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Distinguish between marketing and selling

New Marketers are sometimes confused about the differences between marketing and selling. In point of fact marketing is simply the act of "bringing the product to market". Selling on the other hand is the final steps one takes to "close a sale" convert a prospective buyer into a customer, or "making a conversion".

At it's core marketing is essentially nothing more than research. That is to say it's about identifying groups potential buyers and then finding the best way of bringing the product to their attention, generally through some form of advertising.

Once potential customers have been identified, marketers will try to reach them by developing what is called the "Marketing Message". The more closely this message resonates with the wants needs or desires of prospective customers the better the odds of making a conversion, aka, closing sales.

Marketing on-line has some distinctive advantages to off line marketing methods. On marketers can conduct market research using search engines or keys word searches using specialized programs as well as various other methods.

In minutes the online marketer can accumulate highly accurate real time data on what people are looking at, or looking for on-line. The value of this powerful research capability can not be understated.

On-line or off, marketing and sales seem sometime to overlap in the development of what is commonly known as the "pitch". The pitch of course is how the marketing message is delivered. It's where the marketing "rubber" meets the road so to speak.

If the marketing has been done properly then the marketing message will be clearly delivered in ad copy, sales copy or by what ever means it is brought before the prospective customer.

Selling is more closely associated with a process called overcoming objections. It is a much more intimate one to one technique where a buyer "assists" a prospective customer in making a "buying decision".

Part of the marketing process is to actually uncover potential objections which might prevent a prospect from being converted to a customer. Selling is in fact where all that marketing research is applied at the point of sale.

While many would say that marketing is only a numbers game, it is really is an art as well. Successful marketers often seem to have an instinct for how to reach prospective customers that goes beyond simply number crunching. They simply seem to know what makes people tick, or perhaps more to the point, what makes them buy.

With Internet Marketing in particular there is a tremendous focus on the numbers. How many thousands, or even million potential customers will see an ad or get an email. It's easy to get the feeling that if only you have a big enough audience, sales will automatically follow.

Unfortunately many novice markets have fallen into the trap of thinking that bigger numbers make for greater success. It's no wonder then that so many fail to achieve any success at all.

Part of a good marketing plan of course is all about getting the marketing message in front of as many people as possible, not just any people of course, but the right people at the right time.

If marketing is done well it simply disappears behind the neat graphics and sparkling ad copy. The marketing message come shining through and to stimulate, motivate or excite exactly the right people.

When marketing is done well products virtually sell themselves.

Marketing decisions generally fall into the following four controllable categories:

Product

Price

Place (distribution)

Promotion

The term "marketing mix" became popularized after Neil H. Borden published his 1964 article, The Concept of the Marketing Mix. Borden began using the term in his teaching in the late 1940's after James Culliton had described the marketing manager as a "mixer of ingredients". The ingredients in Borden's marketing mix included product planning, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact finding and analysis. E. Jerome McCarthy later grouped these ingredients into the four categories that today are known as the 4 P's of marketing, depicted below:

The Marketing Mix

These four P's are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment. The goal is to make decisions that center the four P's on the customers in the target market in order to create perceived value and generate a positive response.

Product Decisions

The term "product" refers to tangible, physical products as well as services. Here are some examples of the product decisions to be made:

Brand name

Functionality

Styling

Quality

Safety

Packaging

Repairs and Support

Warranty

Accessories and services

Price Decisions

Some examples of pricing decisions to be made include:

Pricing strategy (skim, penetration, etc.)

Suggested retail price

Volume discounts and wholesale pricing

Cash and early payment discounts

Seasonal pricing

Bundling

Price flexibility

Price discrimination

Distribution (Place) Decisions

Distribution is about getting the products to the customer. Some examples of distribution decisions include:

Distribution channels

Market coverage (inclusive, selective, or exclusive distribution)

Specific channel members

Inventory management

Warehousing

Distribution centers

Order processing

Transportation

Reverse logistics

Promotion Decisions

In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. Marketing communication decisions include:

Promotional strategy (push, pull, etc.)

Advertising

Personal selling & sales force

Sales promotions

Public relations & publicity

Marketing communications budget

Limitations of the Marketing Mix Framework

The marketing mix framework was particularly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. Today, with marketing more integrated into organizations and with a wider variety of products and markets, some authors have attempted to extend its usefulness by proposing a fifth P, such as packaging, people, process, etc. Today however, the marketing mix most commonly remains based on the 4 P's. Despite its limitations and perhaps because of its simplicity, the use of this framework remains strong and many marketing textbooks have been organized around it.

Q. 2 Discuss the concept of selling by highlighting its special characteristics? Why service sector is widely growing all over the world?

Management philosophy that if customers are left to themselves, they will not make the effort to buy the firm's products. Therefore, it dictates, the firm must be aggressive in pushing its sales.

Selling is offering to exchange something of value for something else. The something of value being offered may be tangible or intangible. The something else, usually money, is most often seen by the seller as being of equal or greater value than that being offered for sale. Another person or organization expressing an interest in acquiring the offered thing of value is referred to as a potential buyer, prospective customer or prospect. Buying and selling are understood to be two sides of the same "coin" or transaction. Both seller and buyer engage is in a process of negotiation to consummate the exchange of values. The exchange, or selling, process has implied rules and identifiable stages. It is implied that the selling process will proceed fairly and ethically so that the parties end up nearly equally rewarded. The stages of selling, and buying, involve getting acquainted, assessing each party’s need for the other’s item of value, and determining if the values to be exchanged are equivalent or nearly so, or, in buyer's terms, "worth the price.”

From a management viewpoint it is thought of as a part of marketing,[1] although the skills required are different. Sales often forms a separate grouping in a corporate structure, employing separate specialist operatives known as salespersons (singular: salesperson). Selling is considered by many to be a sort of persuading "art". Contrary to popular belief, the methodological approach of selling refers to a systematic process of repetitive and measurable milestones, by which a salesman relates his or her offering of a product or service in return enabling the buyer to achieve their goal in an economic way.[2] While the sales process refers to a systematic process of repetitive and measurable milestones, the definition of the selling is somewhat ambiguous due to the close nature of advertising, promotion, public relations, and direct marketing.

Q. 3 Discuss the significance of marketing mix in relation with Product Life Cycle. What should be the marketing strategies in the different stages of product life cycle?

The marketing mix section of your small business marketing plan concentrates on the tactics used to achieve the marketing and business plan. Those tactics can be categorized as the four 'P's' of marketing: product, price, promotion and place(also known as the distribution channel).

A common analogy used in describing marketing mix is relating the mix (in marketing mix) as being the ingredients in a recipe: you need to get the quantities of each element right or the result will not be what you need or expect.

Consider the following questions carefully when you build your marketing plan:

* When developing your marketing tactics for the product, you must consider the features, advantages and benefits of the product. Define all the characteristics of your product. Define and rank which are most valuable to your target market? Why are they valuable to your market? Define what is unique about your product and why it has a competitive advantage (something that is not easily duplicated). Consider conducting a marketing research survey to test your assumptions. You may be surprised to find out that what you thought was important to your market is not. Make sure you can address all these questions in your marketing plan.

* Pricing your product sounds like a straightforward process but the reality is that it is a very complex process. At what stage in the life cycle is the product? Product life cycle stages will influence price. Are you the high cost, high value provider? Or the low cost, high volume provider? Does your product have unique attributes that can not be easily duplicated? Does your product have a competitive advantage not easily overcome? Are you trying to buy your way into the market? Be very careful with this 'buy-in' strategy --it is often very challenging to move a low price up. Is this product a loss leader for your sales of another, more profitable product? There are still more questions to consider when developing your price and you must analyze each answer carefully before determining the price for your product. Typically it is a good idea to plot your price attributes on a grid - you can visually see where you are on a grid and better assess if that is the right place to be.

* Promotion includes a number of marketing communications tactics. Should you build a direct mail program (is your product conducive to a printed description; do you have a good targeted mail list)? Can you market your product online? Are traditional advertising methods (print, radio, television) the most appropriate? What kind of budget do you have? Does your product have a strong enough brand? If not focus on building a stronger identity and brand. How can public relations efforts help you promote your product? Can you successfully participate in trade shows and industry events to sell your product? How will you craft your sales story: from sales letters to sales pitches? Have you build measurements into each of your promotional vehicles? Do you truly understand your market and your audience? Recognize that you will need to use more than one of these tactics to launch a successful marketing campaign.

* Place is how your product moves to market. What distribution channel will you use? Will it be a business-to-business channel or a business-to-consumer channel? Will you sell using your own sales staff, or will you outsource sales and use distributors or sales agents? Can you sell your product online or must it be offline and in-person? Is your market geography wide or narrow? What are the implications of the answers to these questions on your marketing mix?

When building and creating your marketing plan you must consider these elements of your marketing mix because they will have a significant impact (positive if well planned and managed; negative if poorly planned and not managed) on your product's success or failure.

All small business owners go into business expecting success; not all plan for success. Ensure that your small business enjoys success by developing a strong strategic marketing plan that includes a comprehensive marketing mix.

Q. 4 How market segmentation differs from product differentiation? Explain the bases for market segmentation and targeting market.

Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations sharing with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups.

Examples:

Age

Gender

Price

Interests

While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.

"Positive" market segmentation

Market segmenting is dividing the market into groups of individual markets with similar wants or needs that a company divides the market into distinct groups who have distinct needs, wants, behavior or who might want different products & services. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private although industrial market segmentation is quite different from consumer market segmentation, both have similar objectives. All of these methods of segmentation are merely proxies for true segments, which don't always fit into convenient demographic boundaries.

Consumer-based market segmentation can be performed on a product specific basis, to provide a close match between specific products and individuals. However, a number of generic market segment systems also exist, e.g. the Nielsen Claritas PRIZM system provides a broad segmentation of the population of the United States based on the statistical analysis of household and geo-demographic data.

The process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behavior; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved.

Improved segmentation can lead to significantly improved marketing effectiveness. Distinct segments can have different industry structures and thus have higher or lower attractiveness (Michael Porter). With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased leading to better reputation.

In marketing, product differentiation (also known simply as "differentiation") is the process of distinguishing a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own product offerings.

Differentiation can be a source of competitive advantage. Although research in a niche market may result in changing a product in order to improve differentiation, the changes themselves are not differentiation. Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of a firm's product and create a sense of value. Marketing textbooks are firm on the point that any differentiation must be valued by buyers (e.g. [1]). The term unique selling proposition refers to advertising to communicate a product's differentiation [2].

In economics, successful product differentiation leads to monopolistic competition and is inconsistent with the conditions for perfect competition, which include the requirement that the products of competing firms should be perfect substitutes. There are three types of product differentiation: 1. Simple: based on a variety of characteristics 2. Horizontal : based on a single characteristic but consumers are not clear on quality 3. Vertical : based on a single characteristic and consumers are clear on its quality [3]

The brand differences are usually minor; they can be merely a difference in packaging or an advertising theme. The physical product need not change, but it could. Differentiation is due to buyers perceiving a difference, hence causes of differentiation may be functional aspects of the product or service, how it is distributed and marketed, or who buys it. The major sources of product differentiation are as follows.

Differences in quality which are usually accompanied by differences in price

Differences in functional features or design

Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing

Sales promotion activities of sellers and, in particular, advertising

Differences in availability (e.g. timing and location).

The objective of differentiation is to develop a position that potential customers see as unique.

Differentiation primarily impacts performance through reducing directness of competition: As the product becomes more different, categorization becomes more difficult and hence draws fewer comparisons with its competition. A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables).

Most people would say that the implication of differentiation is the possibility of charging a price premium; however, this is a gross simplification. If customers value the firm's offer, they will be less sensitive to aspects of competing offers; price may not be one of these aspects. Differentiation makes customers in a given segment have a lower sensitivity to other features (non-price) of the product

Q. 5 Write short notes on the followings:

Standardization

Functional Organization

Marketing Information System

STANDARDIZATION

Standardization or standardisation is the process of developing and agreeing upon technical standards. A standard is a document that establishes uniform engineering or technical specifications, criteria, methods, processes, or practices. Some standards are mandatory while others are voluntary. Voluntary standards are available if one chooses to use them. Some are de facto standards, meaning a norm or requirement which has an informal but dominant status. Some standards are de jure, meaning formal legal requirements. Formal standards organizations, such as the International Organization for Standardization (ISO) or the American National Standards Institute, are independent of the manufacturers of the goods for which they publish standards.

Usage

Standardization is the process of establishing a technical standard, which could be a standard specification, standard test method, standard definition, standard procedure (or practice), etc.

The existence of a published standard does not necessarily imply that it is useful or correct. Just because an item is stamped with a standard number does not, by itself, indicate that the item is fit for any particular use. The people who use the item or service (engineers, trade unions, etc) or specify it (building codes, government, industry, etc) have the responsibility to consider the available standards, specify the correct one, enforce compliance, and use the item correctly. Validation of suitability is necessary.

In the context of social criticism and social sciences, standardization often means the process of establishing standards of various kinds and improving efficiency to handle people, their interactions, cases, and so forth. Examples include formalization of judicial procedure in court, and establishing uniform criteria for diagnosing mental disease. Standardization in this sense is often discussed along with (or synonymously to) such large-scale social changes as modernization, bureaucratization, homogenization, and centralization of society.

In the context of business information exchanges, standardization refers to the process of developing data exchange standards for specific business processes using specific syntaxes. These standards are usually developed in voluntary consensus standards bodies such as the United Nations Center for Trade Facilitation and Electronic Business (UN/CEFACT), the World Wide Web Consortium W3C, and the Organization for the Advancement of Structured Information Standards (OASIS).

In the context of customer service, standardization refers to the process of developing an international standard that enables organizations to focus their attention on delivering excellence in customer service, whilst at the same time providing recognition of success through a 3rd Party organization, such as British Standards Institution (BSI). The International Customer Service Standard (TICSS) has been developed by The International Customer Service Institute (TICSI) with the objective of making it the cornerstone global standard of customer service. This standard has the status of an independent standard, managed by The International Customer Service Institute.

Standards can be:

de facto standards which means they are followed by informal convention or dominant usage.

de jure standards which are part of legally binding contracts, laws or regulations.

Voluntary standards which are published and available for people to consider for use

FUNCTIONAL ORGANIZATION

Functional organization is a type of organizational structure that uses the principle of specialization based on function or role.

It allows decisions to be decentralized since issues are delegated to specialized persons or units, leaving them the responsibility of implementing, evaluating, or controlling the given procedures or goals.

In general, each country or economy has a single recognized National Standards Body (NSB). Examples include ABNT, ANSI, AENOR, BSI, DGN, DIN, IRAM, JISC, KATS, SABS, SAC, SCC, SIS, SNZ. An NSB is likely the sole member from that economy in ISO.

NSBs may be either public or private sector organizations, or combinations of the two. For example, the three NSBs of Canada, Mexico and the United States are respectively the Standards Council of Canada (SCC), the General Bureau of Standards (Dirección General de Normas, DGN), and the American National Standards Institute (ANSI). SCC is a Canadian Crown Corporation, DGN is a governmental agency within the Mexican Ministry of Economy, and ANSI and AENOR are a 501(c)(3) non-profit organization with members from both the private and public sectors. The determinates of whether an NSB for a particular economy is a public or private sector body may include the historical and traditional roles that the private sector fills in public affairs in that economy or the development stage of that economy.

Many specifications that govern the operation and interaction of devices and software on the Internet are in use. To preserve the word "standard" as the domain of relatively disinterested bodies such as ISO, the W3C, for example, publishes "Recommendations", and the IETF publishes "Requests for Comments" (RFCs). These publications are sometimes referred to as being standards. Drafts and working documents should not be considered as formal published standards.

In a military context, standardization can be defined as: The development and implementation of concepts, doctrines, procedures and designs to achieve and maintain the required levels of compatibility, interchangeability or commonality in the operational, procedural, material, technical and administrative fields to attain interoperability.

Note: there are at least four levels of standardization: compatibility, interchangeability, commonality and reference. These standardization processes create compatibility, similarity, measurement and symbol standards.

MARKETING INFORMATION SYSTEM

Clearly, information systems that claim to support managers cannot be built unless one understands what managers do and how they do it. The classical model of what managers do, espoused by writers in the 1920's, such as Henry Fayol, whilst intuitively attractive in itself, is of limited value as an aid to information system design. The classical model identifies the following 5 functions as the parameters of what managers do:

1. Planning

2. Organising

3. Coordinating

4. Deciding

5. Controlling

Such a model emphasises what managers do, but not how they do it, or why. More recently, the stress has been placed upon the behavioural aspects of management decision making. Behavioural models are based on empirical evidence showing that managers are less systematic, less reflective, more reactive and less well organised than the classical model projects managers to be. For instance, behavioural models describe 6 managerial characteristics:

· High volume, high speed work

· Variety, fragmentation, brevity

· Issue preference current, ad hoc, specific

· Complex web of interactions, contacts

· Strong preference for verbal media.

Such behavioural models stress that managers work at an unrelenting pace and at a high level of intensity. This is just as true for managers operating in the developing world as in the developed world. The nature of the pressures may be different but there is no evidence that they are any less intense. The model also emphasises that the activities of managers is characterised by variety, fragmentation and brevity. There is simply not enough time for managers to get deeply involved in a wide range of issues. The attention of managers increase rapidly from one issue to another, with very little pattern. A problem occurs and all other matters must be dropped until it is solved. Research suggests that a manager's day is characterised by a large number of tasks with only small periods of time devoted to each individual task.

Managers prefer speculation, hearsay, gossip in brief, current, up-to-date, although uncertain information. Historical, certain, routine information receives less attention. Managers want to work on issues that are current, specific and ad hoc.

Managers are involved in a complex and diverse web of contacts that together act as an information system. They converse with customers, competitors, colleagues, peers, secretaries, government officials, and so forth. In one sense, managers operate a network of contacts throughout the organisation and the environment.

Several studies have found that managers prefer verbal forms of communication to written forms. Verbal media are perceived to offer greater flexibility, require less effort and bring a faster response. Communication is the work of the manager, and he or she uses whatever tools are available to be an effective communicator.

Despite the flood of work, the numerous deadlines, and the random order of crises, it has generally been found that successful managers appear to be able to control their own affairs. To some extent, high-level managers are at the mercy of their subordinates, who bring to their attention crises and activities that must be attended to immediately. Nevertheless, successful managers are those who can control the activities that they choose to get involved in on a day-to-day basis. By developing their own long-term commitments, their own information channels, and their own networks, senior managers can control their personal agendas. Less successful managers tend to be overwhelmed by problems brought to them by subordinates.

Managerial Roles

Mintzberg suggests that managerial activities fall into 3 categories: interpersonal, information processing and decision making. An important interpersonal role is that of figurehead for the organisation. Second, a manager acts as a leader, attempting to motivate subordinates. Lastly, managers act as a liaison between various levels of the organisation and, within each level, among levels of the management team.

A second set of managerial roles, termed as informational roles, can be identified. Managers act as the nerve centre for the organisation, receiving the latest, most concrete, most up-to-date information and redistributing it to those who need to know.

A more familiar set of managerial roles is that of decisional roles. Managers act as entrepreneurs by initiating new kinds of activities; they handle disturbances arising in the organisation; they allocate resources where they are needed in the organisation; and they mediate between groups in conflict within the organisation.

In the area of interpersonal roles, information systems are extremely limited and make only indirect contributions, acting largely as a communications aid in some of the newer office automation and communication-oriented applications. These systems make a much larger contribution in the field of informational roles; large-scale MIS systems, office systems, and professional work stations that can enhance a manager's presentation of information are significant. In the area of decision making, only recently have decision support systems and microcomputer-based systems begun to make important contributions.

While information systems have made great contributions to organisations, until recently these contributions have been confined to narrow, transaction processing areas. Much work needs to be done in broadening the impact of systems on professional and managerial life.

Decision Making

Decision making is often seen as the centre of what managers do, something that engages most of a managers time. It is one of the areas that information systems have sought most of all to affect (with mixed success). Decision making can be divided into 3 types: strategic, management control and operations control.

Strategic decision making: This level of decision making is concerned with deciding on the objectives, resources and policies of the organisation. A major problem at this level of decision making is predicting the future of the organisation and its environment, and matching the characteristics of the organisation to the environment. This process generally involves a small group of high-level managers who deal with very complex, non-routine problems.

For example, some years ago, a medium-sized food manufacturer in an East African country faced strategic decisions concerning its range of pasta products. These products constituted a sizeable proportion of the company's sales turnover. However, the company was suffering recurrent problems with the poor quality of durum wheat it was able to obtain resulting in a finished product that was too brittle. Moreover, unit costs were shooting up due to increasingly frequent breakdowns in the ageing equipment used in pasta production. The company faced the decision whether to make a very large investment in new machinery or to accept the offer of another manufacturer of pasta products, in a neighbouring country, that it should supply the various pasta products and the local company put its own brand name on the packs. The decision is strategic since the decision has implications for the resource base of the enterprise, i.e. its capital equipment, its work force, its technological base etc. The implications of strategic decisions extend over many years, often as much as ten to fifteen years.

Management control decisions: Such decisions are concerned with how efficiently and effectively resources are utilised and how well operational units are performing. Management control involves close interaction with those who are carrying out the tasks of the organisation; it takes place within the context of broad policies and objectives set out by strategic planners.

An example might be where a transporter of agricultural products observes that his/her profits are declining due to a decline in the capacity utilisation of his/her two trucks. The manager (in this case the owner) has to decide between several alternative courses of action, including: selling of trucks, increasing promotional activity in an attempt to sell the spare carrying capacity, increasing unit carrying charges to cover the deficit, or seeking to switch to carrying products or produce with a higher unit value where the returns to transport costs may be correspondingly higher. Management control decisions are more tactical than strategic.

Operational control decisions: These involve making decisions about carrying out the " specific tasks set forth by strategic planners and management. Determining which units or individuals in the organisation will carry out the task, establishing criteria of completion and resource utilisation, evaluating outputs - all of these tasks involve decisions about operational control.

The focus here is on how the enterprises should respond to day-to-day changes in the business environment. In particular, this type of decision making focuses on adaptation of the marketing mix, e.g. how should the firm respond to an increase in the size of a competitor's sales force? should the product line be extended? should distributors who sell below a given sales volume be serviced through wholesalers rather than directly, and so on.

Within each of these levels, decision making can be classified as either structured or unstructured. Unstructured decisions are those in which the decision maker must provide insights into the problem definition. They are novel, important, and non-routine, and there is no well-understood procedure for making them. In contrast, structured decisions are repetitive, routine, and involve a definite procedure for handling them so that they do not have to be treated each time as if they were new.

Structured and unstructured problem solving occurs at all levels of management. In the past, most of the success in most information systems came in dealing with structured, operational, and management control decisions. However, in more recent times, exciting applications are occurring in the management and strategic planning areas, where problems are either semi-structured or are totally unstructured.

Making decisions is not a single event but a series of activities taking place over time. Suppose, for example, that the Operations Manager for the National Milling Corporation is faced with a decision as to whether to establish buying points in rural locations for the grain crop. It soon becomes apparent that the decisions are likely to be made over a period of time, have several influences, use many sources of information and have to go through several stages. It is worth considering the question of how, if at all, information systems could assist in making such a decision. To arrive at some answer, it is helpful to break down decision making into its component parts.

The literature has described 4 stages in decision making: intelligence, design, choice and implementation. That is, problems have to be perceived and understood; once perceived solutions must be designed; once solutions are designed, choices have to be made about a particular solution; finally, the solution has to be implemented.

Intelligence involves identifying the problems in the organisation: why and where they occur with what effects. This broad set of information gathering activities is required to inform managers how well the organisation is performing and where problems exist. Management information systems that deliver a wide variety of detailed information can be useful, especially if they are designed to report exceptions. For instance, consider a commercial organisation marketing a large number of different products and product variations. Management will want to know, at frequent intervals, whether sales targets are being achieved. Ideally, the information system will report only those products/product variations which are performing substantially above or below target.

Designing many possible solutions to the problems is the second phase of decision making. This phase may require more intelligence to decide if a particular solution is appropriate. Here, more carefully specified and directed information activities and capabilities focused on specific designs are required.

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