Module -3

DECISION SUPPORT
SYSTEM
Prepared by Dr.Lakshmi.H
 Module -3 Decision Support System
◦ Marketing Decision Support System-meaning, Use of Decision Support Systems in Marketing
Research, Data base & Data warehousing. The three Vs: Volume, Velocity & Varity, The Fourth
V: Value. Elements of data base, types of data base, using marketing data base for marketing
intelligence, ways to gather consumer data.

◦ Practical Component: Appreciate the use of different data collection methods, sampling
design techniques, measurement methods to analyze the data.

Subject Faculty Name: Dr. Lakshmi.H

Designation: Assistant Professor Email Id: lakshmih_mba@sirmvit.edu
 Marketing Decision Support System
♦ Managers want, and need, decision-relevant information in accessible and preferably graphical form
for:
1. Routine Comparisons of current performance against past trends on each of the key measures of
effectiveness,
2. Periodic exception reports to assess which sales territories or accounts have not matched previous
years’ purchases, and
3. Special analyses to evaluate the sales impact of particular marketing programs, and to predict what
would happen if changes were made.
♦ In addition, different divisions would like to be linked to enable product managers, sales planners,
market researchers, financial analysts, and production schedulers to share information
 Marketing Decision Support System V kumar pg 32

♦ Marketing decision support system (MDSS)

combines marketing data from diverse sources
into a single database which line managers can
enter interactively to quickly identify problems
and obtain standard, periodic reports, as well as
answers to analytical questions
 Characteristics of a MDSS
Interactive
The process of interaction
with the MDSS should be
simple and direct.
With just a few commands
the user should be able to
obtain the results
immediately.
There should be no need for a
programmer in between.
Flexible
A good MDSS should be
flexible.
It should be able to present
the available data in either
discrete or aggregate form.
It should satisfy the
information needs of the
managers in different
hierarchical levels and
functions.
Discovery oriented User Friendly
The MDSS should not only
The MDSS should be user
assist managers in solving
friendly. It should be easy for
the existing problems but the managers to learn and use
should also help them to the system
probe for trends and ask new
questions.
It should not take hours just
The managers should be able
to figure out what is going
to discover new patterns and
on.
be able to act on them using
the MDSS
Most MDSS packages are
menu driven and are easy to
operate
Use of Decision Support Systems in Marketing
Research

It can help
Decision support
businesses to
systems has
Decision support save money by
ability to predict
systems can help preventing
the outcome of businesses to failures and put
different save time as well. them towards a
scenarios,
better cause
 Data base
(V kumar pg 656)

◦ What Is a Database?
◦ A database is a customer list to which has been added
information about the characteristics and the transactions
of these customers.
◦ Businesses use it to cultivate customers and develop
statistical profiles of prospects most like their present
customers—as they seek new customers.
 The Need for Database
♦ Database marketing is an important tool that has been with us long enough to draw significant
conclusions about what works and what doesn’t in marketing research.
♦ Database marketing provides insights to the following questions:
1. Who are my customers: Are my competitors’ customers different from my own?—It is
important to know this in order to analyze and understand the demographic and behavioral
profile of your customers.
2. How loyal are my customers?—Determining a customer’s loyalty can help you analyze your
database better
 A Marketing Database
◦ A marketing database can collect and manipulate information on customers, their individual
characteristics and, their response characteristics.
◦ With a database, marketers can use past actions by customers to predict their future
preferences or profile prospective customers for effective market segmentation.
◦ With a database, marketers can project additional sales—through cross-selling and repeat
purchases.
◦ At the same time, by collecting information and learning more about current customers’ tastes
and preferences, marketers can effectively target new customers with the same
characteristics, and even predict the lifetime value of these newly acquired customers.
◦ In this way, the organization cannot just replace customers lost through attrition but can grow.
Elements of a Database
Source of order, inquiry, or
Recency/frequency/monetary
referral
transaction history by date, amounts
Data and purchase details of (cumulative) of purchase, and
first transaction products (lines) purchased

Name and title of individual Relevant organization data for

and/or organization Mailing industrial buyers
address, including Zip Code
Telephone number Relevant demographic data for
consumer buyers

A unique identifier
Database
such as an ID or
match code
attempts to Credit history and rating
(scoring)
create
 Types of Databases
Active customers:
Inquiries
How recently have they purchased? Inactive customers
How frequently have they From what media source did
How long have prior customers
purchased? inquirers come?
been inactive? How long had they
How much did they spend? What been active? What was the nature and
are their product or ser-vice seriousness of the inquiry?
What was their buying pattern while
preferences? active? What offers have they Do you have any demographic or
Identifying your most active received since? psychographic information on
customers can help you concentrate inquirers?
This information can help you
your resources on the most design promotions that re-activate
profitable segment of your customer your inactive customers.
list.
◦ Modeling customers serves several purposes or objectives:
♦ It helps us identify our most typical customers and so become more effective in our prospecting.
♦ It helps us identify our best customers, another aid to prospecting.
♦ It helps us identify niche markets to add to our marketing universe.
♦ It helps us develop more effective marketing tools (materials and media).
Benefits of Database Marketing
1. Customers are Easier to Retain than Acquire.
◦ The first reason is that it takes five times the energy and budget to get a new customer as it does to
keep an existing one.
◦ Also, a disproportionately small number of your customers generate a very large proportion of
your income.
◦ The old 80/20 rule—that 80 percent of your business comes from 20 percent of your customers—
is a remarkably accurate generalization.
◦ Therefore, the priority has changed to relationship building with the top 20 percent of your
customers and working on the next 25 percent to upgrade them.
◦ A smaller effort should go into the following 25 percent, while final 30 percent are probably not
worth bothering about.
2. Determine Their “Lifetime Value:
◦ Companies should start valuing their customers
◦ Along the lines on recency, frequency and amount spent on purchase of products from them, the worth of
each customer will become an asset.
◦ And building a lasting relationship becomes the obvious way to a prosperous and profitable future.

3. Developing Relationships with Customers:

◦ Understanding your customers’ tastes and preferences on an individual basis is the foundation for
relationship marketing.
◦ Relationship marketing combines elements of general advertising, sales promotion, public relations, and
direct marketing to create more effective and more efficient ways of reaching consumers.
◦ It centers on developing a continuous relationship with consumers across a family of related products and
services
 Datawarehouse
(Naresh K Malhotra pg 120)

◦ A data warehouse is as much a process of

gathering disparate data, converting it into a
consistent format that can aid business decision-
making, as it is a configuration of software and
hardware.
◦ Data warehouses empower users by providing
them with access to a whole array of
information in an organization, making it
available for use in other applications
 Datawarehouse
◦ Datawarehouse can be described as having the following three qualities:
1. It is a collection of integrated databases designed to support managerial decision making
and problem solving.
2. It essentially becomes a giant database that can include survey data held in a database
format.
3. It physically separates an organization's operational data systems from its decision
support systems.
Components of Data warehouse
1. Acquisition
This includes all the programs,
applications and various
interfaces that extract data from
existing databases
It continues with preparing the
data and exporting it to the
data warehouse.
2. Storage
This is synonymous with any
database. It simply involves a
storage area to hold a vast
amount of data from a variety of
sources.
The storage area is organized to
make it easy to find and use the
data
It will be updated from a variety
of sources which could be through
scanner and loyalty card data on
customers, or through the use of
intranet data when examining the
compilation of competitor data.
3. Access
This encompasses both set reporting
of predetermined events and the
means of performing individual
analyses, querying ‘what-if’
scenarios
The process of exploring the
databases uses data mining
techniques
As marketing researchers and
decision-makers learn about markets
and their effects upon those markets,
the development of predictive
models is facilitated
 Data Mining
◦ The process of discovering meaningful correlations, patterns and trends by sifting
(examining) through large amounts of data stored in repositories, using pattern recognition
as well as statistical and mathematical techniques.
◦ The Data Warehouse could be termed a ‘repository’ or a place where large amounts of
sometimes disparate sources of data are stored;
◦ Data mining is a process that depends upon access to the data held in that repository
 Data Mining
♦ Data mining is a way of exploiting the data held by
organizations to help discover and develop specific
information or knowledge.
♦ With the aid of data mining software, the decision-maker
is encouraged to think in new ways and ask new
questions.
♦ The decision-maker discovers more from the data and
explores in new areas, integrating other sources of data,
going through iterative processes to dig deeper.
 Examples of Data Mining
♦ Mobile Service Providers ♦ Farming: Farmers use Data Mining to find out the yield
♦ Retail Sector of vegetables with the amount of water required by the
plants.
♦ Artificial Intelligence
♦ Automation:
♦ Ecommerce
♦ Dynamic Pricing: Data mining helps the service
♦ Science And Engineering: A large amount of data is providers such as cab services to dynamically charge the
collected from scientific domains such as astronomy, customers based on the demand and supply.
geology, satellite sensors, global positioning system
♦ Transportation: Data Mining helps in scheduling the
♦ Crime Prevention moving of vehicles from warehouses to outlets and analyze
♦ Research: research such as environmental conditions like the product loading patterns.
air pollution and the spread of diseases like asthma among ♦ Insurance: Data mining methods help in forecasting the
people in targeted regions. customers who buy the policies, analyze the medical
claims that are used together, find out fraudulent behaviors
and risky customers.
The Five Vs of Big data
Velocity

Volume Variety

5 V’s
Value Veracity
 1. Volume
• The exponential growth in the data storage as the data is now more than text data.

• The data can be found in the format of videos, music’s and large images on our social media channels.

• It is very common to have Terabytes and Petabytes of the storage system for enterprises.

• As the database grows the applications and architecture built to support the data needs to be re-evaluated
quite often.

• Sometimes the same data is re-evaluated with multiple angles and even though the original data is the
same the new found intelligence creates explosion of the data.

• The big volume indeed represents Big Data.

• Example:
• Instagram, for example, stores photographs.
• There are 600 million Instagrammers; 400 million who are active every day
• Each day 95 million photos and videos are shared on Instagram
• 100 million people use the Instagram “stories” feature daily
 2. Velocity
• The data growth and social media explosion have changed how we look at the data.
• There was a time when we used to believe that data of yesterday is recent.
• The matter of the fact newspapers is still following that logic.
• However, news channels and radios have changed how fast we receive the news.
• Today, people reply on social media to update them with the latest happening.
• On social media sometimes a few seconds old messages (a tweet, status updates etc.) is not
something interests users.
• They often discard old messages and pay attention to recent updates. The data movement is now
almost real time and the update window has reduced to fractions of the seconds.
• This high velocity data represent Big Data.
 3. Variety
 Data can be stored in multiple format. Data was once collected from one place and delivered in one format
For example database, excel, csv, access or for the matter of the fact, it can be stored in a simple text file.

 It is now being presented in non-traditional forms, like video, text, pdf, and graphics on social media, as
well as via tech such as wearable devices.

 Although this data is extremely useful to us, it does create more work and require more analytical skills to
decipher this incoming data, make it manageable and allow it to work.

 Big Data is much more than simply ‘lots of data’. It is a way of providing opportunities to utilise new and
existing data, and discovering fresh ways of capturing future data to really make a difference to business
operatives and make it more agile.

 Eg: Photos and videos and audio recordings and email messages and documents and books and
presentations and tweets and ECG strips are all data, but they're generally unstructured, and incredibly
varied.
 4. Veracity
• It refers to inconsistencies and uncertainty in data, that is data which is available can
sometimes get messy and quality and accuracy are difficult to control.
• Big Data is also variable because of the multitude of data dimensions resulting from multiple
disparate data types and sources.
• Example: Data in bulk could create confusion whereas less amount of data could convey half
or Incomplete Information.
 5. Value
 After having the 4 V’s into account there comes one more V which stands for Value.

 The bulk of Data having no Value is of no good to the company, unless you turn it into
something useful.

 Data in itself is of no use or importance but it needs to be converted into something

valuable to extract Information.

 Hence, Value is the most important V of all the 5V’s.

 5 Vs in Nutshell
• System/users generating Terabytes, petabytes and
Volume zetabytes of data Storage

• System generated streams of data

Velocity • Multiple sources feeding data for one system Processing

• Structures data
Variety • Unstructured data blogs, images, audio etc Presentation
 5 Vs in Nutshell
• Inconsistencies and
Clarity of
Veracity uncertainty in data
• quality and accuracy information

Value added
Value • Simple data no use information
 Using Marketing Databases for Marketing
Intelligence (V kumar pg 658)

• Customers have chosen over competitors for any of several reasons or even for a combination of items.
• Why customer chose your product?
• Reason to choose your product?
• What is unique in product?
• To find how product or service superior in aspects in terms of competitors
 Using Marketing Databases for Marketing
Intelligence
1. Competitive Advantage
◦ This form of marketing intelligence involves
collecting data from competitors in order to
distill insights that can be used to more
effectively develop business strategies.
◦ By understanding which consumers choose
competitors and why, brands can better align
marketing efforts to shift products and
messaging toward the ideal consumers.
2. Product Intelligence
◦ Product intelligence involves taking a deep dive
into the brand’s products as well as how those
products stack up within the market.
◦ Typically done by speaking to consumers, polling
target audiences or engaging them with surveys,
organizations can better understand the
differentiators and competitive advantages of their
products.
◦ From there, teams can better align products to the
unique consumer interests and problems that help
drive conversions.
3. Marketing Understanding
• The data used for this variant of marketing
intelligence revolves around examining the
marketplaces populated by customers or
prospects.
• Are there magazines, books or industry journals
the marketplace reads?
• Or perhaps organizations they are a part of?
• Understanding the areas where your target
audiences are most active can help you identify
the right media mix, touchpoints and media
channels to use and where your products can fit
into those elements.
4. Consumer Understanding
• Most companies focus on new sales, customer
loyalty and retention is just as important.
• Depending on the industry it costs brands an average
of five times more to acquire a new customer than to
retain an existing one.
• Understanding your customers can help effectively
target new customers for less marketing spend, while
helping boost retention rates.
• Consider the following questions:
• Who are your buyers?
• Why are they buying from you?
• Are they satisfied with the level of service?
• Are there things that can be improved?
• What are the challenges your team can help them
with?
Ways to gather Consumer Data (V kumar pg 659)
 1. Survey
• Asking direct questions to customers is probably
one of the most popular, and also an effective
method of gathering data.

• Web-based surveys are definitely quick and easy

for the respondents.

• Respondents have limited answers to choose

from with a few open questions.

• Questionnaire sometimes leaves no place to

share the actual thought of one customer or his
in-depth impression.
 2. Interview
• A one-on-one interview is probably the most
personal method to choose from.
• The interview is ideal when in-depth data
analytics is required. 
• It allows researcher to ask specific questions, and
if the answer is not clear enough, you can always
follow-up with
• Time consuming and expensive
 3. Focus Group
• Focus groups are basically the same as interviews but
conducted in a group.
• Ideally, the focus group should have between three to ten
people maximum, plus a moderator.
• The general idea of a focus group is that each participant
can share the opinion, but it also leaves a place for
discussion within the group.
• This method gets highly detailed data from
representatives of different target groups.
• Moderator controls this type of interaction, as well as
trying to keep the results qualitative and measurable.
 4. Online Tracking
• Website or app is the perfect tool for collecting data about customer behavior.
• When a person visits a website automatically it creates the data.
• It gives a complete information about how many people visited the site, how long they stayed, what they
clicked, and where they got lost, what they bought, what they were interested in, what they left in the basket
– all this information helps to plan business strategy.
• Tracking customers behavior allows companies to have greater insight into their preferences.
• Not only customers’ behavior but also their transactions can be tracked.
 5. Marketing analysis
• Another data collection method is through marketing
campaigns.
• While conducting a campaign, data is collected in may
ways.
• It analyses data about profiles of people that clicked on
your ad, how many times they did it, at what time, on
which device, etc.
• This method provides with the best feedback about
profiles of people who were actually interested in
advertisement.
 6. Monitoring social media
• Social media, has the power to gather as much
data as each person decided to share publicly.
• Collecting data about their interests, hobbies or
followers can give companies a better
understanding of their target audience.
• Companies can know and also monitor how many
times they were mentioned or looked for on social
media.
• Many social media sites will also provide you with
analytics about the performance of your posts.
• This is a perfect use of the third-party data, that
can give precious customer insights.
 7. Subscription and registration data
• Signing up to your email list or rewards program
almost always requires providing valuable customer
data.
• It is also done with the customer’s permission.
• The main benefit of such a method is that leads are
more likely to convert.
• They have already shown an interest in a brand.
• Companies just need to remember that asking for
too much can discourage people from joining
subscription, but if enough data is not asked for
data analytics, then it won’t be valuable.
 8. Monitoring in-store traffic
• Customer insights can be gathered from monitoring
the in-store traffic.
• A traffic counter on the door, will help to keep track
of how many people come to the store during the day.
• It will also give the information about busiest days
and hours are.
• security cameras or sensors installed will monitor the
customers’ within the shop.
• It will provides the data about the most preferred
section of the store.
 VTU Questions
1. Definition: Marketing Decision Support System 3marks
2. Use of Decision Support Systems in Marketing Research 7marks
3. Definition: Data base 3marks
4. Types of data base 7marks
5. Elements of data base 7marks
6. Definition: Data warehousing 7marks
7. The three Vs: Volume, Velocity & Varity, The Fourth V: Value. 10marks
8. Using marketing data base for marketing intelligence 7marks
9. Ways to gather consumer data 7marks