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MkIS Forecasting L12
MkIS Forecasting L12
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1 Introduction
Information is the life blood of successful marketing. It is of great strategic value to marketers, as well as
contributing to tactical and more routine operational decision making. Knowing what kind of information to
obtain and how to make effective use of it once you have got it, are the key skills of strategic marketing. Such
information gives the firm an opportunity to gain competitive advantage over competitors. Armies win wars not
necessarily because they have superior military power, but through more effective intelligence gathering
procedures. Likewise commercial firms are waging commercial war in a free market competitive economy. They
too will have a better chance of ‘winning’ if they have superior intelligence to their competitors.
All aspect of information including its collection, storage, processing, retrieval and use must be managed. The
marketing oriented firm needs some form of process to carry out this activity. What is needed is some form of
system devoted to the management of the entire information needs of the organisation. Such a system is called a
Marketing Information System (MkIS). Marketing research is a component part of an integrated MkIS.
Marketing is the management process that anticipates and delivers customer value more effectively and
efficiently than the competition and, in a profit making organisation, does so at an acceptable level of profit.
Note the word anticipate. Many markets are dynamic rather than static. The only thing really certain about the
future is that it will be different from today. Marketing management needs to anticipate and stay ahead of these
changes. Much marketing decision making at the strategic level requires some form of prediction or forecast of
likely future conditions across a wide variety of areas. Marketing information systems can be used to provide
information for use in a wide range of decision areas. Not all of these involve forecasting. However it would be
true to say of any information system or decision support system, that the end product is usually a decision about
the future made in the present, often based largely on information about the past. This process by its very nature
involves forecasting.
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Marketing intelligence system Marketing research system
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customers and future customers and their future purchasing plans. Salespeople attend conferences and
conventions, attend courses, ‘man’ the stands at trade shows and exhibitions, attend sponsored events and assist
with hospitality. They make it their business to network effectively with other sales people within the industry.
Sales people often posses a wealth of marketing intelligence gathered during the course of their job, but only a
small number of firms make full use of this potentially valuable and important source of commercial
intelligence. The use of sales personnel to collect and supply marketing intelligence is but one example of the
type of information that can make up the firms marketing intelligence system. Vehicle drivers, receptionists,
maintenance engineers and others all come into contact with suppliers and/or customers during the course of
work and all have the potential to contribute to the marketing intelligence gathering arm of the firm’s MkIS.
3 Forecasting
Managerial decision-making involves forecasting future conditions and such decisions tend to be long-term and
strategic in nature rather than operational. Forecasting information helps management to make operational
decisions and is important in almost all areas of the firm, but the forecasting of sales is particularly important
since it is the base upon which all company plans are built. Forecasting is a specialist process in itself and
indeed is the subject of a number of individual textbooks. What is described here is only a simple overview of
the process in order that its application to marketing planning can be more fully appreciated.
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3.1 Forecasting terminology
In many texts the term ‘forecast’ refers to objective, quantitative techniques and ‘predict’ denotes subjective
estimates. Here the terms ‘subjective’ and ‘objective’ forecast will be used.
The development of a forecasting system requires a considerable amount of data to be collected and analysed for
usefulness and validity. The company’s ability to acquire relevant data influences which of the wide choice of
forecasting techniques should be used, and a forecast will only be as good as the data used in its compilation.
4 Summary
Marketing information systems and sales forecasting have been described and it has been shown that in a
purposeful, pro-active marketing organisation the acquisition and management of information cannot be left to
chance. What required is a formal system devoted to the entire information needs of the organisation.