written proposal is especially important when the research project is large and complex or when an outside firm carries it out.
·         The proposal should cover the management problems addressed and the research objectives, the information to be obtained, the sources of secondary information or methods for collecting primary data, and the way the results will help management decision making. The proposal also should include research costs.
·         A written research plan or proposal assures that the marketing manager and researchers have considered all the important aspects of the research, and that they agree on why and how the research will be done.

STEP 3: IMPLEMENTING THE RESEARCH PLAN

·         The researchers next put the marketing research plan into action. This involves collecting, processing, and analysing the information. Data collection can be carried out by the company’s marketing research staff or by outside firms.
·         The company keeps more control over the collection process and data quality by using its own staff. However, outside firms that specialise the data collection often can do the job more quickly and at lower cost.
·         The data collection phase of the marketing research process is generally the most expensive and the most subject to error. The researcher should watch fieldwork closely to make sure that the plan is implemented correctly and to guard against problems with contacting respondents, with respondents who refuse to cooperate or who give biased or dishonest answers, and with interviewers who make mistakes or take shortcuts.
·         Researchers must process and analyse the collected data to isolate important information and findings. They need to check data from questionnaire for accuracy and completeness and code it for computer analysis. The researchers then tabulate the results and compute averages and other statistical measures.

STEP 4: INTERPRETING AND REPORTING THE FINDINGS

·         The researcher must now interpret the findings, draw conclusions, and report them to management. The researchers should not try to overwhelm managers with numbers and fancy statistical techniques. Rather, the researcher should present important findings that are useful in the major decisions faced by the management.
·         Interpretation should not be left only to the researchers, however. They are often experts in research design and statistics, but the marketing manager knows more about the problem and the decisions that must be made.
·         In many cases, findings can be interpreted in different ways, and discussion between researchers and manager will help point the best interpretations. The manager will also want to check that the research project was carried out properly and that all the necessary analysis was completed. Or, after seeing the findings, the manager may have additional questions that can be answered through further sifting of the data.
·         Finally, the manager is the one who ultimately must decide what action the research suggests. The researchers may even make the data directly available to marketing managers so that they can perform new analyses and test new relationships on their own.
·         Interpretation is an important phase of the marketing process. The best research is meaningless if the manager blindly accepts wrong interpretation from the researchers. Similarly, managers may have biased interpretation- they tend to accept research results that show what they expected to reject those that they did not expect or hope for. Thus, managers and researchers must work together closely when interpreting research results, and both must share responsibility for the research process and resulting decisions.