Everything you need to know marketing information system. Marketing information systems are really the frameworks used for managing, processing and accessing data.
They can be simply a sharing of information by key departments, but are more likely to be some form of integrated system based around information technology.
The important issue is that the information from such a system is presented in a way that is useful to the marketing decisions.
The term ‘marketing information system’ or MIS is used to describe such a system. Such systems are generally discussed in the context of marketing information or marketing research. (It should be observed that the term MIS is commonly used for the somewhat more far reaching ‘management information system’).
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Learn about:-
1. Definition of Marketing Information System 2. Evolution of Marketing Information System 3. Scope 4. Characteristics 5. Importance 6. Classification 7. Functions
8. Dimensions 9. Basic Properties 10. Steps 11. Components 12. Sources of Information 13. Marketing Information 14. Categories 15. Marketing Information and Analysis 16. Advantages and Limitations.
Marketing Information System: Definition, Scope, Importance, Functions, Steps, Components and Advantages
Content:
- Introduction to Marketing Information System
- Definition of Marketing information System
- Evolution of Marketing Information System
- Scope of Marketing Information System
- Characteristics of Marketing Information System
- Importance of Marketing Information System
- Classification of Marketing Information System
- Functions of Marketing Information System
- Dimensions of Marketing Information Systems
- Basic Properties of Marketing Information System
- Steps in Marketing Information System
- Components of Marketing Information System
- Sources of Information
- Market Information
- Categories of Marketing Information System
- Marketing Information and Analysis
- Advantages and Disadvantages of Marketing Information System
Marketing Information System
With the increasing use of the computer, companies are becoming more interested in the development of a corporate wide, integrated management information system. The purpose of such a system is to bring all of the flows of recorded information in the entire company into a unified whole. Thereby it is hoped that the manager’s capacity to plan and control the company’s activities will be improved. Such a system is often seen as a marked improvement over current procedures.
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As companies have attempted to introduce such a system, however, a consensus seems to be growing, especially among some computer hardware manufacturers, that a more realistic approach is to begin with smaller systems, such as one in marketing, or in production.
As Business Week recently put it, “Skeptics are backing of and asking whether one big system is such a good idea after all.” The reason for this change in view is the growing awareness that these smaller subsystem, such as one for marketing, can perhaps be conceptualized in enough detail to be operational, whereas, in the current state of the art, the larger systems probably cannot.
The human mind simply cannot grasp the whole management operation with efficient clarity and detail to permit it to be structured and modeled. New concepts will probably have to be developed to aid us in thinking about such a complex phenomenon. In the meantime, management can proceed to develop the smaller systems. In building the smaller systems too, we can benefit by learning from the mistakes that were made with global systems.
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Marketing information systems are really the frameworks used for managing, processing and accessing data. They can be simply a sharing of information by key departments, but are more likely to be some form of integrated system based around information technology. The important issue is that the information from such a system is presented in a way that is useful to the marketing decisions.
Even in quite small companies they can involve large quantities of data. One apparently logical approach to the problem of extensive data is to develop, using computer technology, a system which stores and provides access to the information needed by those making marketing decisions.
The term ‘marketing information system’ or MkIS is used to describe such a system. Such systems are generally discussed in the context of marketing information or marketing research. (It should be observed that the term MIS is commonly used for the somewhat more far reaching ‘management information system’).
While it is essential for organisations to have systems by which marketing information can be stored, processed and accessed, it should be clear from the points made regarding the nature of information in general, and marketing information in particular, that such systems have fundamental limitations. At best the system can only handle such tangible and intangible information as is made available to it.
There are three basic components of a good marketing information system:
1. Information acquired via market intelligence
2. Information from operating data
3. Information library.
What a MkIS does is to bring together data from these sources, usually into a computerised database. By structuring it appropriately this allows the interrogation and linking of the data. It is important for the systems to be designed by marketers, not computer people, as the form of the output is critical to good decisions.
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Market intelligence is all of the data available from the many external sources. It may have been acquired formally or informally but will usually be checked for reliability before it is entered into an MkIS.
Information from operating data, such as production or accounts, has been covered under the heading of operational information. It is usually different from marketing information as it is collected for very different reasons. Nevertheless, there is likely to be some marketing relevance in this data and that must input into the MkIS.
It could perhaps contain the details of car production, 2-door versus 4-door, or various engine sizes ordered. Certainly sales information drawn from invoices is very important and yet this needs to be presented in a way that might categorise customers by relevant market segment, or might show products purchased in as much detail as possible. It could take the form of a sophisticated customer database, such as that used by major service companies for mail order or airline reservations.
The information library is a collection of all the formal research gathered by an organisation that is still relevant and up to date. It might also include research surveys carried out by trade associations or by associated companies, as such reports are sometimes available and they do add to knowledge. Thus the MkIS will contain a comprehensive collection of all relevant information which could help achieve better marketing decisions.
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Computer-based systems are particularly useful for handling numerical information, but can provide only limited assistance when handling qualitative information based on descriptions and ideas. The need to address this problem has been recognised, and much work has been done to develop ‘decision support systems’ designed to provide the information needed for marketing decisions.
No doubt the number of companies developing and using such systems will increase. The main benefit offered by such systems is likely to be the facilities they offer for accessing the available information. Because of the volume, complexity and time-dependent nature of marketing information, the provision of marketing information will continue to be the specialist marketing activity of marketing research.
Marketing Information System – Definitions Provided by Eminent Authors: Cundiff, Still, Govoni, K. Cox, K. Gonod, R. Good and Professor Alder Lee Opines
Marketing information system is a set of procedures and methods for regular and planned collection, analysis and presentation of information in making marketing decisions. It is an interacting, continuing, future-oriented structure of persons, machines and procedures designed to generate an orderly flow of information collected from internal and external sources of information.
It is an integrated combination of information, information processing and analysis, equipment and tools (i.e., software and hardware) and information specialists who analyse and interpret the collected information and provide it to decision-makers to serve their analysis, planning and control needs.
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Marketing information system is a broader and more encompassing term than market research and a variation of the term management information system. Marketing Information System (MIS) is the structure of people, equipment and procedures used to gather, analyses and distribute information required by an organisation.
These are the data to be used as a basis for marketing decisions. Market research reveals that information is collected for a specific reason or project; the major objective is a one-time use.
Marketing information system is a consciously developed plan for information flow (side by side with goods flow) and it is an ongoing or continuous process.
It is defined as “a set of procedures and methods for the regular, planned collection, analysis, and presentation of information for use in making marketing decisions.” – (K. Cox and R. Good)
Marketing information is an ongoing repetitive process of collection, analysis and presentation of information, whereas the marketing research subject is an intermittent or irregular activity — on a project-to-project basis and it is concerned with solving specific marketing problems. Of course, it is a major component of marketing information system.
The definitions of marketing systems as given by various philosophers are:
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Cundiff, Still and Govoni define MIS as, “Marketing information system is an organised set of procedures, information handling routines and reporting techniques designed to provide the information required for making marketing decision.”
K. Cox and K. Gonod hold, “MIS is a set of procedures and methods for the regular and planned collection, analysis and presentation of information in making marketing decisions.”
Professor Alder Lee opines “Marketing information system is an interacting, continuing, future oriented structure of people, equipment and procedure designed to generate and process an information flow which can aid business executives in the management of their marketing programmes.”
Marketing Information System – Evolution: MIS to Help Develop Marketing Plans, MIS to Evaluate the Marketing Plan’s Effectiveness
Today many companies no longer think of marketing research in terms of only a single project. Through experience managers have learned that they need certain kinds of information at regular intervals of time in order to deal with recurring decisions. As a consequence, they have found it very helpful to use several regularly scheduled research projects that support or complement one another in providing managers with the appropriate information needed for those recurring decisions.
When a company begins to regularly schedule the coordination of findings from several research projects designed to assist in specific recurring decision situations, the company has begun to develop a marketing information system- MIS for short.
Such marketing information systems are beginning to evolve, as the following two examples illustrate:
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1. MIS to Help Develop Marketing Plans:
To help its managers develop their marketing plans, the Gillette Company uses information gathered from five different types of regularly recurring research projects. The five projects were designed to provide the managers a complete picture of the razor and blade market, including detailed descriptions of consumers, competition, and distribution. The five projects, and the usefulness of the information they gather, are as follows.
These five projects provide Gillette marketing managers with information on market shares, brand loyalty and brand switching, consumer attitudes, brand and advertising awareness, product advantages versus competition, inventory levels, out-of-stock, retail prices and display, local advertising, and more.
As the data are gathered from recurring studies, the managers have a complete picture of current market and competitive conditions from the most recent set of studies, and they know the recent trends that exist in all of these data. All of these items of information provide the Gillette managers an excellent historical record on which to base the development of their new marketing plans.
2. MIS to Evaluate the Marketing Plan’s Effectiveness:
Gross margin, marketing expenditures, and contribution to earnings are recorded for each market area and also totally. This information is also shown for each market (1) as a percentage of the total for all markets and (2) as the dollar amount of change this year compared with last year. Additionally, the total industry sales in dollars, the firm’s market share, the percentage of retail distribution achieved for the product, and television media costs are shown for each market, both for this year and last.
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With these data, management can observe changes in demand (as reflected in total industry sales); changes in sales, costs, and earnings, changes in competition (as reflected in market share and retail distribution percentages) and, changes in advertising costs (as reflected in television media costs). This information is available by market and for all markets. With such information management can reappraise a product’s marketing expenditures plan as well as the effectiveness of the advertising-sales promotion mix used and then make changes.
For example- in Area A, advertising and promotion expenses of $100,000 produced $260,000 of contribution to earnings, while in Area E advertising and promotion expenses of $400,000 produced only $280,000 of contribution to earnings. This suggests that the company might increase its total contribution to earnings by shifting some advertising and promotion money from Area E to Area A.
Concluding Comments on Marketing Research Usage:
The materials show that marketing research is being used to measure the characteristics of markets, to obtain information needed for forecasting, to evaluate new-product ideas and improve existing products, to assist managers in making better advertising and promotion decisions, and for many other purposes. Marketing research is used throughout the four phases of the administrative process, from establishing strategies all the way through to evaluating the effectiveness of the marketing plan used to try to achieve the established strategy.
The role of marketing research appears to be headed for higher levels of sophistication and utilization as more and more companies begin to develop their own Marketing Information Systems (MISs).
Marketing Information System – Scope: Strategy Implementation, Strategy Development, Market Monitoring, Support Management, Decision Making and a Few Others
Scope # 1. Strategy Implementation:
MIS helps in product launches, authorizes the co-ordination of marketing strategies, and is an integral part of Sales Force Automation (SFA), Customer Relationship Management (CRM), and customer service systems implementations. It permits decision makers to more effectively manage the sales force as well as customer relationships.
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Some customer management software companies are extending their CRM applications to include Partner Relationship Management (PRM) capabilities. This has become increasingly important as many marketers are choosing to outsource important marketing functions and form strategic alliances to address new markets.
Scope # 2. Strategy Development:
Information needed to develop marketing strategy is also provided by MIS. It supports strategy development for new products, product positioning, marketing communications (advertising, public relations, and sales promotion), pricing, personal selling, distribution, customer service and partnerships and alliances. MIS gives the foundation for the development of information system-dependent e-commerce strategies.
Scope # 3. Market Monitoring:
MIS enables the identification of emerging market segments, and the monitoring of the market environment for changes in consumer behaviour, competitor activities, new technologies, economic conditions and governmental policies at the time of using market research and market intelligence.
Scope # 4. Wider Applications:
Under modern marketing ideologies, MIS includes operational, sales and marketing process-oriented systems, which serve in daily marketing operational activities such as direct mailing (database marketing), telemarketing and operational sales management. The users are middle management and operative sales and marketing personnel.
Scope # 5. Support Management and Decision Making:
Marketing information systems support management decision making. Management has five distinct functions and each of them needs support from MIS. These are planning, organising, co-ordinating, decision-making and controlling.
Scope # 6. Functional Integration:
MIS the co-ordination of activities within the marketing department and between marketing and other organisational functions like engineering, production, manufacturing, product management, finance, logistics, and customer service.
Marketing Information System – Characteristics
1. MIS is an ongoing process. It operates continuously.
2. MIS acts as a data bank and facilitates prompt decision-making by manager.
3. MIS operates in a rational and systematic manner and provides required information.
4. MIS is future-oriented. It anticipates and prevents problems as well as it solves marketing problems. It is both a preventive as well as curative process in marketing.
5. The gathered data is processed with the help of operations research techniques. Modem mathematical and statistical tools are available for problem-solving in the field of marketing.
6. MIS is a computer-based method of data collection, processing, and storage.
7. Management gets a steady flow of information on a regular basis — the right information, for the right people, at the right time and cost.
8. Marketing Information System stands between the marketing environment and marketing decision-makers. Marketing data flows from the environment to the marketing information system. Marketing data is processed by the system and converted into marketing information flow, which goes to the marketers for decision-making.
In the past, most decisions were made on the basis of reports prepared through manual labour. Today, managers, with the help of specialists, can employ sophisticated mathematical and statistical techniques, such as simulation, allocation models, PERT network, inventory models, and similar quantitative models to minimise the risks of doing business in a real-time MIS environment.
They can do this on the basis of up-to-date information recalled or retrieved from the computer’s database. Computer is now regarded as an indispensable ready reckoner for effective managerial decision-making. The introduction of computers has facilitated the setting up of Marketing Decision Support System (MDSS).
The System comprises collection, storage, analysis and reporting of marketing data. MIS is normally centralised, whereas MDSS is decentralised and allows marketing and sales managers to interact directly with the database.
The decision support system contains data on customers, market, competitor, economic, and social conditions and sales performance of the company. By making use of personal computers and software, the managers can independently retrieve data, analyse and interpret information and even create reports to meet individual requirements.
The decision support system has data from internal and external sources. Many companies move beyond database by creating large complex volume of data for its own use and use by clients. Example- Credit card companies have history of every individual transaction made by each card holder.
Marketing Information System – Importance: Anticipation of Consumer Demand, Complexity of Marketing, Significance of Economic Indicators and a Few Others
1. Anticipation of Consumer Demand:
Mass production and mass distribution in ever- expanding markets are based on anticipation of consumer demand. Under customer-oriented marketing approach, every marketer needs up-to-date knowledge about consumer needs and wants. In a dynamic economy, consumer tastes, fashions and liking are constantly changing.
Without precise information on the nature, character and size of consumer demand, marketers will be simply groping in the dark. Decisions based upon hunches, guess-work, intuition or tradition cannot give desirable results in the modern economy. They must be supported by facts and figures.
2. Complexity of Marketing:
Modern marketing process has become much more complex and elaborate. Ever-expanding markets and multinational marketing activities require adequate market intelligence service and organised information system.
3. Significance of Economic Indicators:
Forces of demand and supply are constantly changing. These determine prices and general market conditions. In a wider and complex economy, fluctuations in demand, supply and prices are tremendous. Marketer must have latest information on the changing trends of supply, demand, and prices.
For this purpose, he relies on the market reports and other market intelligence services. Economic indicators act as barometer indicating trend of prices and general economic conditions. Intelligent forecasting of the future is based on economic indices, such as national income, population, price, money flow, growth-rate, etc.
4. Significance of Competition:
Modern markets are competitive. A marketer cannot make decisions in a competitive vacuum. Modern business is a many-sided game in which rivals and opponents continuously try to formulate strategies to gain advantage over one another.
Predicting the behaviour of one’s competitors and overtaking of the competitor will need the services of marketing intelligence. A marketer cannot survive under keen competition without up-to-date market information, particularly regarding the nature, character, and size of competition to be met.
5. Development of Science and Technology:
Ever-expanding markets create conditions that lead to technological progress. The energy crisis since 1974 gave a great encouragement to discover other alternative sources of energy, i.e., atomic energy, solar energy, wind energy and so on. Modern marketer must be innovative.
‘Innovate or perish’ is the slogan in the existing marketing environment. Marketer must have latest information regarding technological developments. New products, new markets, new processes, new techniques are based on facts and figures.
6. Consumerism:
In an ever-widening market, we do have a communication gap between consumers, users, and marketers. This gap is responsible for unrealistic marketing plans and programmes. Many marketers are isolated from day-to-day marketing realities. This has led to consumer dissatisfaction.
Consumerism and increasing consumer grievances indicate that products do not match consumer needs and desires and marketers have no up-to-date knowledge of real and precise consumer demand. Many marketers have discovered that marketing agencies in charge of distribution do not offer expected services to their customers. Up-to-date Marketing Information System alone can establish proper two-way flow of information and understanding between producers and consumers in a wider market.
7. Marketing Planning:
We are living in the age of planning and programming. Our plans and programmes are based upon information supplied by economic research (economic forecasts) and marketing research (marketing forecasts), which provide the requisite information about the future economic and marketing conditions.
For instance, sales forecast is the base of production plan, marketing plan, financial plan, and budgets. Marketing information alone can inter-relate and co-ordinate the product and user/consumer demand so that both supply and demand can travel on the same wavelength.
8. Information Explosion:
We live in the midst of information explosion. Management has literally a flood of information knocking at its door. Computer is the most immediate force behind the information explosion.
The speed with which the computer can absorb, process, and reproduce large quantities of information is simply staggering. When a computer is effectively programmed, it can certainly add tremendously to the quality of information flow. As multinational companies’ troop in and competition turns fierce, the winner will be the one who satisfies customer needs most comprehensively through well-organised Marketing Information System.
Marketing Information System – Classification: Based on the End Use and on the Subject Matter of the Information
The information needs of the marketing job are large and diverse.
The information needs and can be classified in two ways:
i. Classification based on the end use (or purpose) of the information
ii. Classification based on the subject matter of the information,
i. Classification Based on End Use:
As per this method, marketing information can be classified into four groups as shown below:
a. Information for marketing planning.
b. Information for marketing operation.
c. Information for key decision in marketing.
d. Information for marketing control
ii. Classification Based on Subject Matter:
As per the second method of classification, marketing information can be classified on the basis of the content or subject matter of the information, as shown below:
b. Consumer
d. Distribution channels
f. Sales force
g. Competition
h. Sales methods.
i. Interned operations of the firm.
j. External environment of the firm
Marketing Information System – Functions: Assembling of Marketing Data, Processing, Analyzing the Data, Storage, Retrieval, Evaluating Regarding Accuracy and a Few Others
The Marketing Information System performs six functions, viz.:
1. Assembling of marketing data.
2. Processing, i.e., editing, tabulating and summarizing the data.
3. Analyzing the data, i.e., filling out percentage, ratios, test of significance, etc.
4. Storage and retrieval, i.e., filing and indexing.
5. Evaluating regarding accuracy and reliability of data.
6. Dissemination or distribution of relevant and wanted information to decision makers.
All the above six functions can be brought down to three main stages, viz.:
1. Collection of market information.
2. Interpretation of information.
3. Dissemination of information.
1. Collection of Market Information:
The first stage of market intelligence function is gathering the information adequately, timely and relevant from the angle of marketers. Marketing executive gathers market information in many ways by tapping different sources of information collecting is the process of locating and tapping the sources of information.
The different sources of market information can be divided into:
i. Internal sources,
ii. External sources, and
iii. Market research.
i. Internal Sources of Information:
The internal sources of information are the records maintained by the marketing organization. They are financial records of sales, purchase, cash transactions, returns, etc. This information is helpful for the marketing executives to have sales analysis in terms of product, customer analysis and territorial analysis.
The internal sources are:
a. Product analysis – Product analysis is the study of actual position of different products. How they are received by the customers, its speed, i.e., slow or fast and causes of decline or rise over the past period.
b. Customer analysis – Customer analysis helps to get classified information by income, age group preference to a particular brand and price range. This helps the marketer to shift his operating ability to those areas where there is necessity of stress to better the performance.
c. Territorial analysis – Territorial analysis gives the break-up picture relating to an area. This helps to have a control over activities of sales forces (salesmen). Effort can be made to pad up (improve) the position in those areas where sales are declining and efforts can be made to maintain the market and extend the market in new areas.
ii. External Sources of Information:
The efficiency of a marketing firm can be judged not by comparing the internal records but by comparing the firm with others in the same line.
The external sources are:
a. Trade associations and chambers of commerce – Chambers of commerce and trade associations have their own publications. They may be monthlies or quarterlies. Even the regulated markets and cooperative societies have such useful publications.
b. Competitors – The best source perhaps is that provided by rivals. The success of a business is getting the secrets of other business. Business tactics or strategies followed by rivals have got to be mastered. Competitors never let their secrets out. A wise marketer has many ways of getting the required information via the employees.
c. Government publication – Different departments of Government of a Nation may be Central or State publishes up- to-date information. In India departments of agriculture, statistics, industries and commerce, foreign trade, etc., have been disseminating the vital data to marketers.
The examples are – RBI Bulletin, forward Market Bulletin, and Monthly Bulletin of Statistics, Planning Commission Reports, Reports of Export Promotion Councils, Census Reports and Indian Trade Journal, etc. The information given is up-to-date and authentic that helps the marketer to rely on such intelligence.
iii. Other Sources:
There are a number of concerns who have taken it as their business to provide information in the form of articles, reports, facts, opinions, criticisms, etc. The best examples of these kinds are – Eastern Economists, Capital, Southern Economists, Commerce, Yojana, Indian Finance, etc. Even the newspapers like Economic Times, Financial Express are taken into account. The University Departments, Colleges and Research Centres are the good sources of rich information.
2. Interpretation of Information:
Interpretation of information is the second stage of marketing information system. Collection of data is comparatively easier. However, interpretation is the crux of market information function. Interpretation of data refers to providing analysis of the information to arrive at certain generalizations.
Much depends on the dynamic thinking capacity or creative mind of the marketer to have correct generalizations or arriving at correct and logical conclusions. Decision-making is based on interpreting the critical appraisal of the given facts, opinion or estimates. That is why interpretation of data can be called as crucial yet delicate process of creativity.
3. Dissemination of Market Information:
Flow of information is as important as the flow of goods in the marketing system. Effective management of marketing information means not only systematic analysis but also providing or passing the information at different levels in the organization.
The marketing executive who has arrived at certain conclusions in respect of the problems faced must communicate to the men of action. There must be a combination of thinking and doing. Thinking has value only when doing is followed.
Marketing Information System – Dimensions
The information as well as information system could be understood in terms of the quality and quantity they possess. However, it is necessary to realise that the quantity and quality of information needed at various levels of management differs. Thus, it is important to give emphasis not only to generation, storage, and retrieval of the relevant information to fill in the existing gaps but attention should also be paid to elimination of irrelevant data.
The value of information, i.e., the benefits could be ascertained by the following:
(i) Accessibility- This refers to the ease and speed with which the particular information could be obtained. Faster and easier access will have more value as compared to difficult access.
(ii) Comprehensiveness- More complete the information in itself, more valuable it becomes. This attribute does not refer to the value of information but refers only to its usefulness.
(iii) Accuracy- The information, if free from any error, will have more value than otherwise.
(iv) Timeliness- It takes certain time to generate the information and the value of the information depends very much on how it is made available to the user manager.
(v) Authenticity- If the information is being generated from a formal information system it is authentic and could be measurable.
(vi) Free from Bias- The information, if free from any bias towards the pre-conceived conclusion, will have more value than otherwise.
Marketing Information System – Basic Properties: Purpose, Relevancy, Frequency, Rate, Deterministic, Cost, Value and Reliability
According to Murdick and Ross the basic properties of information are as follows:
I. Purpose:
Information must have purpose at the time of communication, otherwise, it is simply data or noise. The diversified purposes of information are to evaluate, inform, persuade or organise the facts and figures in creating new concepts, identifying problems, and controlling them.
II. Mode and Format:
The modes for communicating information are sensory (through sight, hearing, taste, touch and smell) but mainly visual and oral are used in business organisations. Sound recorders, gamma ray, quality control devices, tapes, cards, cathode-ray tube (CRT) are some forms of information communication.
III. Relevancy:
Relevance is the major criterion for information judgment. Information experts consider relevant data as information.
IV. Frequency:
The frequency of information for different areas varies according to operational need. The weekly financial reports will show little changes of small value in comparison to actual inventory reports.
V. Rate:
The quantitative rate of information transmission must be ascertained in terms of time required. For instance, the time required for sales reports transmission from district office to head office is fixed weekly. Generally, low rate of transmission is found in human information system and high in telecommunication system.
VI. Deterministic:
Information concerning future must be certain for avoiding doubts and mistrust. The figures of inventory return on investment (ROI), sales are often calculated in a single value.
VII. Cost:
Cost is limiting factor for obtaining information. A small non-scientific sample for determining market potential costs for less than a probability sample survey. Even internal information from company accounting records may be extremely costly but to gather, store, process and retrieve it is essential. The marketing manager must constantly trade off the value of information against its cost.
VIII. Value:
Manager must evaluate the possible gain from the information or the possible loss from it absence. The measurement of the quantitative and qualitative value of information is a fertile area for a system designer.
IX. Reliability:
Reliability is the degree of confidence for the decision-making with the information aid. But to obtain very reliable information is an expensive task. Therefore, marketing manager must evaluate the task of information against its reliability cost.
Marketing Information System – Steps: Define the System, Source and Frequency Identification, Format of MIS and Implemetation
Steps # 1. Define the System:
The system for which design is to be made has to be defined; in terms of elements, the relationship and its boundaries. The system may be the complete organisation consisting of all functions or only one or several functions.
Steps # 2. Source and Frequency Identification:
Once the information needs have been assessed, the source of this information and the frequency of reporting have to be identified. The source could be both external and internal, whereas the frequency could be based on the occurrence of the event or by exception.
Steps # 3. Formats of MIS:
There are two formats which are very important, viz.-
(a) Research assessment sheet
(b) Marketing activity evaluation sheet
The research assessment sheet contains information like marketing decisions, parameters, frequency, source, and the format code. The marketing activity evaluation sheet will contain the items, relationship, standard, actual, variance, and reason. The first format is useful from the information point of view while the second format could be used for control.
Steps # 4. Implementation:
The steps needed for implementing the newly designed Marketing Information System could be-
(a) Prepare marketing research plan
(b) Train the research staff
(c) Prepare operating schedule
(d) Evaluate and modify the research system
Marketing Information System – Components: Internal, External Marketing Information and Marketing Research
There are three divisions or components of marketing information system:
1. Internal Marketing Information:
It is secured through accounting system. Data on sales, inventories, marketing costs, cash flows, accounts receivables and payables (credit sales and credit purchases), trading returns, financial returns, etc., constitute the information generated from within.
2. External Marketing Information:
It is in the form of marketing intelligence. It keeps marketers well informed about current marketing environment, changing consumer demand, changing competition, changing prices, etc. Census data, newspapers, trade journals, magazines, trade shows and exhibitions, books, company annual reports, salesmen’s reports, suppliers, wholesalers, retailers and customers, special publications of trade associations, government reports, etc., provide valuable sources of market intelligence.
A marketer is interested in market intelligence because it is the only source of securing latest information about competition and customers. In a sense, marketing intelligence is an organised feedback process of marketing communication (inflow of information).
Salesmen act as ears and -eyes of the marketing firm in the market place. They are intelligence agents who can supply vital current information on buyer behaviour, channel behaviour and also on competitors.
There are professional market intelligence agencies who sell intelligence services to interested marketers.
Market intelligence data will have to be classified, edited, analysed and evaluated and distributed to the right people in the right form as early as possible. Many marketing decisions are based on market intelligence which acts as a mirror of marketing conditions reflecting faithfully how things are going on in the competitive market.
3. Marketing Research:
It is a systematic search for information. It involves data collection, analysis and interpretation. It exists primarily as a tool of managerial decision-making process: Marketing research is defined as the collection and analysis of data relevant to marketing decision-making and the communication of the results of this analysis to marketers. Of course, research cannot make decisions. It only helps experienced marketers in their task of decision-making.
It is a valuable instrument to keep a marketer always on the right path under competitive market pressures and to fulfill customer demand at a profit to the marketer. Please note that marketing research provides special information on request when a marketer has typical marketing problems demanding unique information for their satisfactory solutions.
MR studies are project- oriented. Mostly they involve special studies relating to market segmentation, buyer behaviour, product or brand preferences, product or brand usage, advertising and sales promotion, physical distribution, dealer behaviour, competition, etc.
Functions performed by Marketing Information System are:
1. Collection of marketing data, i.e., facts and figures,
2. Processing of data, i.e., editing, tabulating, and summarizing the data,
3. Analyzing the data, e.g., finding out percentages, ratios, averages, correlation, etc.,
4. Filing and storage,
5. Evaluating regarding accuracy and reliability of data,
6. presentation or distribution of relevant wanted information in the easily understandable form to managers or others.
Computer offers electronic data processing equipment—1. Model bank to assemble and process data, 2. Analytical bank in charge of analysis and evaluation, 3. Data bank to store and distribute.
Marketing information system stands between the marketing environment (market place) and marketers who take marketing decisions on product, prices, promotion and distribution or on marketing-mix. Marketing data flows from the market place (environment) to the marketing information system.
Marketing data is processed, (classified, edited, analyzed, interpreted) and presented in an easily understandable form to marketers for decision-making and formulating marketing plans and programmes.
Marketing Information System – Sources of Information
The information an organisation has about its market comes to it in a variety of ways, both formally and informally. All organisations have a fund of knowledge available both from the people who work for it and in the records accumulated over many years.
For example, when reading through a technical magazine someone could notice an article about developments at a competitor’s plant. Maybe this expansion is to allow for a new product or to improve efficiency. If this information is fed through to the right area it could be very useful.
Although some people might believe there can be a problem of an excess of such information, the most important issue is for all employees to know where to send such informal facts and leave it to a central department, usually marketing, to decide what to keep, what to check out properly, and what to ignore.
Unfortunately organisations rarely have complete knowledge about their markets, customers or competitors. At best it is like a mosaic or jigsaw, where the picture can still be clear, even though a large number of pieces may be missing. Sometimes it would be helpful to make efforts to acquire more information to make the picture even clearer.
However, it must be realised that information can cost money. It is only worth acquiring if the additional information would increase the chances of making a better marketing decision in the future. It must be remembered that marketing information does not replace decision taking – it is at best an aid to help take better decisions. Therefore the purpose and value of information gathering must be set against the cost of obtaining and processing that information.
Generally, the knowledge provided by marketing information changes over time. Thus, returning to our analogy of a mosaic, the colours of some pieces will fade over time. To revive the pattern, pieces must then be removed and replaced as new ones become available.
When information is used for marketing it must not be out of date as this could easily lead to bad decisions. Again, like the pieces used to make a mosaic, marketing information has to be obtained from many different sources and sometimes alternative sources can be used.
The sources of data could be divided as:
i. Undirected observation – Informal, unstructured collection of information from any source. It includes casual reading of magazines and newspapers, meetings with contacts, TV reports and many other chance events.
ii. Conditioned viewing – Formal searching but sometimes unstructured collection whereby a comprehensive search is made covering a specified range of publications. This is often done using an on-line database or a CD-ROM, but can be undertaken by setting up a specific department to scan every publication and to extract interesting articles to pass to the marketing manager.
iii. Informal searching – A structured way of capturing vital information such as a system of receiving sales force reports. The information might present itself in an informal way but the system to ensure it reaches the relevant managers must be structured.
iv. Formal searching – This is where formalised marketing research comes in. It is a specific study undertaken to fill in some of the gaps in the mosaic of information available. It involves the collation, analysis and presentation of appropriate, available and required data.
Research can be defined as the use of investigative techniques to discover non-trivial facts and insights which lead to an extension of knowledge.
There are well-established techniques for doing marketing research as a formal business activity and these are described in many specialist texts.
Marketing Information System – Marketing Information
We are, however, primarily interested in the marketing information that is required for the leather manufacturer to trade successfully. This might involve forecasts of future demand so that correct supplies can be ordered. It also includes knowledge of customers’ needs, and how those needs are likely to change in the future, and perhaps also information about other manufacturers who could be considered as competitors.
Marketing as a business activity has developed as a result of recognising that the success of an organisation depends upon creating and retaining customers. In the short term these decisions are likely to be concerned with meeting the needs of customers efficiently. In the longer term they are likely to focus more on the organisation’s need to respond to the ever-changing expectations of the users of its products and / or services.
Included within the category of marketing information are:
i. Market and environmental information
ii. Customer and potential customer information
iii. Competitor information
iv. Product, price, and other information about the offering
v. Distributor, and advertising and promotional information.
All of these are drawn from the different levels of the marketing environment and the behaviour of customers.
In fact we could define marketing information as any information which is relevant to, or affects, the profitable exchange of a product/service between an organisation and its customers.
Although marketing information can be either tangible or intangible there is often little evidence of tangible marketing information in many organisations. There might be some files containing, for instance, catalogues showing the products offered by competitors, but they are usually limited in comparison with the files needed by the production functions of an organisation.
Also these files are quite likely to be dispersed within an organisation. Some departments such as sales, design or advertising may have formal files, but in addition many managers are likely to have their own file labelled ‘Competition’ and containing catalogues collected at an exhibition or other similar event.
It is inevitable that marketing decisions often have to be made on the basis of incomplete marketing information. In this respect marketing information is different from operational information as any gaps in the latter clearly affects the efficiency of production. However, marketing information is time-dependent. It is of no value when it is out of date and so it can then be discarded since there is no legal requirement to store it.
It is important that the requirement for adequate marketing information is recognised, since this is fundamental to the success of an enterprise.
It should be evident that, when required marketing information has to be obtained, this will inevitably involve an investment in time, financial capital, or both. For many organisations there is an important relationship in that the viability of many operational decisions depends upon having appropriate marketing information.
On another level the term ‘getting close to the customer’ is a very sophisticated operation. Firms such as Grattan Mail Order in the UK, and several international airlines in the USA and other countries, have obtained a real competitive advantage by developing powerful customer information systems.
These are used both to better understand consumer needs, and also to support the development and marketing of new products. Grattan gather information on the personal characteristics and buying patterns of customers, as well as more general information on non-customers.
They use the information to send out sample mailings of offers to see who responds. They then use the analysis to identify other customers with similar characteristics for a more general and usually very successful marketing offer.
Marketing Information System – Categories: Marketing Environment, Customer, Competitor, Product, Distribution and Promotional Information
It is useful to classify marketing information in terms of the five main categories.
These respectively relate to:
i. The environment and market in which the product or service is produced, provided, supplied and used
ii. The target customers, clients, or users served by an organisation (and many other key stakeholders)
iii. Competitor information
iv. The product or service being provided
v. How that product/service reaches and is communicated to the target customers.
i. The Marketing Environment:
Often, events which are likely to have an impact on an enterprise are seen, in the first instance, within the wider marketing or macro environment which comprises social, cultural, technological, economic, political and legal aspects. Alternatively, these factors could be studied as a first step in establishing which new markets are more attractive than others.
In most countries there are numerous reports produced which forecast the macro environment. Some are expensive to obtain but often a summary is all that is necessary and this could be available in libraries or in the business/trade press. They are also available through computerised business data services such as McCarthy’s in the UK. It is, of course, important to understand the origins of any reports used, perhaps checking the information from more than one source. Nevertheless using commercial reports is the best way to monitor the wider environment.
A word of warning, however:
a. Many forecasts cover entire countries or industries and are not necessarily specific to the smaller sector or industry you may be studying.
b. Forecasts are based on historical data and specific assumptions, so they can have a wide margin for error.
c. Forecasts that conflict with ‘common sense’ should be carefully reviewed.
d. Forecasts will always be wrong.
The last warning is one of the ‘fundamental laws’ suggested by Flores and Whybark (1985) who also advise that –
We should not forecast things that don’t need to be forecast.
And
The average of several simple methods often works best.
There are many specialist textbooks which cover the analysis of the marketing environment. Some are basic economics texts, but more specialist marketing references can be found in Palmer and Worthington (1992).
Over the last fifteen years the use of scenarios has become more popular as a way of looking at the macro environment. A scenario is a qualitative description of the future and several different scenarios can be drawn up. There may be a ‘most likely’ scenario and perhaps a ‘worst case’ scenario of the future.
The use of scenarios was developed by the Royal Dutch Shell Company after the dramatic oil price movements in 1978. This technique has helped Shell and other organisations to study the likely effect of future plans in a number of different future situations.
Customer information is central to the concept of marketing. Many existing businesses, especially those providing services, have direct contact with the people who use their service. For instance, hairdressers can judge from this direct contact whether their clientele is getting older and more prosperous or older and less prosperous.
By consciously recognising such trends, hairdressers can maintain the future of their businesses either by ensuring that the service offered is changed to match the changing needs of the clientele or to attract another category of clientele. Customer information obtained through direct contact, although intangible, is likely to be the best available.
The management of larger organisations, even those who essentially provide services such as banks, can easily lose direct contact with their customers. To avoid this, managers need adequate tangible marketing information such as up-to-date customer satisfaction surveys. Without it, they will have no option but to make decisions based on the information, perhaps now out of date, they gained prior to becoming managers.
The problem is even worse for the manufacturers of products. Very often these are sold through wholesale and retail intermediaries which means that managers could be making decisions without having any contact with their final customers and users.
Customer information can be either qualitative or quantitative. Qualitative information might involve opinions or reasons for a particular action. This can be as valuable to the marketer as knowing a quantitative fact that, say, 8 out of 10 people buy a particular brand of cat food.
Information can be obtained as a one-off (ad hoc) study. It can also be tracked over a period of time, perhaps using a consumer panel to measure changes in behaviour.
It is important to appreciate that the success of a product is dependent as much upon the alternatives available to a potential customer as upon the product itself. It is the appreciation of these alternatives and the impact that they are likely to have on the acceptability of a product to the potential customer which often requires specific marketing information.
Most successful organisations will continually update a competitor profile of all their direct competitors. This will include what those competitors are doing, what products they are offering, as well as when, why and how they are performing and any other relevant information.
It should again be stressed that marketing is related to the future activities of an organisation and therefore it is important to develop a feel for what competitors are likely to do in the future.
In his book managing for marketing excellence, Ian Chaston suggests:
Even in their analysis of existing competition, some marketers make insufficient use of information sources outside of standard market research studies. Marketers could learn a valuable lesson from the financial community on the benefits of studying annual accounts and shareholder reports as a basis for appraising the capabilities of companies.
Financial analysts also exploit other sources of information to gain a more complete picture of the future prospects for a company. These include the perspectives of supplier /intermediaries, publicity releases, announcement of capital investment programmes and recruitment advertising programmes. Given such a range of information it should be a danger signal to management if the marketing department only presents conclusions based on market share and customer surveys.
An interesting article under the heading ‘How to snoop on your competitors’ describes some highly questionable methods of obtaining information on competitors. It provides a real insight into the lengths to which some organisations go to get such data. Whether or not you approve of such practices they do go on, and they affect the whole image of marketing research.
The article less controversially also suggests that:
Competitive intelligence is a bits and pieces business much information you will find is inaccurate, irrelevant or stale and you must search hard to find golden nuggets. But, once you have 80% of the puzzle, you see things you didn’t see when you had 20%.
iv. Product/Services Information:
Marketing information on products or services cannot be isolated from customers or competitors. Specifications can be recorded but it is the degree to which the offering matches the future needs / wants of the customers which is of major importance to a marketer.
It may be that a research study could be undertaken in a blind (unbranded) situation, although the branded product has to be considered in the actual marketing decisions. Products can, of course, be assessed in direct comparative situations as it is how a product/ service offering is perceived alongside competitive offerings that gives the best indication of its acceptability.
Of course the indirect competition must not be forgotten, but this is much more difficult to forecast for the future. Generally issues of indirect competition require information to be acquired after some event such as the loss of sales. In this case it will be an attempt to explain the problem.
The development of the Sony Walkman as a new product, is an interesting example of a product which, at least for a time, affected the market for some apparently unrelated products. One example was the market for good quality pens. Both Walkmans and quality pens were similarly priced gift items for young people and were therefore competitors in the gift market.
Within this category of study will come the price of an offering. Price is very difficult to research when customers are not actually buying a product. However, actual prices of comparative products, and the differences between retail prices and trade prices, are matters of fact where information can be obtained.
v. Distribution and Promotional Information:
Since some products go through several intermediaries on their way to the final consumer, it is obviously important to learn as much as possible about the various middlemen. These intermediaries are customers of a supply organisation, but they also have a key role in the promotion of a product en route to the final consumer.
Decisions on distribution channels are critical to success, and once set up they require careful monitoring. This area of trade research is often carried out as part of a continuous study by major research agencies such as the A C Neilsen organisation.
The origins of marketing research are involved with advertising research. Perhaps because so much money is spent on consumer advertising this is still a key area of study. Most media have extensive information on readers/viewers. This allows careful targeting of marketing communications to any chosen segment.
The information is usually made available to all potential advertisers. The effectiveness of advertisements is also studied in detail with most advertising agencies having a good in-house research function.
Some quite strange devices are used in advertising research, for instance a pupilo-meter to study how the eye moves when reading an advert. However, the value of good research when studying promotional effort is well established. The drawback of promotional measures relates to the problem of cause and effect.
Measures such as awareness of product names and opportunities to see a particular advertisement are easily studied, but these cannot be directly related to sales. This is what prompted the now famous comment, sometimes attributed to Lord Leverhulme, ‘I know half my advertising is wasted, but I don’t know which half’.
Marketing Information System – Marketing Information and Analysis
In the marketing arena many different types of information can be obtained to assess the market, product performance, competitive situation and based on this information a strategic choice and a strategic direction can be made. But one has to be careful as to what extent the information is correct.
We must be mindful of what happened to Coca Cola in mid-eighties. Having spent several billions on research, ended up having to withdraw the product born out of that research and revert back to the old in a space of some three months as the market insisted upon it — consumerism. Consumerism in marketing parlance is defined as objections from the market against a company’s marketing programmes.
Much of attitude research is said to be imaginative as the respondents do one thing and say another depending on their audience— the researcher and their own mood. Some may not want to humble inordinately in the presence of the researcher or even be extravagant.
A clever Engineer built an effective mousetrap superior than its inexpensive already existing cousins. The newborn cost more than double and was priced likewise. After its successful launch where many housewives exercised their right to ‘curiosity purchase’ it never enjoyed repeat custom. This baffled the Engineer who ultimately learnt that housewives used the inexpensive mousetraps to catch mice and when they were caught both the trap and the mice were disposed to the dustbin.
The mousetrap in effect was a disposable. The mousetrap the Engineer designed didn’t come with a disposable price. If the Engineer had enough information of the behavioural pattern of housewives using mousetraps he would never have ventured out to make such an expensive one but alternatively used his engineering wisdom and skill to produce something cheaper than that in the market which could have also saved the housewives some money.
The moral of the above story demonstrates how important correct information is to marketing. The first thing the company must have is the right information of the external macro environment in which it operates and then the total market, its potential and existing customers and their buying behaviour, its collaborators and its competitors. It must thereafter be concerned about its own products & services, its sales, its market share, pricing, profitability and costs.
From available statistics the company can tabulate information in terms of sales volumes, growth, profit etc. It will also tell the company where it is and its own market share. Market share is one sure way to increase profitability—if a company can get more market share and make more sales to more people at the same overheads or at a marginal increase it is common sense that the profitability of that company will enhance.
Marketing information can be obtained from various resources and they are:
i. Desk Research – Information accessible from available internal company documents and other external records and publications, articles and advertisements.
ii. Marketing Intelligence – Collecting data from operational points through the company’s suppliers, its own sales force and marketing intermediaries about customers and competitors, its own products and those of competitors.
iii. Marketing Research – Marketing research can be defined as the total system of designing, collecting, analysing, tabulating and reporting of data relevant to a marketing issue through a company’s internal resources or delegated external specialists such as marketing research agencies.
iv. Marketing Decision Support System – MDSS is a process of collection of data, systems, tools and techniques with supporting software and hardware to gather and interpret information on business and the environment.
v. Marketing information – gathering system is an extensive subject, which needs to be addressed separately due to its specific, complex role and activities. However, some of the types of information needed to be ascertained and analysed will be helpful to decide on the priorities, strategy and tactics a company must adopt.
They are:
1. Environment Analysis.
2. Industry Attractiveness.
3. Product life Cycle.
4. Portfolio Analysis.
5. Value Chain.
6. Gap Analysis.
7. SWOT Analysis.
The above helps a business organisation to identify, the environment in which it operates, the performance of the industry it manages, the performance and profitability of brands it markets, the strengths, weaknesses, the opportunities and threats it may have to face.
Marketing Information System – Advantages and Disadvantages
Advantages of MIS:
1. Control Systems:
(a) Typical Applications:
(i) Control of marketing costs.
(ii) Diagnosis of poor performance.
(iii) Management of fashion goods.
(iv) Flexible promotion strategy.
(b) Benefits:
(i) More timely computer reports.
(ii) Flexible on-line retrieval of data.
(iii) Automatic spotting of problems and opportunities.
(iv) Cheaper, more detailed, and more frequent reports.
2. Research Systems:
(a) Typical Applications:
(i) Advertising strategy.
(ii) Pricing strategy.
(iii) Evaluation of advertising expenditures.
(iv) Continuous experiments.
(b) Benefits:
(i) Additional manipulation of data is possible when stored for computers in an unaggregated file.
(ii) Improved storage and retrieval capability allows new types of data to be collected and used.
(iii) Well-designed data banks permit integration and comparison of different sets of data.
Disadvantages of MIS:
1. Expensive – Establishment of MIS is costly affair as it involves huge cost to be incurred on setting up of hardware and software for the required purpose.
2. Not Preferred – The database marketing has been primarily used as a tactical tool. There is a possibility that MIS lead to less reliable and less secure data. MIS system may become slow, large, and hard to manage.
3. Depends on Database – The database marketing depends on the data quality. While the observational data is powerful, the corrupted observational data could be ‘powerful misleading’. The quality also depends on the quality of analysis and the extent to which the databases are linked.
4. Requires New Set of Skills – The database often demands new skills and organisations from new analytical and decision-making skills in sales and marketing to a revamped information system organisation that could support the entirely new class of users.