ORIGIN AND DEVELOPMENT OF OPERATION RESEARCH

The term, Operational Research, was first coined in 1940 by McClosky

and Trefthen in a small town, Boesey, of the !nited "in#dom$
This new science came into eistence as a res%lt of research on military operations d%rin# &orld
&ar ''$ (%rin# the was there were strate#ic and tactical problems which were #reatly
complicated,to epect ade)%ate sol%tions from indi*id%als or specialists was
%nrealistic$
Therefore, the military mana#ement called on scientists from *ario%s disciplines and or#anised
them into teams to assist in sol*in# strate#ic and tactical problems, i$e$ ,to disc%ss,e*ol*e and
s%##est ways and means to impro*e the eec%tion of *ario%s military pro+ects$
By their +oint efforts, eperience and deliberations, they s%##ested certain approaches that
showed remarkable pro#ress$ This new approach to systematic and scientific st%dy of the
operations of the system was called the Operations Research or Operational Research$
, marketing information system -MkIS. is a mana#ement information system -M'/. desi#ned
to s%pport marketin# decision makin#$ 0obber -1002. defines it as a 3system in which marketin#
data is formally #athered, stored, analysed and distrib%ted to mana#ers in accordance with their
informational needs on a re#%lar basis$3 'n addition, the online b%siness dictionary defines
Marketin# 'nformation /ystem -Mk'/. as 4a system that analy5es and assesses marketin#
information, #athered contin%o%sly from so%rces inside and o%tside an or#ani5ation$6
718

9%rthermore, 4an o*erall Marketin# 'nformation /ystem can be defined as a set str%ct%re of
proced%res and methods for the re#%lar, planned collection, analysis and presentation of
information for %se in makin# marketin# decisions$6 -"otler, at al, 100:. (e*elopin# a Mk'/
system is becomin# etremely important as the stren#th of economies rely on ser*ices and to
better %nderstand the specific needs of c%stomers$ "otler, et al$ -100:. defined it more broadly as
3people, e)%ipment, and proced%res to #ather, sort, analy5e, e*al%ate, and distrib%te needed,
timely, and acc%rate information to marketin# decision makers$3
718
,s o%r economy foc%ses on ser*ices, marketin# is becomin# etremely important to 4monitor the
marketin# en*ironment for chan#es in b%yer beha*ior competition, technolo#y, economic
conditions, and #o*ernment policies$6
7;8
'n this sense, the role of marketin# is becomin# pi*otal
for an or#ani5ation to 4adapt to chan#es in the market en*ironment$6 -<armon, 100;.
9%rthermore, as o%r economy relies hea*ily on the ac)%isition of knowled#e, Mk'/ systems are
necessary to be able to define and differentiate the *al%e proposition that one or#ani5ation
pro*ides with respect to another, as well as to define their competiti*e ad*anta#e$ -<armon,
100;.
The main benefit of Mk'/ systems is to inte#rate market=monitorin# systems with strate#y
de*elopment and the strate#ic implementation of policies and processes that help capt%re and act
on c%stomer mana#ement applications with marketin# decision s%pport systems$ This area
constit%te Marketin# intelli#ence that s%pports the analysis and market based acti*ities that
s%pport c%stomer relations and c%stomer ser*ice with real time information with real time
applications that s%pport market based approaches$
,ccordin# to Robert <armon -100;., Mk'/ systems are composed on fo%r components> -1. %ser
interfaces, -1. applications software, -;. databases, and -4. systems s%pport$ The followin# is a
description of each one of these components$
1$ !ser interfaces$ The essential element of the Mk'/ is the mana#ers who will %se the system
and the interface they need to effecti*ely analy5e and %se marketin# information$ The desi#n of
the system will depend on what type of decision mana#ers need to make$
1$ ,pplication software$ These are the pro#rams that marketin# decision makers %se to collect,
analy5e, and mana#e data for the p%rpose of de*elopin# the information necessary for marketin#
decisions$
;$ (atabase marketin#$ , marketin# database is a system in which marketin# data files are
or#ani5ed and stored$
4$ /ystem s%pport$ This component consists of system mana#ers who mana#e and maintain the
system assets incl%din# software and hardware network, monitor its acti*ities and ens%re
compliance with or#ani5ational policies$
,lon# with these components, Mk'/ systems incl%de Marketin# (ecision /%pport /ystems
-M(//., which in t%rn rely on simple systems s%ch as Microsoft ?cel, /@//, and on=line
analytical tools that help collect data$ (ata compiled for analysis is stored and processed from a
data wareho%se, which is simply a data repository system that helps store and f%rther process
data collected internally and eternally$ -<armon, 100;.
Comonents of a marketing information system
, marketin# information system -M'/. is intended to brin# to#ether disparate items of data into a
coherent body of information$ ,n M'/ is, as will shortly be seen, more than raw data or
information s%itable for the p%rposes of decision makin#$ ,n M'/ also pro*ides methods for
interpretin# the information the M'/ pro*ides$ Moreo*er, as "otlerAs
1
definition says, an M'/ is
more than a system of data collection or a set of information technolo#ies>
3, marketin# information system is a contin%in# and interactin# str%ct%re of people, e)%ipment
and proced%res to #ather, sort, analyse, e*al%ate, and distrib%te pertinent, timely and acc%rate
information for %se by marketin# decision makers to impro*e their marketin# plannin#,
implementation, and control3$
9i#%re 9$1 ill%strates the ma+or components of an M'/, the en*ironmental factors monitored by
the system and the types of marketin# decision which the M'/ seeks to %nderpin$
Fig!re "#$ T%e marketing information systems an& its s!'systems
The eplanation of this model of an M'/ be#ins with a description of each of its fo%r main
constit%ent parts> the internal reportin# systems, marketin# research system, marketin#
intelli#ence system and marketin# models$ 't is s%##ested that whilst the M'/ *aries in its de#ree
of sophistication = with many in the ind%strialised co%ntries bein# comp%terised and few in the
de*elopin# co%ntries bein# so = a f%lly fled#ed M'/ sho%ld ha*e these components, the methods
-and technolo#ies. of collection, storin#, retrie*in# and processin# data notwithstandin#$
Interna( reorting systems) ,ll enterprises which ha*e been in operation for any period of time
na*e a wealth of information$ <owe*er, this information often remains %nder=%tilised beca%se it
is compartmentalised, either in the form of an indi*id%al entreprene%r or in the f%nctional
departments of lar#er b%sinesses$ That is, information is %s%ally cate#orised accordin# to its
nat%re so that there are, for eample, financial, prod%ction, manpower, marketin#, stockholdin#
and lo#istical data$ Often the entreprene%r, or *ario%s personnel workin# in the f%nctional
departments holdin# these pieces of data, do not see how it co%ld help decision makers in other
f%nctional areas$ /imilarly, decision makers can fail to appreciate how information from other
f%nctional areas mi#ht help them and therefore do not re)%est it$
The internal records that are of immediate *al%e to marketin# decisions are> orders recei*ed,
stockholdin#s and sales in*oices$ These are b%t a few of the internal records that can be %sed by
marketin# mana#ers, b%t e*en this small set of records is capable of #eneratin# a #reat deal of
information$ Below, is a list of some of the information that can be deri*ed from sales in*oices$
B @rod%ct type, si5e and pack type by territory
B @rod%ct type, si5e and pack type by type of acco%nt
B @rod%ct type, si5e and pack type by ind%stry
B @rod%ct type, si5e and pack type by c%stomer
B ,*era#e *al%e andCor *ol%me of sale by territory
B ,*era#e *al%e andCor *ol%me of sale by type of acco%nt
B ,*era#e *al%e andCor *ol%me of sale by ind%stry
B ,*era#e *al%e andCor *ol%me of sale by sales person
By comparin# orders recei*ed with in*oices an enterprise can establish the etent to which it is
pro*idin# an acceptable le*el of c%stomer ser*ice$ 'n the same way, comparin# stockholdin#
records with orders recei*ed helps an enterprise ascertain whether its stocks are in line with
c%rrent demand patterns$
Marketing resear*% systems) The #eneral topic of marketin# research has been the prime A
s%b+ect of the tetbook and only a little more needs to be added here$ Marketin# research is a
proacti*e search for information$ That is, the enterprise which commissions these st%dies does so
to sol*e a percei*ed marketin# problem$ 'n many cases, data is collected in a p%rposef%l way to
address a well=defined problem -or a problem which can be defined and sol*ed within the co%rse
of the st%dy.$ The other form of marketin# research centres not aro%nd a specific marketin#
problem b%t is an attempt to contin%o%sly monitor the marketin# en*ironment$ These monitorin#
or trackin# eercises are contin%o%s marketin# research st%dies, often in*ol*in# panels of
farmers, cons%mers or distrib%tors from which the same data is collected at re#%lar inter*als$
&hilst the ad hoc st%dy and contin%o%s marketin# research differs in the orientation, yet they are
both proacti*e$
Marketing inte((igen*e systems) &hereas marketin# research is foc%sed, market intelli#ence is
not$ , marketin# intelli#ence system is a set of proced%res and data so%rces %sed by marketin#
mana#ers to sift information from the en*ironment that they can %se in their decision makin#$
This scannin# of the economic and b%siness en*ironment can be %ndertaken in a *ariety of ways,
incl%din#
1

!nfoc%sed
scannin#
The mana#er, by *irt%e of what heCshe reads, hears and watches eposes
himCherself to information that may pro*e %sef%l$ &hilst the beha*io%r is
%nfoc%sed and the mana#er has no specific p%rpose in mind, it is not %nintentional
/emi=
foc%sed
scannin#
,#ain, the mana#er is not in search of partic%lar pieces of information that heCshe
is acti*ely searchin# b%t does narrow the ran#e of media that is scanned$ 9or
instance, the mana#er may foc%s more on economic and b%siness p%blications,
broadcasts etc$ and pay less attention to political, scientific or technolo#ical media$
'nformal
search
This describes the sit%ation where a fairly limited and %nstr%ct%red attempt is
made to obtain information for a specific p%rpose$ 9or eample, the marketin#
mana#er of a firm considerin# enterin# the b%siness of importin# fro5en fish from
a nei#hbo%rin# co%ntry may make informal in)%iries as to prices and demand
le*els of fro5en and fresh fish$ There wo%ld be little str%ct%re to this search with
the mana#er makin# in)%iries with traders heCshe happens to enco%nter as well as
with other ad hoc contacts in ministries, international aid a#encies, with trade
associations, importersCeporters etc$
9ormal
search
This is a p%rposef%l search after information in some systematic way$ The
information will be re)%ired to address a specific iss%e$ &hilst this sort of acti*ity
may seem to share the characteristics of marketin# research it is carried o%t by the
mana#er himCherself rather than a professional researcher$ Moreo*er, the scope of
the search is likely to be narrow in scope and far less intensi*e than marketin#
research
Marketin# intelli#ence is the pro*ince of entreprene%rs and senior mana#ers within an
a#rib%siness$ 't in*ol*es them in scannin# newspaper trade ma#a5ines, b%siness +o%rnals and
reports, economic forecasts and other media$ 'n addition it in*ol*es mana#ement in talkin# to
prod%cers, s%ppliers and c%stomers, as well as to competitors$ Donetheless, it is a lar#ely
informal process of obser*in# and con*ersin#$
/ome enterprises will approach marketin# intelli#ence #atherin# in a more deliberate fashion and
will train its sales force, after=sales personnel and districtCarea mana#ers to take co#nisance of
competitorsA actions, c%stomer complaints and re)%ests and distrib%tor problems$ ?nterprises
with *ision will also enco%ra#e intermediaries, s%ch as collectors, retailers, traders and other
middlemen to be proacti*e in con*eyin# market intelli#ence back to them$
Marketing mo&e(s) &ithin the M'/ there has to be the means of interpretin# information in
order to #i*e direction to decision$ These models may be comp%terised or may not$ Typical tools
are>
B Time series sales modes
B Brand switchin# models
B Einear pro#rammin#
B ?lasticity models -price, incomes, demand, s%pply, etc$.
B Re#ression and correlation models
B ,nalysis of Fariance -,DOF,. models
B /ensiti*ity analysis
B (isco%nted cash flow
B /preadsheet Awhat if models
These and similar mathematical, statistical, econometric and financial models are the analytical
s%bsystem of the M'/$ , relati*ely modest in*estment in a desktop comp%ter is eno%#h to allow
an enterprise to a%tomate the analysis of its data$ /ome of the models %sed are stochastic, i$e$
those containin# a probabilistic element whereas others are deterministic models where chance
plays no part$ Brand switchin# models are stochastic since these epress brand choices in
probabilities whereas linear pro#rammin# is deterministic in that the relationships between
*ariables are epressed in eact mathematical terms$
T%e s!'systems of marketing information system are
9orecastin# system G Market forecastin# system is essential system$ 't refers to
estimatin# the f%t%re demand for the ser*ices or prod%cts$ This system normally takes inp%t from
the eistin# information systems and allows the or#ani5ation to forecast the f%t%re$
By %tili5in# *ario%s techni)%es of predictin# the demand of the prod%cts can be ascertained that
ser*es as basis for all the f%nctional area$ ,ppropriate predictin# techni)%e sho%ld be %tili5ed
based on the information$ The forecastin# helps for plannin# as well as %sef%l for controllin#
also$
C%stomer analysis system G This c%stomer analysis system pro*ides %sef%l information
re#ardin# *ario%s types of c%stomers$ The c%stomers can be di*ided into> eport c%stomers,
#o*ernment c%stomers, corporate c%stomers, b%lk c%stomers and small, indi*id%al se#ment$
The characteristic of each c%stomer *aries and these #ro%ps of c%stomers sho%ld be st%died at
len#th so as to impro*e the performance of the company in that partic%lar c%stomer se#ment$
This system allows %nderstandin# the problems of *ario%s c%stomers$
Market research system G This system pro*ides details on partic%lar problem of
marketin#$ 't #athers cons%mer related data that can be %tili5ed to s%pport decisions of
marketin#$
Thro%#h marketin# research %sef%l information as to promotion, sales and prod%ct can be
obtained$ Marketin# research can be thro%#h phone inter*iew, personal inter*iew and mail
ser*ices etc$
Market analysis system G This system pro*ides analysis re#ardin# the market
information$ These analyses are basically related to market se#mentation$ /e#mentation pro*ides
basic data for takin# decisions as to which se#ment is doin# well and what *al%e concentration is
re)%ired to impro*e the market$
Market intelli#ence system G This system refers to an information system re#ardin# the
strate#ies of the competitors$ Most of the intelli#ence system of market obtained in an
%nstr%ct%red manner will be thro%#h the word of mo%th or thro%#h obser*in# statistics a*ailable
thro%#h the media as well as commercial data base ser*ices$
Dowadays d%e to hea*y increase of competition there is a hea*y need for the data of market
intelli#ence to ha*e appropriate decisions in marketin#$
Marketin# mi system G This system consists of 4@As$ They are prod%ct, price, promotion
and place$ <ow best these 4@As sho%ld be mied so as to achie*e the ob+ecti*es of marketin#$
These 4@As plays *ery important role in marketin#$ This system pro*ides details as to which
prod%ct is needed by the c%stomers at what price as well as what promotional meas%res sho%ld
be taken to make the ser*ices or prod%cts to reach the c%stomer and the last b%t not the least the
deli*ery place$
?lectronic shoppin# and ad*ertisin# G ?lectronic shoppin# allows the c%stomers to *iew
abo%t prod%cts and company on the electronic means, i$e$, internet to p%rchase the #oods or
ser*ices, in the case of #lobal marketin# electronic shoppin# as well as ad*ertisin# systems help
hea*ily tho%#h they are epensi*e$
,d*ertisin# creates interest in the c%stomerAs minds re#ardin# the prod%cts$ ,d*ertisin# is
information re#ardin# the prod%cts as well as company$ ?lectronic stalls are employed at a
central location for the p%rpose of ad*ertisin# and pro*idin# potential c%stomers to access the
information abo%t ser*ices and prod%cts$ They also ser*e as #ood tools for market research$
&itho%t websites, or#ani5ations today are likely to feel somewhat handicapped$ @resent days
e*ery type of company maintains websites for the sake of pro*idin# information re#ardin# their
ser*ices and prod%cts$ 'nternet ad*ertisements ha*e become famo%s for means of or#ani5ation to
reach new c%stomers$
(eli*ery rootin# and trackin# system G This system tracks the #oods *ehicles position
and calc%lates the stat%s of deli*ery$ (eli*ery trackin# system employs satellite dishes on the
deli*ery *ans in order to monitor the mo*ement and location of *ehicles and #oods$ (eli*ery
ro%tin# systems help to ro%te the *ehicles efficiently in order to deli*er the #oods to the
c%stomers at lesser cost$ The ro%tin# software works on #eo#raphical maps as well as identifies
the best ro%tes for the sake of *ehicles that wo%ld epedite deli*ery and red%ce the cost$
@oint of sale system G This system is another fact of the order entry system$ 't capt%res
data abo%t the order at the point of sale and fre)%ently fo%nd in fast food centers chain
marketin#, department store$ The information obtained from point of sale becomes inp%t to the
9,'/ and also to the marketin# information system$ @oint of sale %pdates immediately in*entory
and sales le*els$ Thro%#h point of sales can be monitored min%te and in*entory also can be
monitored closely$
(irect mail ad*ertisin# system G 'n this system, the company mails, broch%res and sends
the information directly to the tar#et c%stomers$ 9or this reason company "eeps CompanyAs
mailin# address$ The data may be drawn from the files of c%stomers, acco%nt recei*able files and
prospect files as well as other data p%rchased from o%tside$ This is )%ite opposite to mass
ad*ertisin# that reaches an %nspecified n%mber of people that may p%rchase the prod%ct or not$
This direct mail ad*ertisin# system permits hi#h tar#et market selecti*ity, fleibility,
personali5ation, early testin# of the prod%ct or ser*ices as well as meas%rement of the res%lts$
Telemarketin# system G This system means %se of telephone to sell the prod%cts or
ser*ices$ 't has become a common as well as important means by which or#ani5ations impro*e
prod%cti*ity of their sales force$ This system allows sales people to initiate contacts, offer
ser*ices or prod%cts as well as follow=%p on sales witho%t inc%rrin# tra*ellin# cost$ This
telemarketin# system enables sales person to reach many c%stomers within a #i*en time for
telemarketin# %se electronic directories as well as online databases for the p%rpose of #atherin#
partic%lars of prospecti*e of c%stomers to meet the sales tar#ets$ This system has allowed se*eral
firms to increase their sales s%bstantially and #ain market share as well as at the same time
decrease the cost per sale$
(ata wareho%sin# and micro marketin# system G Micro marketin# means di*in# sales or
ad*ertisin# campai#ns to *ery narrowly defined c%stomers$ &ith the help of comp%ters, micro
marketin# is possible$ They are %tili5ed for the sake of identifyin# and tar#etin# specific
c%stomer or prospects from lar#e database$ 't needs lar#e c%stomer database known as data
wareho%se$ (ata wareho%se ha*e etensi*e data re#ardin# c%stomers$ This information in data
wareho%se can be sorted analy5ed to obtain specific c%stomer information$ This process is
known as the data minin# and its main is to identify new opport%nities in marketin# and is
helpf%l to the department of marketin# for the p%rpose of foc%sin# on narrow as well as niche
markets in many acti*ities of marketin#$
/ales force a%tomation system G The sales force a%tomation system is desi#ned for the
sake of increasin# the prod%cti*ity of sales people$ 'n this system identifyin# prospecti*e
c%stomers, contactin# them, makin# demonstration, callin# on c%stomers, #i*in# answers to the
)%estions, and choosin# the sales and follow=%p on sales$ This system addresses only the task of
administrati*e of sales people$
The sales force a%tomation system helps the sales force in the followin# methods$
This system pro*ides details as to tra*el ependit%re or salesmen sales commission$ 't pro*ides
details re#ardin# the sales like prod%ct wise, area wise, re#ion wise, salesperson wise, order
bookin# can be recorded and analy5ed$ 't assists in maintainin# and collectin# details pertainin#
to c%stomers their sales history, prod%ct preference$ 9or this +ob contact mana#ement s%bsystems
helps *ery m%ch$
To help the sales forces to collect eistin# as well as potential c%stomers$ 'n this case the
prospecti*e information system helps sales force in locatin# potential c%stomers from so%rce
s%ch as eistin# c%stomers, c%stomer en)%iries, *endors, directories and online database by
eternal a#encies etc$ The benefits of this system are red%cin# sales cycle, increase re*en%e on
sales, de*elopin# order mana#ement and capt%rin# c%stomer related information$