Marketing Information

system and Buyers

Behavior
Unit 3

Marketing Information
system
Meaning and definition: (MKIS)
It is the mechanism for providing decision
making information and data to the marketing
decision maker. It provides a continuous flow
of information about prices, advertisings,
sales, competition and distribution. It is the
major tool for scanning and monitoring the
external environmental forces.

 According to PhlipKotler:
"A marketing information system consists of
people, equipment, and procedure to gather, sort,
analyze, evaluate and distribute needed timely and
accurate information to marketing decision makers."
Key concept: ( Features )
It is made up of people like managers, supervisors,
sales persons etc.
It is equipment based like computer etc.
It is a continuous process
It provides valuable information.

Importance or relevance of
MKIS
Vital for day to operation
Obtained information of National and international
markets
Satisfying the needs and wants of the customers
Encouraging to non price competition ( differentiation,
image, services and promotion )
Environmental monitoring and scanning
Marketing planning
Marketing program building
Evaluation and control

Components of MKIS
All organizations irrespective of their size and
nature of operation need information to take correct
and timely decisions. The source of information
lies in the marketing environment. Components of
market information system are given below.
Internal record system
Marketing intelligence system
Decision support system
Marketing Research

1. Internal Records system:

It is very importance source of information. The major internal records
used by the MKIS are customers orders and complaints, invoices, sales
reports and marketing research reports.
Every organization maintains an internal database about current and past
result like as Product quality/price/packaging/distribution/promotion etc.
. Invoices: They are major sources of information. It contains name of
customers, location, products, quantity price including discount, total
sales value etc.
. Sales reports: Sales reports are regularly submitted by the field sales
staffs to the company.
. Marketing research reports: Previous marketing research reposts can be
a valuable source of information on future problems. They are targeted at
solving a particular marketing problem. It generates a variety of data and
information that are stored in the MKIS for future use.
. Other miscellaneous: Internal records / financial statements / Audit
reports etc.

2. Marketing Intelligence System:

This system provides information about

every day happenings in the marketing
environment. It is a set of procedures and
sources used by managers to obtain every day
information about pertinent developments in
the marketing environment.
Sources: Marketing Managers / Sales force /
Middlemen / Specialists / Outsourcing /
Marketing information units/ News papers /
Magazines / Private intelligence agencies etc.

3.Decision support system (DSS) or Analytical system:

Organization develops marketing decision support system to help their

marketing managers make better decisions. It does not collect information. But
it stores, analysis, the collected information. It is a set of statistical or
mathematical tools and decision models. This system has three components:
Data Bank: Computers are used for data storage. It is the store house for all
the collected information from internal reports, research, intelligence, etc.
Statistical Bank: ( Method Bank ) It has methods bank for analyzing data
which range from simple procedures to sophisticated statistical tools like
multiple regression, factor analysis etc.
Model Bank: They consists of various models that facilitate decision making
models define the interrelationship between different variables help decision
maker to understand and control marketing problems like game theory,
differential calculus etc.
In todays context the DSS function is handled by a computer experts with the
help of a powerful computer and relevant software.

4. Marketing Research system:

It is a systematic inquiry undertakes to help
resolve specific marketing problems. It should
be systematic, objective, informative, problem
based and decision making. It is a function
which links the consumers, and public to the
marketer through information. The purpose of
marketing research is to generate information
that helps the business executive the take
appropriate and timely decision.

 It is a systematic and objective search for and analysis of

information relevant to the identification and solution of any
problems in the field of marketing. It is the process of
generating information that helps the business executives to
take the timely decision. Scientific methods are used in
marketing research for gathering, analysis of information to
achieve objectives.
Areas of Research:
1. Product research ( developing products, and testing research )
2. Advertising research ( Research for setting advertising
objectives, copy testing, Media search )
3. Sales research ( sales analysis, distribution analysis, Sales
force performance, Sales potential analysis, Sales forecasting )
4. Motivation and attitude of consumers research etc

Nepalese Marketing information system

The development: Prior to economic liberalization of the 1980s.
The lead organization: In 1982, Surya Nepal began conducting market
research to better understand the needs and problems of the smokers.
Current users: In the late 80s Gorkha Brewery also conducted several
research on generating profiles of beer consumers. Today this company
has been able to capture more than 90 percent of the beer market of
Nepal. Most of the private bank and hospitals also have effective
information system.
Growing importance of marketing information in marketing
agencies.
Open Economy: Since 1990s the protected economic regime of Nepal
has been gradually replace by an open economy.

 Foreign Players: In the 1990s many multinational companies

were established in nepal under joint venture and licensing.
Currently most of the medium and large manufacturing and
service companies have developed their information systems.
Competition: Nepalese business firms compete with
multinational companies who have effective and update
information system.
New brand failures: Many new brands brought into the
Nepalese market have failed to gain consumers acceptance.
Pine cigarette, Singha beer, (CG)Black beer ( Gorkhas ) etc.
Expansion of Market Area: Nepalese business houses are also
engaged in collecting information about the export markets
through market research and marketing intelligence.

Buyer Behaviors Analysis ( Consumer behavior)

Buyer Behavior:
Concept:
A buyer is any one who might buy a given product. They
are either an individual or an institutional. A buyer is some one
who is potentially willing and able to buy products offered by
the marketer. Consumers create demand for the products.
Marketers must know their customers (KYC).

Human behavior is a very complex process. Behavior is

the responses of the market toward the firm's offer. It refers to
any actions a consumer takes toward a product or actions a
consumer takes toward a product or brand. The action may be
negative or positive. Buyer behavior is a series of activities of
customers related to products.

 Buyer behavior relates to the purchase

behavior of individuals and groups, and
organizations who buy products to meet their
needs and solve problems.
Consumer behavior / Organizational buying
behavior ( business org. social institutions, and
government )
It is the study of how individuals and groups
make their decisions to use their resources in
terms of time, money and efforts.

 According to Philip Kotler "Buying behavior is the

decision processes and acts of customers involved in
buying and using products."
Buyer is stimulated by marketing mix as well as PEST.
They are influenced by culture, social, personal and
psychological variables. Variables determine a person's
wants a behavior.
Cultural variables: Religion / Social / Groups /
Family / Status
Personal variables: Gender, age life style, occupation
and income
Psychological variable: Motivation / perception /
learning / beliefs / attitudes / personality and life style.

 Conclusion: Buyer behavior consists of the

activities that the people engage in when
selecting, purchasing, and using products and
services so as to satisfy needs and desires. It is
the mental emotional and physical actions of
consumers. It is the process to find out the
customers want in a product and then to offer
them that product. While studying buyer
behavior we should consider answering the
following six O's.

Occupants: What Profession?

Objects: What they buy?
Occasions : When they buy it?
Organization: Which organization?
Objectives: What purpose? Why they buy it?
Operations: How they use it ?

Consumer behavior as a process of

Acquisition, Consumption, and Disposition.

Importance of Buyer Behavior:

Need identification: The study of buying behavior enables marketer to rightly
assess the actual need of the consumer and identify the best way of satisfying
them.
Efficient use of resources: By understanding buyer behavior organizations
can make efficient use of marketing resources. The goal of marketing is to
understand, meet and satisfy target customer's need and wants.
Selection of market segments: It is an important variable for market
segmentation. By understanding buyer behavior organization can effectively
segment the market.
Product positioning: Buyer behavior helps an organization to study how
buyers perceive different brand of product sold in the market. It describes how
an organization's product differs from its competitors.
Marketing mix development: By understanding buyers behavior organization
can develop marketing mix. It helps to develop appropriate marketing mixes.
Reduce uncertainty: The study of consumer behavior helps to market to
reduce the uncertainty that may affect marketing programmed and enables of
firm to anticipate the effects of its marketing decision.

Consumer Buying process

Stages of consumers buying process:
Consumers are the decision maker regarding the purchase of
goods and services that can provide current and future
satisfaction. Consumers face several buying decisions every day. A
rational consumer usually follows certain process while buying
products which are given below:
1. Problems or Need Recognition:
The buying process starts when the consumer recognizes a need.
Need can be activated through internal and external sources.
Internal stimulus or sources such as hunger, thirsts, shelter etc.
External stimulus such as advertisement window display etc.
There are different types of problems such as routine problems,
Emergency problems(sickness and accident etc ), Planning
problems ( buying car, home, seeking education etc ) Evolving
problems ( neither are expected nor demand immediate solution )

2. Information Search:
After need recognition consumers search information
about products. It focuses on availability of brands,
product, features, seller's characteristics, warranties
prices etc. Information search by consumers can be
either passive or Active.
Passive Search : It is not related to a problem or need
just consumers are found to go through a variety of
information while watchig television or browsing
through internet or looking through news papers etc.
Active Search: Consumers undertake active search
( pre-purchase search ) when they have a problems to
solve.

 Internal search: Previous experiences about

product.
External search: Personal sources, friends,
family, relatives, associates.
Market sources: Advertising, sales forces,
middlemen, packaging etc.
Public sources: TV. / Radio / news papers and
internet / consumer interest group/ Govt. etc.
Experiential:
Handling/examining/testing the product by
consumer.

3. Evaluation of alternatives:
Once the information of alternative products is gathered they
are properly evaluated to find out the best product that can
satisfy the consumer to a great extent. The evaluation criteria
may be product attributes, brand utility price etc.
4. Purchase decision:
After evaluation alternatives they make the purchase decision.
Purchase decision is influenced by payment method,
warranties, delivery after sales services and installation.
Social influences: family / friends etc.
Situational factors: Income / expected dealer terms/
Product availability / etc.
Purchase intension: Social influences and situational
influences

5. Post purchase evaluation:

The consumer continues to make evaluation after the
purchase has been made. Satisfied consumers
continue to purchase and develop brand loyalty. But
dissatisfied customers stop purchasing the product.
6. Product disposal:
Disposal of products by consumers after use is and
important post purchase decision. They can
permanent dispose and temporary disposal.
Permanent: sell it / exchange it or trade it / give it
away / throw it way.
Temporarily: Rent it / loan it / free change.

 Factors affecting consumers buying behavior

process: (Determinants)

1. Economic factors:
Level of income ( Consumers personal or
family income)
Saving and Liquid assets
Debt, credit availability
Attitude toward spending
Economic conditions

2. Personal Factors:
Age: Yong person is fashion conscious in the
choice of the products while middle aged person is
status conscious. Young is more risk taker and
visit departmental store than old.
Gender: Females are more shopping and
bargaining power and likely to visit several shops
and compare price, quality and service than males.
Family size and their Family life cycle (old,
middle and child aged )
Occupation and life style ( activities, interests,
opinion )

3. Psychological Factors:
Motivation: It is a reasons for behavior so it
reflects why an individual does something.
Perception: A consumer buys clothes not only
to hide nakedness or keep warm but also to
enhance the self image, status and prestige.
Learning
Attitude/ belief ( attitude will be changed
through promotional activities etc.)
Personality

4. Socio-cultural factors
Reference groups influences
Family influences , family life cycle influence
Roles and status
Social class ( level of income, Psychological)
Culture and sub culture
family life cycle influence ( different ages,
married , unmarried, you couple, older couple
etc.
Lower income, middle, and high income

Business or Organizational Buying behavior

Concepts:
Actually it refers to the buying behavior of
organizations so they buy products of resell, business
use, or to make other products. It consists business
houses, industries, retailers, government and non
government organization.
All formal organization manufacturing, business
firms, intermediaries, government, educational and
social institutions purchase goods and services and
other ideas for their operations

Features of Organizational buying behavior

Few large Buyers
Demand
Relationship ( maintain relationship with
supplier and customers )
Professionals ( systems buying )
Channel
Buying influences
Rationality

Organizational buying process:

Problems recognition: It is start from diminishing inventory
levels of raw materials, parts, spares and supplies
Preparing product specification: Details specifications are
prepared by a technical committee of an organization.
Supplier search: use of news papers, internet etc
Proposal solicitation: The purchasing manager solicits
proposals from potential suppliers or the product or services
regarding quality, price etc and may be applied formal
bidding, quotation, contracting etc
Supplier selection and purchase: The purchase committee
carefully evaluates the proposals submitted by potential
suppliers in terms of price, delivery capability, quality and
other technical capabilities.

Factors determining organizational buying behavior

A. Environmental factors: ( PEST )
Economic factors: The general economic condition of
a country affects the level of demand, consumption,
investment and saving. Therefore any change in the
economic condition of a country affecting consumers
demand for organizational products.
Technological factors: Technological changes in the
production process directly influences organizational
buying decisions. The use of internet and e-commerce
has revolutionized the supplier search and order
process.

 Political/legal factors: Political stability enhance

investment climate and also increase the level of
demand for products and services. Change in the
government also influences the organizational
markets. The organizational buying is also
influenced by the law and other regulatory
provisions imposed by the government.
Social
responsibility
factors:
Pollution
consciousness brings new requirement of
production, transportation, and packaging
technology.

B. Organizational factors;
Buying Objectives: different organization has
different buying objectives. Business firms focus
quality and government organization focus on lowest
bidders for purchase.
Buying Policies: Organizing buying policies favoring
reciprocity principle will narrow down the range of
suppliers.
Procedures: Buying procedures in the organizational
market various across organizations. The government
market requires sealed bids and tender for every large
purchse.
Structures

C. Interpersonal factors:
Authority: In most of the public sector buying situation
in Nepal the purchase committees only recommends
while the board of directors or CEO has the final decisive
power.
Interests: Since the purchase committee has several
individuals from the key departments they might have
their own interests influencing the organizational buying.
Status: The buying group may be represented by
personnel working at different levels of organizational
hierarchy. The status of the staff may also play key role.
Persuasiveness power of individuals to influence the
organizational buying varies across individuals.

D. Individual factors:
Age: Young buyers tend to favor building relationship with new
suppliers. As people grow older they tend to maintain relationship
with established suppliers.
Income: In most of the government buying the technical group
and decision makers receives financial incentives from suppliers.
Education
Job position: In Nepal the top executive has the final authority in
most of the organizational buying decisions.
Personality: Individual who consider themselves as tough are
expected to engage in hard bargaining while those with flexible
personality are likely to be soft on the purchases deal.
Risk taking: Low risk takers tend to favor doing business with
established suppliers while high risk takers constantly search for
new sources of supply.

E. Cross- cultural Factors:

France: Knowledge of French language is
essential for negotiation and deal.
Nepal: Organizational buyers first negotiate on
their individual commission and benefits and
then only on the final deal.

Important Questions
1. Define consumer behavior. Discuss some of
the key factors that affects the buyers
behavior.
2. Compare and contrast between consumer and
business markets.
3. Describe the major component of marketing
information system.