Everything you need to know about marketing information system. A well-designed marketing information system (MIS) begins and ends with the user.
The MIS first assesses information needs by interviewing the marketing managers and surveying their decision environment to determine what information is needed. The MIS next develops information and helps managers to use it more effectively.
Finally, the MIS distributes information gathered from internal sources, marketing intelligence and marketing research to the right mangers at the right time.
More and more companies are decentralising their information system through networks that allow managers to have direct access to information.
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Learn about:-
1. Introduction to Marketing Information System 2. Definitions and Concept of MIS 3. Features 4. Components 5. Importance
6. Requisites of a Good MIS 7. Kinds 8. Steps 9. Contribution of MIS in Developing Better Marketing Decisions 10. Advantages.
Marketing Information System: Introduction, Features, Components, Importance, Advantages and Other Details
Contents:
- Introduction to Marketing Information System
- Definitions and Concept of Marketing Information System
- Features of Marketing Information System
- Components of Marketing Information System
- Importance of Marketing Information System
- Requisites of a Good Marketing System
- Kinds of Marketing Information System
- Steps in Marketing Information System
- Contribution of MIS in Developing Better Marketing Decisions
- Advantages of Marketing Information System
Marketing Information System – Introduction
Marketing information consists of facts, figures and reports about products, prices, market conditions, consumer’s responses, customer’s needs and desires, market competition, advertising developments, selling methods, information regarding physical flow of goods, transportation, warehousing inventory position and also regarding other elements of marketing mix.
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According to Kotler, “A marketing information system is a continuing and interfacing structure of people, equipment and procedures to gather, sort and distribute pertinent, timely and accurate information for use by marketing decision-makers to improve their marketing planning, implementation and control”.
A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort analyse, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. First, it interacts with these managers to assess information needs.
Next, it develops needed information from internal company data, marketing intelligence activities, marketing research, and information analysis. Finally, the MIS distributes information to managers in the right form at the right time to help them make better marketing decisions. Marketing information system are really the frameworks used for managing, processing and accessing data.
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There are three basic components of a good marketing information system:
(i) Marketing intelligence is all of the data available together data from these sources, usually into a computerised database. By structuring it appropriately this allows the integration 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.
(ii) 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.
(iii) 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 knowledge.
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Computer-based system are particularly useful for handling numerical information, but can provide only limited assistance when handling qualitative information based on descriptions and ideas.
Marketing Information System – Definitions and Concept according to Murdick and Ross, Paul Siegal and Carl Hayel
Before the industrial revolution; organisations were essentially small in size. We have an even today there are large number of small organisations. But industrial revolution has also given birth to a large corporation starting from a one man organisation to very large corporations employing large number of workers.
The One man organisation may be a small retail shop, an artisan or a professional working on his own. He is the owner of his establishment, makes operational plans for his day to day work makes decision of strategic nature involving contract of longer duration, prepares perspective plans for the expansion of his establishment or entering into new lines of activity and sets up long term goals for the establishment.
The next level of organisation size may be small that of a cottage industry in which the man, apart from himself, also involves other members of his family viz. his wife and children. The organisation is run by the members of his family. The head of the family by that virtue also acts as the head of the organisation.
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Small scale industries occupy the next place in the spectrum of organisation sizes. Small Scale industries employing professional workers may be a proprietorship firm owned by a single industrial partnership firm or a private limited company owned by a small group of individuals.
The owner of such an organisation is directly involved in the management of the organisation. Large corporations are not owned by a single individual or a group of individuals. They are run as public limited companies owned by a large number of people running into hundreds or thousands in case of private sector corporations, and general public ownership in case of public sector corporations.
Today organisations are operating under an environment of change which poses challenging facts of the problem to the management. To face the prevailing problems it becomes a whole time job of management to aware of fluctuating informations under such environment of growing mechanism. With the growth and complexity of organisation, new dimensional problems have emerged in the field of planning, control, communication and the most sensitive among them being the human, relations.
The old techniques of management by intuition, rule of thumb, whim, personal prestige, and saying of ‘Grand sans’ are no longer valid for management decision making in the present day of organisation. In carrying out management analysis, planning and control, managers need adequate information at almost every turn.
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In other words management in every organisation is now constantly on the lookout for such quantitative and other information by which it can analyse its administrative action. In the present context, it is only the “Management Information System” (MIS) which can meet all the demands made on it by management.
According to Murdick and Ross. “The MIS operating system by exchange of information, management information system is designed to take advantage of modern tools and techniques. But MIS is neither refers to a traditionally data processing nor to the sophisticated computer system.”
According to Paul Siegal, “An MIS is not a sophisticated computer system, a communication network, a generalised data base management system, an accounting system, the MIS is philosophy, an approach a point of view, a way of seeding the organisation as a whole. It is at the core of a hierarchy of system.
The organisational system provides product and service for the environment system, the organisation information system provides all the data and information needed by the organisational system and the management information system provides the management oriented information to the organisation information system.
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Carl Hayel says “Management Information System are planned and organised approaches to supply executive with intelligence aids that facilitate the managerial process.”
From the analysis of the above views, we can infer that the management information system is a systematic approach to furnish timely, adequate, accurate information to the proper person in the hierarchy with a view to assist him in taking such decision as optimise the interrelationship of man, material machines and money to attain organisational goals effectively.
The objective of MIS is to provide information for decision making on planning, initiating, organising and controlling the operations of the subsystems of the firm and to provide a synergistic organisation in the process.
Business organisation does not exist in a vacuum. It exist in a world of concrete places and things, natural resources, important obstructions and living persons. The sum of all these factors and forces is called the organisational environment. All the organisations have internal and external data which effect internal and external environment.
The internal data are aimed at identifying a company’s strength and weakness when viewed in the perspective of the general business environment and in the light of competitive activity should help management to shape its future.
External environment may be classified in various ways, such as local, national, international, or past, present and future or economic or non-economic. The determinants of economic environment are fiscal policy, monetary policies, industrial policy, income policy etc. and the determinants of non-economic environment refers to social, political, legal, educational, cultural, physical and technological factors affecting business.
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Strategic informations are needed at top level for strategic decision maker, technical information are needed at middle level for technical decision maker and operational informations are needed at operational level for operational decision maker.
Marketing Information System – 5 Important Features
Every firm is the scene of many information flows affecting marketing management. Each firm has made some arrangements to systematise these flows. These arrangements constitute the form’s marketing information system.
A structured, interacting complex of persons, machines, and procedures designed to generate an orderly flow of pertinent information, collected from both intra and extra-firm sources, for use as the basis for decision making in specified responsibility areas of marketing management.
The marketing information system stands between the environment and marketing executive-user. There is a marketing data flow from the environment to the marketing information system which turns this data flow into a marketing information flow that goes to its executives. On the basis of this information, the executives develop plan and programs, which enter a marketing communication flow that goes back to the environment.
Feature # 1. Should Incorporate Selectivity:
The functions of the MIS do not stop with searching, organising, analysing, coding, preserving and feeding the information. Nor can the MIS be viewed as a mere courier service department. It must include the judgement factory. It must have the ability to decide whether a particular piece of information is essential or not.
And to do this, the MIS must know the nature and variety of information required by different departments and the roles of these departments in the total marketing system. MIS must be in a position to evaluate the various demands for information format the various executives and to moderate and temper those demands that appear unreasonable.
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This is not to suggest that MIS should overload all the users of the marketing information. Too much information should be supplied; but all significant information must be provided. The MIS should also let all users of the marketing information know as to what information is available, from which sources it is gathered and what it costs to gather and process the information.
Feature # 2. Should be Economical:
The MIS should also be economical. For this, it must recognise the cost value ratio of the information. It must also apply the principle of selectivity in gathering, processing and supplying the information.
The MIS should know – What are the types of information required? By whom? For what purpose? When do they need it? Why that particular information? What is the rely worth of the information? What is the cost involved in making available the particular piece of information? It must ensure that the cost of the information never exceeds its value.
The same information may be secured by different competing information designs. The information derived from each design has an associated value and associated cost. A comparison of these costs and values must be made and the best design must be chosen.
Feature # 3. Should be a Decision Support System:
The MIS cannot be viewed as a record keeping or filing activity. Nor is it limited to a data bank service. Data processing and record keeping are, no doubt, part of the MIS. But MIS is conceptually much larger than this. It has the role of making marketing management more efficient. It is in a unique position to aid marketing decision making and control.
In fact, the modern trend is to view the MIS basically as a marketing decision support system. It provides the right information back-up to marketing managers which a mere data bank cannot render. MIS helps the right choice among the marketing alternatives and improves the effectiveness of the entire organisation.
Feature # 4. Should be Compatible with the Culture of the Firm:
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It is also essential that the MIS be compatible with the culture and level of sophistication attained by the organisation. There is a good deal of interrelationship between the marketing operation, the marketing control system, and the marketing communication flow. The MIS must reflect this relationship.
Moreover, the MIS must be intelligible to and operable by the people in the organisation. There is no purpose in organising a highly sophisticated and advanced MIS if it is not intelligible to or usable by the people concerned.
The MIS must also involve the suppliers of the information. Since the suppliers are not necessarily the users, they are not usually motivated to provide essential information in time. They may also not have a clear idea of the information needs or how the information will be used. MIS should involve them, educate them and motivate them.
Feature # 5. MIS has to be a Unified and Centralised System:
The first requisite in organising and MIS is to recognise the unified nature of the system. The MIS must be perceived and managed as a single entity. No doubt, there are several information components in every MIS; likewise there are several activity components in the system—in its collection, processing, storing and transmission.
These components must be integrated into a unified system and managed by a single centralised agency. Likewise, the activity components must also be integrated; though they may be located in different sections of the organisation. The entire set of information components and activity components must form a single information unit.
There is real advantage is handling the MIS of the firm is a centralised office. The chief of the MIS must operate as the consultant, coordinator and controller of all the components of the MIS.
Marketing Information System – Importance: Anticipation of Consumer Demand, Complexity of Marketing, Significance of Economic Indicators and a Few Others
1. Anticipation of Consumer Demand:
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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 demands, marketers will be simply groping in the dark. Decisions based upon hunches, guesswork, intuition or tradition cannot give desirable result in the modern economy. They must have the support of facts and figures.
2. Complexity of Marketing:
Modern marketing process has become much more complex and elaborate. Ever-expanding markets and multinational’s marketing activities require adequate market intelligence services. Hence, there is a systematic approach to organized information system. Marketing communications provide information cues in non-price competition through advertising and sales promotion.
3. Significance of Economic Indicators:
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Forces of demand and supply are constantly changing. They determine prices and general market conditions. In a wider and complex economy, fluctuations in demand, supply and prices are tremendous. The marketers must have latest information on the changing trends of supply, demand and prices.
For this purpose, they rely 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 market cannot make decision 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 outguessing of the competitor will need the services of marketing intelligence. A market 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 technical progress. In most cases, the market was the mother of inventions. The energy crisis since 1974 has given a great encouragement to discover other alternative sources of energy, e.g., atomic energy, solar energy and so on.
Modern marketer must be innovative. “Innovate or perish” is the slogan in the existing marketing environment. But innovations are based on information given by research technological developments. New products, new markets, new processes and 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.
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 interrelate and coordinate 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 and internet are the most immediate force behind the information explosion. Computer and electronic data processing equipment act as our rescue boats to face successfully the fantastic flow of information.
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 car certainly add tremendously to the quality of information flow.
Marketing Information System – Components
1. Management:
Management is the process of getting things done through and with people. It is an activity of planning co-ordinating, controlling, and directing an organisation to achieve desired result. Management comprises the process or activities that describe what managers do in the operation of their organisation; plan, organise, initiate, and control operations.
They plan achieve the plan. They organise the task necessary for the operation plan, set up these tasks into homogenous groups and assign authority delegation. They control the performance of the work by setting performance standards and avoid deviation from the standard.
Koontz and O’Donnel put it thus “acting in their managerial capacity as, president, department heads, foremen, supervisors, college dean’s bishops and head of Govt. agencies all do the same”.
According to F.W. Taylor, “Management is the art of knowing what you want to do and then see that they do it in the best and cheapest way.”
On the other hand the functional view of management was expressed by Henry Fayol (father of the principle of management) as such “to manage is to forecast and to plan, to organise, to command, to coordinate and to control.”
E.F.L. Brench defines management is “a social responsibilities of effective planning and regulation of operations of an enterprise in fulfilment of a given purpose to task. Hodge and Jonson defines the term Management as decision making process.”
In their words, “Management is the process of making decisions and issuing commands on behalf of an organisation’s membership group taking into consideration the complex of objectives, limitations and standard underlying the production and distributions of value required to satisfy membership’s need.”
Lastly Peter Druker in his book “Management” defines management as a multipurpose organ that manages a business and managers and workers and works.
However, most of the definition suggest different source of management and a sequence of steps, which a manager should take up for a particular organisational task, a manager ordinarily will perform the managerial functions in sequence creating planning, organising, motivating, communicating and controlling the human behaviour in the organisation.
2. Information:
The second element of an MIS is information, which can be defined as processed data assisting management to discharge its functions. It consists of classified and interpreted data that are being used for decision making.
This is the most valuable assets required by management in order to plan and control business operations effectively. Now a day’s information constitute one of the factors of production. It is the input for production system.
Information is data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in current or perspective actions or decisions.
Data the raw material for information, is defined as group of non-random symbols which represents quantities, actions, objects etc. Data item in information system are formed for characters. These may be alphabetic, numeric or special symbols.
Data items are organised for processing purpose into data structures, file structures and data bases. Information within an organisation may be analysed according to management levels categorised as top management, middle management, and lower management.
Management levels → Nature of Information used
Strategic Mgt. level → Strategic information as Competition
Tactical Mgt. level → Operational information such as resources schedule
Operation Mgt. Level → Control Information Deviations
A. Strategic Management Level:
It refers to strategic plans and policies, long term goals and objectives of organisation. It responds to technical and strategic level and also provide a link between organisation and environment. As such it needs to have information about the external environment e.g. Govt. policy future development patterns etc.
B. Technical management Level:
It is concerned with the generation of short term plans, policies, procedures, programmes and objectives with the frame work provided by the strategic management levels.
C. Operational Management Level:
The responsibility of management of this level is to implement the policies so that goals and services may be supplied to the society.
Data and Information:
A distinction need to be drawn between information and data. So often the two are confused, and indeed the manager is often surrounded by data without having such information. Data are facts, discrete items which may lack the necessary integration or ordering that produces information. It is the organisation of data that liberates the information contained within them.
3. System:
The last element of the MIS is the system. A system is a set of interacting, elements, interacting with each other to achieve a predetermined objective or goal. System concept and technique aid management in developing and maintaining an effective frame work of system and procedure to satisfy the specific needs of the organisation.
According Carl Heyel, “A system is an orderly arrangement of interdependent activities and related procedure which implement the facilities in the performance of major of an organisation.”
Webster defines ‘system’ as “a set or arrangement of things so related or connected to form a unity or organisation.”
A system is a regular, orderly way of doing something. For purpose of its use in management information systems, the system module given below is a useful method of describing the related things that are brought together to form a unity. The System module has the four elements of input, processing, output, and back/control.
An organisation generally functions under two systems- physical and informational. A physical system is a process in itself and is concerned with what is going on. An information system is concerned with the form of how something is being achieved. Both the systems are interrelated and management information system encompasses both physical and information systems.
Marketing Information System – Requisites of a Good MIS
A good MIS should fulfill the following requirements:
i. It must be a unified system.
ii. It should be conceived and used as a marketing decision support system.
iii. It must be compatible with the marketing organization of the firm and with the overall level of sophistication of the firm.
iv. It must be user oriented and it must secure the involvement of users.
v. It must also involve and motivate the suppliers of the information.
vi. It must be economical. The cost-value ratio of the information processed by the -IIS should be favorable to the firm.
vii. It must adopt the principle of selectivity in information.
viii. It must be capable of absorbing smoothly any changes that may become necessary in the system.
ix. It must be fast.
1. The MIS has to be a Unified and Centralized System:
The first requisite is that the MIS should be a unified system. The MIS must be perceived and managed as a single entity. There will be several information components and several activity components in any MIS -in collection, processing, storing and transmission. All these components must be integrated into a unified system and managed by a single centralized agency. The entire set of information components and activity components must form a single information unit. The chief of the MIS must function as the consultant, coordinator and controller of all the components of the MIS.
This does not however mean that marketing information will not be gathered and processed at any other level than the centralized MIS outfit. By its very nature, the marketing function needs to be handled at different levels and each level processes and uses its quota of marketing information. While the centralized outfit will have comprehensive responsibility for the MIS of the company, the other levels would be handling those segments of information that are relevant to their operations. And they will simultaneously be feeders of the data to the centralized MIS as well as users of information from the centralized MIS.
2. The MIS should be a Decision Support System:
MIS cannot be viewed as a record keeping or filing activity. Nor, is it limited to a data bank service. While data processing and record keeping are certainly part of the MIS, MIS is conceptually much larger. It has the role of making marketing management more efficient. It is in a unique position to aid marketing decision making and control. In fact, the modem trend is to view the MIS basically as a marketing decision support system. It provides the right information backup to marketing managers which a mere data bank cannot render. MIS facilitates the right choice from among the marketing alternatives and improves the effectiveness of the entire organization.
i. Should be Compatible with the Culture of the Firm:
It is also essential that the MIS be compatible with the culture and level of sophistication attained by the organization There is’ a good deal of interrelationship between the marketing operation, the marketing control system, and the marketing communication flow The MIS must reflect this relationship Moreover, the MIS must be intelligible to and operable by people in the organisation There is no purpose in organizing a highly sophisticated and advanced MIS if it is not intelligible to or usable by people concerned.
MIS should also be economical It must recognize the cost-value ratio of the information It must also apply the principle of selectivity in gathering, processing and supplying the information. MIS should know: What are the types of information required? By whom? For what purpose? When do they need it? Why that particular information? What is the real worth of the information? What is the cost involved in making available the particular piece of information?
The same information may be secured by different competing information designs. The information derived from each design has an associated value and an associated cool A comparison of these costs and values must be made and the best choice made. It must ensure that the cost of the information never exceeds its value.
iii. Should Incorporate Selectivity:
The functions of the MIS do not stop with searching, organizing, analyzing, coding, preserving and feeding the information. Nor can the MIS be viewed as a mere courier service department It must include the judgment factor. It must have the ability to decide whether a particular piece of information is essential or not and to do this, the MIS must know the nature and variety of information required by different departments and the roles of these departments in the total marketing system.
MIS must be in a position to evaluate various demands for information emanating from various executives and to moderate and temper those demands that appear unreasonable. MIS should carefully assess all the information needs; separate the real needs from the imagined ones; find out an economical method/design to gather and process the information.
This is what is implied by selectivity of MIS. Selectivity should also reflect in the quantum of information finally passed on to the user and the pattern in which it is furnished Too much information should not be supplied; but all significant information must be provided The MIS should also let ail user departments know as to what information is available, from which Sources it is gathered and what it costs to gather and process the information.
Marketing Information System – Kinds
Market researchers take two main routes for classifying marketing information:
(1) Classification Based on the Purpose for which the Information is Used:
As per this first method, marketing information can be classified into four groups as shown below:
(i) Information for marketing planning.
(ii) Information for marketing operation.
(iii) Information for key decisions in marketing.
(iv) Information for marketing control.
(2) Classification Based on the Subject Matter of the Information:
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:
(i) Promotion
(ii) Sales force
(iii) Distribution channels
(iv) Products Customers
(v) Pricing
(vi) Internal environment of the firm
(vii) External environment of the firm.
(viii) Competition
(ix) Sales methods.
Marketing Information System – Steps
1. Simple Marketing Information Systems:
A new principle is needed if we are to find out what a marketing information system (MIS) is all about. This is the principle of a loop.
Now, as a part of the system, he issues instructions to the marketing operation he is managing. The operation could be made up of a large field sales force, a network of company warehouse, a network of company – owned retail stores, or any element of marketing activity owned by the company.
The environment of the operation, also shown in the circle, would be different according to the nature of the operation. If the operation, for example, was a network of company – owned retail stores, the environment would be the retail customers surrounding the stores.
Further, the loop is almost completed by the flow of information from the operations environment into the data processor and data bank. Finally, the loop is completed by the same two-way flow from data processor to brand manager (user), and serving the same purposes as there.
What does this loop mean? The facts that flow from the environment into the computer are those specified by the systems designer. They are the ones that can be processed to provide the information required by the brand manager’s decision rules. The information required by his decision rules, is specified by his intuitive information-processing rules.
The decision rule is – “If it is larger, change my price to equal the initiator’s price else ask myself the question.” From his information processing rule we know precisely what information he needs – he needs market-share data in the local and nearby markets.
One of the major tasks in designing a simple marketing information system is to identify these rules so as to know what facts will best serve him (best “fit his head)” and, therefore, what facts should be stored in the computer. The failure to consider the user’s needs adequately has been one of the frequent tragedies in most attempts to construct an MIS.
To sum-up, the main ingredient of a simple MIS is action based on feed-back. The brand manager devises an action plan based on the regular feedbacks from operating areas on regular intervals. In case of below average out-comes or performances he requests more information or presses for better actions with facts before him and his intuitive judgment, he decides of action plans. He then proceeds to implement the chosen action. This act is also termed as ‘swing action’ in some management terminology.
As a result of his implementing the decision, the relation between the marketing operation and its environment changes. He needs then to know the nature and consequence of the change. Since he knows what action he took, he can, by simple analysis of the data, attempt to infer what the causal process was that occurred.
This analysis takes place on the flow of facts into the computer from the operation and its environment, and the results of the analysis come in the form of information from the computer to him.
This is the meaning of the loop:
(i) Action,
(ii) Market facts,
(iii) Facts converted into information,
(iv) Information evaluated by the brand manager and new decisions result in new action, and
(v) New action leads to new facts, and so on, ad infinitum.
If the brand manager wishes, this simple system can be elaborated to simplify some of his functions. Each of these possible elaborations will be developed in a separate action below. In each of them, however, the concept of the loop—action, feedback, and new action—remains the central idea.
2. Marketing Information Systems with Plan Evaluation:
The first new element added is one that permits the system to evaluate the marketing plan. It is a decision model, or a computer programme based on an explicit set of rules, usually mathematical. It replaces the kind of intuitive rules we saw, which now tend to be the basis for the brand manager’s managerial behaviour. Such subtle mental habits are not easily changed.
If the brand manager has an adequate decision model programmed for his system, he can feed into it his goals and his marketing plan, which incorporates his estimates of buyer behaviour, cost, and competitive information relevant to a particular course of action. The output of the system will then be an evaluation of that plan in terms of his goals.
Such a system where solutions to marketing problems—proposed plans—are transmitted to a decision model programmed in the computer. The decision model queries the computer for the necessary data, which the computer receives from the market (environment). The model evaluates each plan in terms of its contribution to the brand manager’s objective of company profit. The profit results are fed back to him as evaluated plans.
In this way he can, in principle, receive estimates of the profit consequences of each of the plans and so avoid the cost, delay, and risk of tipping his hand to his competitors as a result of trying out a plan in the field. Armed with this new information, he can choose which marketing plan he prefers and initiate the action that is represented in the preferred plan.
The decision model is the crucial new element of this system. It is a major departure from the intuitive decision rules that have characterized marketing management since trading activity first began, perhaps in a Stone Age cave. The success of this system, however, hangs on the efficacy of its constituent parts. It requires certain decision technology, ideally certain formal optimizing models, a central element of which is aggregate response curves.
A formal model is necessary for the dimension of action, such as advertising, that is being tried out. A level of advertising that is optimal when analyzed alone may not be so when analyzed in the context of the other two dimensions of price and sales effort that are assuredly just as much a part of the plan. This is the problem of the optimal marketing mix. Once the optimal mix is obtained, it must be allocated to market segments. These decisions are not as simple as they might seem.
If the ideal of a formal optimizing model is not available to perform each of these tasks, carefully developed simulations may help. It is impossible to gauge the opportunities being sacrificed when you do not know the best answer, however.
3. Marketing Information Systems with Control Subsystems:
The system can be elaborated still further to include some or all of the control or monitoring function. The decision model need not necessarily come first in chronological development, as indicated here. Provision can be made in the system for assisting in the control function without the decision model. Historically, the control function was automated first in most companies.
The essential role of control now clear to the reader, the difficulty of developing a control system which identifies the correct problem in sufficient time for remedial action to be taken was not sufficiently stressed.
4. Marketing Information Systems with Problem-Identifying Subsystems:
The next step is future problem identification, which allows for more lead time in planning corrective action. It may be possible to develop a set of symptoms which will indicate to the brand manager here and now that something is likely to be at an unsatisfactory level not now but at some future date. The concept of the symptom identifier which, again, is a computer programme, is in principle similar to the quality-control idea in production departments.
Here we go a step beyond the control concept by modifying this simple quality control idea to include a warning system which tells the manager to expect problem, not now, but later. The central idea is the concept of a presymptom.
Symptoms of symptoms—presymptoms—are identified by the fact that though the system is still “in control,” the values of the controlled variable are showing a trend instead of being random. This would be especially applicable if our brand manager was confronted by a new competitive brand and wanted to monitor its market share.
This trend will, at some future time, take the values outside the control limits. Further, and equally important, this time can be estimated so that the brand manager knows the amount of time he has available within which he must take corrective action. Thus, having been warned of possible problems at a given time in the future, he will be in a much better position to deal with it.
5. Marketing Information Systems that Make Decision:
The final type of marketing information system is included mainly to give a complete picture. Practically it should be approached with great caution, because it is doubtful whether in many marketing situations the marketing technology—decision, computer- associated, and market research—is sufficiently well advanced to perform this task. Its use may expose the brand manager to undue risk.
For certain repetitive, relatively unimportant decisions, the computer can be programmed to actually make the decision which could be shown by instructions from decision model to marketing operation and its environment. Once the decision is made, the system reports the results, by the line results of respective decisions.
So far as we know, there is no such system yet operating in the marketing area of a company. We understand, however, that such a decision making system does exist in inventory control, which is usually a much more predictable system. Marketing logistics—the physical movement of the product—holds possibilities.
If such a system were feasible, the brand manager would be relieved of the unrewarding task of performing a mechanical function; he would be free to think more systematically about the remaining decisions not handled automatically by the system and he would, in principle, thus be able to do a more effective marketing job. These remaining decisions, which are the non-repetitive and even the important repetitive ones, constitute a large share of all his decisions. They probably deserve much more time than he is now giving them.
Finally, this system can be modified slightly to not only make the decision but also to report only those results of the computer- made decisions that are less than satisfactory, as judged by some predetermined standard. This would require inserting an additional processing step between decision models and brand manager. In other words, he would have both the present and future control systems to rely upon.
The assumptions underlying development of a marketing information system are listed below:
1. An effective control system is available that can be applied to marketing.
2. Decision techniques are, in principles, adequate.
3. Aggregate buyer response functions can be derived.
4. Short-run problems can be forecast and described well enough to estimate the raw data that will be required to support the system.
5. Raw data are stored at a low enough level of aggregation (for example, individual observation of buyer such as a purchase transaction) to provide answers.
6. All traditional short-run problems capable of being subjected to quantitative treatment can be accommodated within the system.
7. No organization problems exist. For example, brand managers will, instead of being fearful and threatened, feel free and comfortable learning fundamentally new information-processing and decision rules.
8. All possible alternatives of action are considered.
(iv) Comprehensive monitoring of inputs and performance variables yields information when changes are made.
Marketing Information System – Contribution of MIS in Developing Better Marketing Decisions
“A marketing information system (MIS) consists of people, equipment and procedures to gather, sort, analyse, evaluate and distribute needed, timely and accurate information to marketing decision makers.”
MIS begins and ends with marketing managers. First, it interacts with these managers to assess information needs. Next, it develops needed information from internal company data, marketing intelligence activities, marketing research and information analysis. Finally, the MIS distributes information to managers in the right form to help them to make better marketing decisions.
Assessing Information Needs:
A good marketing information system provides the managers with the information really they need at the right time.
Some managers will ask for whatever information they can get without thinking carefully about what they really need. Too much information can be as harmful as too little. Other managers may omit things they ought to know or may not know to ask for some types of information they should need.
For example, managers might need to know that a competitor plans to introduce a new product during the coming year. Because they do not know about the new product, they do not think to ask about it.
Sometimes the company cannot provide the needed information either because it is not available or because of MIS limitations. For example, a brand manager might want to know how competitors will change their advertising budgets next year and how these changes will affect industry market shares. The information on planned budgets probably is not available. Even if it is, the company’s MIS may not be advanced enough to forecast resulting changes in market shares.
Finally, the company must decide whether the benefits of having additional information are worth the cost of providing it, and both value and cost are often hard to assess.
Developing Information:
The information needed by marketing managers can be obtained from internal data, marketing intelligence and marketing research. The information analysis system then processes this information to make it more useful for managers.
1. Internal Data:
Many companies build extensive internal databases, “computerized collection of information obtained from data sources within the company”.
Information in the database can come from many sources. The accounting department prepares financial statements and keeps detailed records of sales, costs and cash flows, manufacturing reports on production schedules, shipments and inventories.
The sales force reports on retailer reactions and competitor activities. The marketing department furnishes information on customer demographics, psychographics and buying behaviour. Research studies done for one department may provide useful information for several others.
Internal databases also present some problems. Because internal information was collected for other purposes, it may be incomplete or in the wrong form for making marketing decisions. For example, sales and cost data used by the accounting department for preparing financial statements must be adapted for use in evaluating product, sales force or channel performance. In addition, a large company produces mountains of information and keeping track of it all is difficult.
2. Marketing Intelligence:
Marketing intelligence is the systematic collection and analysis of publicly available information about competitors and developments in the marketing environment.
Its goal is to improve strategic decision making, assess and track competitor’s actions and provide early warning of opportunities and threats. The marketing intelligence system determines what intelligence system is needed, collects it by searching the environment, and delivers it to the marketing managers.
Marketing intelligence can be gathered from many sources. Much intelligence can be collected from the company’s own personnel executives, engineers, purchasing agents and the sales force. The company must make them to realize their importance as intelligence gatherers, train them to spot new developments and interact with them on an ongoing basis, and urge them to report intelligence back to the company.
Competitors themselves may reveal information through their annual reports, business publications, press releases, web pages, etc.
Finally companies buy intelligence information from outside suppliers ranging from marketing research firms to consultants who specialize in competitive intelligence.
Some companies set up an office to collect and circulate marketing intelligence.
3. Marketing Research:
Marketing research system is the third component of the MIS. Marketing research offers special information on request when the marketing executives encounter typical marketing problems demanding unique information for solving those problems. MR studies are project-oriented. Mostly they involve studies relating to buyer behaviour, product or brand preferences, product or brand usage, advertising awareness, sales promotion, physical distribution, dealer behaviour, competition and so on.
Management science or operations research is the latest addition to the marketing information system. OR analysts help marketing executives in decision making in such areas as new product development, marketing mix planning, sales, call time allocation, media selection, queuing problems in retail institutions, location of warehouse, inventory control, and so on.
Marketing information system stands between the marketing environment and marketing decision-makers. Marketing data flows the environment to the marketing information systems. Marketing data is processed by the system and converted into marketing information flow, which goes to the marketers for decision-making. Plans and programmes are based on this information flow. Then we have marketing communication flow back to the environment.
In marketing planning, marketers select, screen, synthesis and combine internal and external information inputs in order to recognize the firm’s relation to its customers, its competitors and its environment in general. Marketing decisions influence external and internal environment. The results are compared with objective or standards. Feedback provides corrective actions and offers further information for revising and modifying decisions.
Marketing Information System – 8 Important Advantages
The various benefits that flow from marketing information are listed below:
(i) It helps the controlling of marketing activities.
(ii) The quality of marketing decisions are decided to a great extent by the quality of marketing information available to the decision maker.
(iii) It provides market intelligence to the firm.
(iv) It facilitates the development of action programmes for achieving set goals.
(v) It helps the firm to adjust its products and services to the needs and tests of customers.
(vi) It helps rapid spotting of trends and facilitates the formulation of basic assumptions on economic and business conditions.
(vii) It helps marketing planning by making available reliable information on the external environment and the internal company realities.
(viii) It helps effective tapping of marketing opportunities and effective defence against marketing threats.