Marketing and High Speed Electronic Computers
W. H. BLOODWORTH
Consumer Goods Distribution Study Project Management Consultation
Whether marketing is defined in general terms such as the American
Marketing Association's "the performance or business activities that
direct the flow of goods and services from producer to customer or
user" as "the creation of time , place and possession utilities
for products and services" or in greater detail as to the nature of
the customers, products, sales and distribution channels employed, and marketing
approaches and functions, the actual work of marketing is primarily
1. Data and information collecting and
2. Data and information processing and
3. Planning and decision making
in addition, of course, to the actual physical
handling of goods and materials.
These points may appear to apply to other functions as
well as marketing. Perhaps this means that, With mass distribution moving
the products of mass production to millions of customers of all sizes,
types and kinds, the integration required has wade impractical the drawing
of sharp lines between the functions. In many businesses the same accurate
record of sales made to consumers are essential to manufacturing, engineering and finance, as 'Well as 'Marketing. If
anything I say seems to apply equally as well to other functions as to
marketing, it is only because it appears to me to be a teamwork area, from
a marketing viewpoint.
In the past, research, engineering and other sciences have contributed
much more to advances in materials, designs and manufacturing than
directly to marketing. Now, with high speed electronic computers making
possible for the first time rapid, accurate and economical handling of the tremendous amount of data and information
included in Marketing, we hope for more benefits from science for that
function. However, we realize that the way to do this is not just to
mechanize the present methods and procedures. You in the Industrial
Computer Section, Operations Research and Synthesis, and others will have
to help us develop new marketing systems to properly use these tools just
being made available.
Some of the apparent uses of high speed electronic computers and
computer section personnel would be:
1. Data and Information Co11ecting and Storing
a. Cooperation in making available a common
machine language for use throughout the Company.
b. Use of Shannon-Wiener information
theory and best techniques to permit use fewest possib1e bits in transmitting
and storing data and information.
c. Ability to retrieve data electronically
as , independent of the rate at
which the computer itself can accept it.
d. Sufficient data storage capacity to record the
millions of sales orders, cancellations,. stock and inventory transactions
made annually throughout the Company. F or instance, by 1965 the Appliance
and Te1evision Receiver Division expects to sell ever 8,000,000 units per
year. Most Of these will be individual transactions insofar as the
ultimate customer is concerned.
e. Provide rapid access (in the order of 0.25
seconds) to current data, so that customers can be informed immediately
concerning the availability and promise of shipment on items not in stock
in a particular area, products may be ordered or shipped immediately as
required, decisions may be based -on current data, etc. Sylvania Electric,
among others, is doing much of this now, with a UNIVAC, near here at
2. Data and Information Processing and Presentation
a. Using the data and information fed into the system, automatically
as programmed or scheduled, perform all the routine or repetitive
clerical functions, scheduling, ordering, billing, etc., work
which can be rigorously thought through or planned.
b. Using mathematical and statistical methods, such as
multiple and partial correlations and regressions, forecast sales,
inventory and material requirements, wake area potential determination,
distributor or retailer number, size and location, determinations,
c. Automatically processing and
tabulating raw data into reports and presenting them when, 'Where,
how and to whom scheduled.
d. Use sales and production records for automatic
replenishment for distributors and/or retailers, and overall optimum
inventory control where required.
e. Use of data and mathematical methods such as linear
programming in ca1culating the Optimum. method of transportation for
all products and locations, game theory and Monte Carlo methods for
determining sales methods and strategies, advertising, etc. Sylvania,
duPont, Sohio among others are doing some of this.
3. Planning and Decision Making
a. Ability to mate ,routine decisions in eases where all
the factors can be rigorously specified and where the decision is the
function of an established policy. Such decisions may vary in complexity
from automatic replenishment to those involving complicated functions.
This automation of routine decision making can release managerial talents
for decisions involving intangible factors. .
b. Ability to test or simulate operating conditions by
the use of mathematical models to aid managers by determining the probable
consequences of alternative methods of operation.
a. Be the nerve center of an electronic
communications system linking all the essential or important elements
of the distribution systems.
An example of this is the American Airlines Reservation Inventory
Control and Flight Information System. It consists essentially of a
Teleregister Corporation special purpose computer, storage and filing
system, data transmission system, and agent input-output units.
With it any agent can almost instantly
(a) Obtain information en available space
(b) Make reservations for available
(c) Make cancellations of any reserved
(d) Obtain flight information on any
This results in better service than would be possible
manually, with the saving of about l0 per cent over
a. Using statistical and mathematical
methods. weight the factors entering into results obtained from
managerial and individual contributor performance s. advertising
promotions , sales techniques. etc. This to mate possible
objective 'evaluation of performances and results for use in planning,
quota and compensation setting and inventory control.
In short, marketing, which is essentially a job of communications,
finds itself in a position to make great strides forward by using these
revolutionary advances in data processing.