N. Carroll Mohn is manager, analytical methods in the corporate marketing research department of the Coca-Cola Company. Dr. Mohn received both masters and doctorate degrees in business and economic statistics from the University of Texas at Austin . He has written numerous journal articles and co-authored a text entitled “Sales Forecasting Models: A Diagnostic Approach.”

What are the elements of an ongoing market tracking procedure required within a company to carry out the function successfully? What about the tracking organization and its sponsorship within the company? This article focuses on some of the more important considerations that are essential to successful implementation of a market tracking system. It examines some of the characteristics of successful tracking systems and how a company might apply itself to getting started. The emphasis here is on those aspects of the market tracking function that are most important to the manager. Clearly there are details associated with establishing a staff organization to support tracking that must be known by the individual who will be in charge of that group. This article, however, does not deal at this level of detail, but rather aims at covering the main points important to the manager (user) of that tracking support group.

Elements of an ongoing tracking procedure

For any particular market tracking application five basic steps usually will be followed. These five steps are primary in establishing the tracking function within a company because support is required for each of them. Should any of these elements be missing or not properly supported, the results of a market tracking function will not be satisfactory. To see just what skills and resources are required for market tracking, each of these five basic elements will be examined.

1. Identifying management needs. The starting point for any new market tracking application is identification of management’s requirements. Due to the nature of market tracking and the supportive role it plays in decision making, the tracking staff frequently will identify what they think is a requirement, and then upon querying management, naturally will receive a positive response. Since supplying a manager with a market tracking report does not require any explicit change in his or her decision making, the manager can always say he or she would like more information, whether or not that information is directly relevant to managing the business.

Pursuing such a procedure in the development of new market tracking applications can be detrimental to the tracking function in the long term. When the tracking staff identifies the potential requirements, it is likely that the number of tracking reports being supplied to management will balloon rapidly, yet the effect on management’s decision making will be minimal.

What is required at this step is a procedure that will require the manager’s participation in determining what market tracking reports would be most useful to his or her particular requirements. While it will be more difficult to involve a busy manager in this identification process, those companies that have done so have found it much more efficient in the long term. One successful way has been to have the tracking staff hold discussion sessions with small groups of managers. The function of these discussions is for managers themselves to identify what they think may be appropriate market elements to monitor. The tracking staff can then introduce managers to some of the possibilities that exist to track specific market elements.

2. Hiring qualified tracking staff. In any company it is useful to have one or more people to help develop and maintain the market tracking function. Basic jobs of this staff group are to support each of the steps of market tracking, being responsible for the actual data collection and the analysis with specific tracking techniques. It is important that staff members be competent in their understanding of the available tracking analysis methods and that they also be competent in understanding the management issues. For most cases, their training will be technical, but more importantly, they must be able to discuss with the manager existing or potential problems and situations uncovered in the market tracking process.

Toward the development of tracking staffs, companies generally have found it advantageous to trade understanding of the business for technical expertise. It also is important that both management and staff realize that the tracking group has been created to support management. Thus, market tracking requirements may adapt when new managers with different decision-making styles need different market tracking support.

3. Gathering data. The lynch pin for successful market tracking is a high level of manager expectancy for the periodic tracking reports. In the data-gathering arena, funding support must be available in the form of a willingness to establish a database from primary and secondary sources. Actual gathering of data usually will be performed by the tracking staff. Procedures for collecting the market tracking data will be determined by its type and source. Once procedures have been established for the actual collection of tracking data, it must be put into form for applying the tracking method. This usually will entail getting the data onto a computer system so that a computerized version of the tracking method can be applied. Design of this data gathering and formatting operation is a key technical function of the market tracking staff.

4. Applying the tracking method. After data are gathered over a time interval, the market tracking staff can apply the appropriate method for tracking. Examples of frequently used procedures are: moving average, trending, or other smoothing methods; actual percent of budget; percent change from prior period; indexing; and exception reporting using prespecified management criteria. It is essential that the company supply necessary computer support to prepare market tracking reports efficiently. Such support usually will include a computer and initial programmer time to fit the tracking method to the data.

5. Communicating the tracking report. For a market tracking report to be of optimal value, it must be given to the manager in a timely manner and in a form to fit his or her particular decision-making style. This means that the market tracking staff must be aware of the time frame within which the manager operates. In terms of the format in which the tracking function is presented, it is advantageous to supply both graphical and tabular output, either in hard copy or via computer. Preparation of brief narrative highlights about the data patterns may be appropriate for management, but one thing that clearly should be avoided is overload of information and redundancy.

Avoiding common mistakes

Managers always seem surprised at the number of difficulties that can develop in getting a market tracking function up and running. Resolving some problems sometimes requires more than reorganizing the effort, primarily because people do not change quickly. The following listing includes several examples.

  1. Human mistakes in recording data may make a manager hesitant to base decisions on the data.
  2. People responsible for checking a market tracking analysis may give rubber stamp approval without verifying its consistency and reliability.
  3. A manager may find that market tracking data never seem to be available in time to impact his or her decisions.
  4. The manager may not be committed to the market tracking function because s/he does not know how to incorporate it into decision making.
  5. Some of the people whose contribution is needed to make market tracking successful do not feel any personal need to make changes in their own procedures that are required to complete the tracking system.

Careful planning and support can be undertaken to help alleviate such difficulties. Accordingly, there are four general areas involving responsibility assignments.

1. Who is responsible? When establishing a market tracking function, companies sometimes fail to define explicitly the responsibility and leadership required for it. Just hoping this responsibility will find a home often can create misunderstanding and give a poor orientation to the market tracking function from the beginning.

While there are no general or set rules about who is most appropriate, responsibility for market tracking must be assigned. The key is making certain one person is responsible for the success of the function and that he or she has the authority to act to guarantee success.

2. Who makes decisions? The market tracking function involves two types of decisions. The first, just mentioned, surrounds guiding the entire market tracking function within the company by a single person given this authority. The second surrounds specific projects and periodic reports of market tracking. The challenge is to determine which decisions will reside with the market tracking staff and which will be with the manager using the particular tracking services. Some areas such as determining what is to be tracked and the frequency of reporting are clearly the manager’s responsibility. Others involving technical decisions are the domain of the market tracking staff, but at least should be reviewed by the manager who will use the tracking service.

3. Who pays for tracking services? The issue here is assigning the cost of market tracking to specific organizational units of the company. Generally, there will be some overhead cost associated with maintaining the market tracking staff, but the majority of the expense should be assigned by the specific tracking reports produced. It is important to allocate market tracking costs wherever possible to the company organizational units using the market tracking reports. The advantage of doing this is that the manager will be more likely to weigh the benefit derived in contrast to its cost. When an organizational unit does not have to pay for having market tracking reports prepared, it usually will justify many tracking services as having value, even if some of them are marginal. As part of the cost allocation process, an initial analysis of what a market tracking report will cost should be made with the user’s agreement to cover its cost. Where a market tracking report is being supplied to several different organizational units, cost can be either equally or proportionally shared, whichever is equitable for the particular company situation.

4. Who does the work? There typically are three jobs in any market tracking application: 1) the tracking staff which identifies and carries out the tracking application, 2) the manager who will apply the market tracking service in his or her decision making, and 3) the computer programmer who will actually automate and apply the market tracking method to the data. Coordinating these tasks requires that one person have the responsibility for seeing that market tracking reports are published on schedule and that procedures are established for coordination among the various parties. Usually, the person in charge will be a member of the market tracking staff since they have the background to interface with the different units.

A common problem in assigning tasks is scheduling programming support time. Since programmers are also a staff group serving multiple organizational units, it is sometimes hard for the market tracking group to get the response from the programming staff necessary to be effective. One solution is to have both staff groups reporting to the same person. Alternatively, setting up procedures outlining programmer assignments and time schedules is helpful.

Locating and integrating the tracking function

In simplest terms, locating the market tracking staff in a company should be consistent with the rest of the organization. The market tracking staff is most closely related to the work done by either marketing researchers or the computer systems group. Hence, it may make sense to combine with either of these units. When this is done, however, it is important that specific persons have the responsibility for market tracking. By setting up a market tracking subgroup, the function is given more emphasis and chances of its usefulness are improved. Perhaps most critical is that the market tracking staff realize their primary concern should be with management and management’s problems. This requires that the market tracking staff report to a person who understands both the technical and the management aspects of market tracking.

The rule of consistency with the rest of the company organization is applied equally to establishing market tracking procedures. The area particularly related to market tracking is planning. Companies usually have established planning procedures, so it is instructive to determine how market tracking procedures can be integrated with at least this existing function to get some appreciation of the issues involved in integration.

In the planning process the application of market tracking involves periodically verifying the feasibility and soundness of a business plan. In this role market tracking provides managers with environmental and evaluative information about the assumptions underlying the business plan. Moreover, market tracking would identify large discrepancies with the plan that need to be understood.

For any application of market tracking it is essential that an evolutionary approach be followed. The initial market tracking service does not have to be perfect. Rather, it should be useful, serving as the starting point from which refinements can be made. Attempting to anticipate all the difficulties and issues surrounding a market tracking function is impossible. Instead, beginning with something satisfactory and improving upon it is the practical course.

Characteristics of successful market tracking

It is worthwhile outlining several steps that can be taken by those directly responsible for market tracking to enhance its level of usefulness. These steps relate to:

  1. the manager type involved,
  2. the degree of support in the company, and
  3. the market tracking task itself.

As expected, the type of manager using the market tracking service dictates the level of success. Characterizing the manager who successfully implements market tracking are: an understanding of the decision-making situation for which the particular market tracking report is being prepared, and an interest in real improvements in decision making rather than adopting market tracking input for appearances’ sake.

Secondly, a company can do two things to support formalized market tracking application. One includes communicating the existence of market tracking services, noting those within the company who are using them successfully. Another is giving the manager access to those resources needed to utilize market tracking. These resources include the data, market tracking specialists and programming support to help in the preparation of the market tracking reports.

Finally and simply, situations for market tracking must be selected that are helpful to the manager, thereby improving decision making. What is needed are market tracking reports that provide opportunities for substantial improvement in decisions.