A Marketing Information system (MIS) is “a system that analyses and assesses marketing information, gathered continuously from sources inside and outside an organisation”.
Marketing Information System (MIS) provides managers and other decision makers with continuous flow of information about markets, customers, competitors, and company operations.
A Marketing Information System (MIS) is a set of procedures and methods designed to generate, analyse, disseminate, and store anticipated marketing decision information on a regular, continuous basis.
1. Introduction to Marketing Information System 2. Concept 3. Meaning 4. Definition 4. Evolution 6. Characteristics 7. Features 8. Components 9. Needs
10. Subsystems 11. Purpose 12. Importance 13. Kinds. 14. Functions 15. Inputs 16. Advantages 17. Disadvantages 18. Emerging Trends.
Marketing Information System: Definition, Functions, Advantages, Components, Importance, Characteristics, Needs and Purpose
Marketing Information System – Introduction
Marketing Information System is a Management Information System designed to support marketing decision making process. It is the system or way by which market information is formally gathered, stored analysed and then distributed to the managers in accordance with their informational needs on a regular basis. It is also a proceeding and interacting structure of people, producers and equipments to gather, analyse, sort and evaluate information for use by marketers.
No one could possibly think of marketing activities taking place in isolation. Business environment, competition and consumers all dynamic by nature influence marketing. Further partners, key stake holders and various other internal factors also influence marketing. Many of these factors are uncontrollable. Marketing professionals need to design marketing programs under such an uncertain and dynamic environment.
Marketing department tries to understand the role and impact of these factors to offset unfavorable situations and harness opportunities. Under such a situation availability of information is crucial to stay competitive and survive. Marketing department collects information from various conventional sources as well as some unconventional sources such as spying.
Since requirement of information is continuous and critical it is suggested to take system approach towards information management. Marketing information system (MIS) is a collection of process, methods, tools and people through which information that supports marketing is collected, stored, analyzed and disseminated. MIS act as marketing support system and facilitate marketing managers to take decisions by making valuable information available to them in precise and timely manner.
Marketing decisions supported by MIS could help organization to outperform competition and achieve sustainable competitive advantage. Against convention it is a myth that MIS primarily comprise of Hardware and software rather any systematic approach towards data collection processing and generating valuable information and its dissemination to support decision making could be a MIS. However in today’s information overloaded world manually processing huge amount of data is not possible, so information technology backed by computing power has become integrated part of MIS.
American academic Philip Kotler has defined it more broadly as – “a system that consists of people, equipments and procedures to gather, sort, analyse, evaluate and distribute needed, timely and accurate information to marketing decision makers.” In the modern era of technological advancement, consumer consciousness and computerized information systems. Marketing Information System has gained more prominence.
The Marketing Information System encompasses the analyses, planning, implementation and control function of marketing management. The overall objective of Marketing Information System is to provide inputs from target markets, marketing channels, competitors, public and other forces for creating, changing and improving the market decisions management of a business enterprise.
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.
Marketing Information System – Concept
An Information system generates information from data. Data is in the form of raw material and it is subject to some manipulation to generate useful information. If a system generates useful information for managerial use in planning, decision-making and control, it is called as a “Management Information System”.
An Information System is a man – machine system that produces information for use in managerial problem solving and decision-making. A full-fledged MIS provides for capturing of data at source with desirable accuracy and processing it to generate information in a usable form for managers.
The purpose of a Marketing Information System is to highlight a situation requiring a marketing manager’s attention and action. The system collects data at source about every transaction in every area of activity and stores it for present or future use. The data items are processed and the information is either stored or communicated to the users.
A marketing information system is a management information system designed to support marketing decision-making.
A Marketing Information System (MIS) is a set of procedures and methods designed to generate, analyse, disseminate, and store anticipated marketing decision information on a regular, continuous basis. An information system can be used operationally and strategically for several aspects of marketing. A marketing information system can be used operationally, managerially, and strategically for several aspects of marketing.
Marketing Information System – Meaning
Marketing information is the lifeblood of marketing process as marketing decision won’t be taken in the absence of marketing information. Marketing decisions are affected by many internal and external environmental variables, so the marketing decision maker needs a great deal of information related to these variables. Seeking information about the environment and competitors is vital for business survival.
No one single variable can guarantee success, but rather will contribute to overall organization performance. Information leads to better decision making especially in this era of fast changing consumer preference, for this reason management needs to do a lot to acquire, process and transmit accurate and timely marketing information for better decision making which will make them gain distinctive advantage, thereby contributing to their organizational performance.
The marketing success in the organization depends basically on the availability and the accuracy of marketing information from its multiple sources. All marketing organizations try to find out and determine the nature of the markets and their trends, needs and changes that occur in these markets, as well as try to know the competitors, prices, options and other marketing information which is the key to success for any marketing decision. The components of marketing information system (internal records, marketing research, and marketing intelligence) are the most important sources in obtaining marketing information.
Marketing information system harnesses data from a set method and procedures designed by organization in looking at critical information need of the organization like, information on market trend and sizes, information on the changing need of customers, information from competitors and the information on government policies that affect business operations. These information is basic in identifying , measuring, forecasting and analysing various market segment as regard to any economic state be it boom or recession.
The international marketing information system is conceptually very close to the marketing information system, being its integral part. Consequently, the international marketing information system is aimed at a systematic and continuous collection, analysis and provision of all relevant data and information for making international marketing decisions, as a part of the company’s marketing information system.
Marketing Information System – Definitions
Marketing Information System has been defined by various authors in various ways.
According to Phillip Kotler, Marketing Information System is “people, equipment, and procedures to gather, sort, analyse, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.”
According to BusinessDictionary(dot)com – A Marketing Information system is “a system that analyses and assesses marketing information, gathered continuously from sources inside and outside an organisation”. Timely marketing information provides basis for decisions such as product development or improvement, pricing, packaging, distribution, media selection and promotion.
According to Donald F Cox and Robert E Good a Marketing Information System may be defined as “a set of procedures and methods for the regular, planned collection, analysis, and presentation of information for use in making marketing decisions”. This of course is a step beyond logistics systems, which handle inventory control, orders, and so forth.”
“A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.” – Kotler and Keller
“Marketing information system is a computerized system that is designed to provide an organized flow of information to enable and support the marketing activities of an organization.” – Harmon
“Marketing information system may be understood as work on gathering, forwarding and storing data, as well as research results, aimed at delivering complete information necessary for marketing decision-making.” – Russ
“Marketing information system is a system in which marketing data is formally gathered, stored, analysed and distributed to managers in accordance with their informational needs on a regular basis.” – Jobber
Marketing Information System (MIS) provides managers and other decision makers with continuous flow of information about markets, customers, competitors, and company operations. A MIS should provide a means of gathering, analysing, classifying, storing, retrieving and reporting relevant data about customers, markets, channels, sales and competitors. A company’s MIS should also cover important aspects of a company’s external environment.
Global competition intensifies the need for an effective MIS. Global companies like Caterpillar, Mitsui, Toyota, ABB, Ford and Texas Instruments have sophisticated electronic data interchange (EDI) systems to improve intercompany information sharing. Internet has complemented and dramatically expanded the ability to access up to date information anywhere in the world.
MIS acts as a strategic competitive tool. MIS and research function must provide relevant information in a timely, cost-efficient and actionable manner. Information systems help geo-centric global companies to meet challenges in the dynamic world markets, due to political and economic events.
On the basis of above discussion and definitions given by some renowned researchers it can be concluded that Marketing Information System is 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 bases for decision-making in specified responsibility areas of marketing management.
Today marketers need to study several important topics in order to make the most of modern information technology. First, they need to understand the importance of information technology and marketing information systems as strategic assets. Second, they need a framework for information scanning and opportunity identification. Third, they should have general understanding the formal market research process. Finally, they should know how to manage the marketing information collection systems and the marketing research effort.
Marketing Information System – Evolution
Various system for processing information’s have been in use by organisations for years. As it was typical in the past, the small country store was owned and operated by one man. The owner was both president and chief executive undertaking all the functions required to operate the store including sales promotion, market research, accounting, inventory control, public relation and so on.
The owner personally gathered all the information necessary to carry out various functions, either vising it as it was gathered or storing the information in his memory for later retrieval. Once a decision was made, the owner usually undertook the necessary action himself.
Within the confinement of a small operation, the owner operated information system was often very efficient. It made use of highly integrated information system of the owner himself. Information was expressed and stored in that system in a form that was readily understood by all the components of management.
The owner operated information system could also be expected to be efficient if more than one person worked in the organisation, provided those involved were relatively closed in their experience and knowledge.
The similarity of purpose and experience of the individuals in such circumstances usually allow a close communication between them and facilitate the interaction between their respective stores of information.
In more recent times, an increasing proportion of our affairs has been conducted by large organisations. Many of the smaller enterprises have been superseded by large corporation or incorporated into them. Private business and industry have grown in the size and scope of the national economies of the leading industrial nations have expanded.
The development of modern economies has a number of effects on the organisations involved in both public and private sectors. In the first place, the growth of organisation has made it much more difficult for one man to control and direct the activities of an enterprise in the manner as the owner of the country store can do.
As the staff of an organisation increased, the amount of authority that must be delegated naturally increases too. Responsibility for routine activities and the accompanying decisions is delegated to managers at the middle and lower levels of the organisation. Senior management concerns itself with the less routine activities of planning and policy making.
A necessary counterpart of delegation of authority in the reporting of the results of the activities that have been assigned, Delegation of authority must, therefore, be accompanied by the establishment of a communicative channel through which these results can be reported and discussed. The greater the degree of delegation, the larger is the number of communication channel needed as part of the information system.
A second effect of the growth of an organisation is that the breadth of experience and knowledge of individual members of the organisation tend to decline. In the early stages of expansion, the owner, president or director of a small organisations usually does the hiring himself normally choosing person with whom he can communicate easily and readily.
As the organisation grows, however, the hiring process itself is delegated. The delegation of authority usually resulted in the hiring process of individuals with a wider range of characteristics. It is quite common that individuals with different back ground placed different interpretation upon information that has been acquired.
This diversity of view point often is a source of strength to an organisation. It can, however, be a cause of misunderstanding. For this reason, greater attention to communication between individual members is needed when the organisation grows in size. This need a particularly acute if the expansion of the organisation involves geographic dispersion of units.
Another factor with which modern origination must contend is the greatly increased complexity of the activities in which they are involved. This complexity is due in most part to the pace and pattern of modern life and has led to an increased degree of specialization by those who are in organisation.
Increased specialization tend to decrease the amount of knowledge and experience common among members of an organisation. In addition, specialization encourages communication between those with similar backgrounds and decreases passage of information between individuals with different interest and specialization.
The complexity of external environment in which modern organisation operate has greatly increased the amount of information that must be processed within organisation.
The nature of the modern environment has also increased the complexity of the necessary information handling. A striking example of this increased complexity is the administration of a company payroll.
The owner of the propriety shop usually paid an employee a previously agreed upon the amount withdrawn directly from the cash register. The owner than charged the amount to cost. A modern payroll system has the same basic function. However, modern social conditions requires that a payroll system also incorporate a large number of other features.
Modern payroll system are usually required to make deduction from the gross pay for some of the following income-tax, health care programme, dental care programmes pension schemes, charitable donation, taxable allowances and benefit union dues, parking fees, payroll saving plan, garnishment, disability, insurance, and numerous other social and administrative functions.
As a result, a modern payroll system is very large, and complicated operation usually requiring computer support to accomplish the necessary data processing tasks. Organisation have met the demand of the increased complexity of their activities by diverting an increase proportion of their effort and resources to administrative task and information system.
In the early twentieth century, the information gathering activities were devoted almost entirely to reporting the financial condition of the organisation. As managerial skills developed in economies were introduced under the general headings of management accounting for evaluation of the efficiency of subcomponents of the organisation in a market oriented economy. The early information system were oriented exclusively towards the financial and managerial accounting functions.
It is note-worthy that the main initial effect of the introduction of the computer in organisation was an increase in the amount of routine clerical and data manipulating capacity available to the accounting function. Design and implementation of information system was often entirely in the hand of accountants.
The concept of an information system designed to serve a wide range of managerial function was often given little attention. Primary emphasis at the time was often given to the work involved in introducing the new computer supported financial and accounting system.
The idea of information system to guide management decisions predates the use of computer which have extended the organisation capabilities for implementing such a system.
Evolution of MIS concept can be summed up by four major areas of system development. There are Managerial Accounting, Management Science, Management Theory and computerisation. Indeed the concept of MIS can be viewed as substantial extension of their concepts.
Marketing Information System – 11 Important Characteristics
Thus, a well-designed management information system is likely to have following characteristics:
1. MIS is a system, it is a logical grouping of distinct and interdependent components of information, element assembled for furnishing and generation of information.
2. It may involve use of manual devices put in frequently manual mechanical and electro mechanical devices. Often MIS is said to be associated with the use of computers.
3. The role of MIS is basically that of generating and packaging of information in the useful quantums of knowledge. The design of management report embodying such MIS is very important and crucial.
4. MIS is related to organisational levels i.e. it is need based. At top level the information required is summary in a “Flesh form”. At the lower and middle levels it is more detailed for exercising day to day control. The frequency of information furnished will be decided by the need of the management.
The frequency of information is higher at middle and low levels. Besides it is internally focussed “at the lower and middle level whereas ‘external’ directed at the top level”.
5. It is associated with the establishment of data bank in a central unit that computer data close to its origin and connects their input into management information.
6. Information communication is wide horizontal and vertical, throughout the requisition. It is necessary therefore, to employ in use sophisticated communication decision devises.
7. The information supplied is “Exception oriented” showing the level at which action is required. There are in fact exception which decide when to report.
8. Information supplied is futuristic i.e. predictive. It primarily aims at giving a fed for the developed and the trend there of. An effective MIS craves for “before the fact reporting.”
9. It must involve complete commitment of the executives. There should be periodical review of the system as the organisation grows or decays.
10. Management get a steady flow of information on a regular basis the right information for the right people, at the right time and cost.
11. The system is composed of a collection of sub-system with varying degrees of integration among the parts.
Marketing Information System – Features
For a marketing information system to be a sound source for decision-making, it should have the following features:
1. MIS should be marketing oriented/directed – The MIS of an organisation should be so designed as to meet the information needs of the Marketing Department at all levels so that the marketing objectives are achieved.
2. It should be Organisation Driven – The Marketing Information System is a support function. Its purpose is to meet the marketing information needs of an organisation. As such the Marketing Information System should be so designed that its strategy is derived from the overall corporate strategy.
3. It should be an Integrated System – Marketing Information System views the organisations marketing information needs from a system’s point of view. It should blend together databases of all subsystems of the marketing system and through information interchange integrates the overall marketing organisation.
4. It should avoid redundancy in data storage – As MIS is an integrated system, it should avoid unnecessary duplication and redundancy in data gathering and storage.
5. It should be based on heavy planning – As the design and implementation of MIS requires heavy investment, such a system should be designed and implemented only after heavy planning.
6. There should be flexibility and ease of use – The MIS should be flexible enough to accommodate new requirements. The system should be easy to operate so that not many computer skills are required on the part of the user to access information.
7. Distributed systems – Most organisations have their offices, sales outlets, etc., geographically spread over a wide area. These offices work mostly independently of its headquarters. However information has to be routinely exchanged between these offices. In such cases the information system should be such as can meet the information processing requirements of the various constituents.
8. Information as a resource – Information is a resource. As such the MIS should be so designed that the information resources can be shared across offices and sales outlets and thus increasing the return from investment in information resources.
Marketing Information System – Components
The marketing information system is an invaluable aid to decision making and is a specialized subset of the corporate ‘management information system’. The term ‘management information system’, along with that of marketing information system, is synonymous with data processing and forms a framework for managing information that is gathered from both outside and inside the organization.
The management information system consists of five separate planning components, namely- Production or Operations; Human Resource Development; Finance; Logistics and of course
1. The internal accounting system is a system that reports orders, sales, dispatches, inventory levels and cheques receivable and payable.
2. The market intelligence system is a set of procedures and sources used to obtain everyday information about pertinent developments in the marketing environment, largely built up from data like reports from sales representative.
3. The marketing research system is the systematic design, collection, analysis and reporting of data findings relevant to a specific marketing situation facing the company.
4. The analytical marketing system analyses marketing data using statistical procedures and models. This analysis feeds into strategic marketing plans.
Subsystems 1, 2 and 3 are data collection methods, whereas subsystem 4 is an analytical method. Together they provide a framework for marketing managers to marshal their thoughts into tactics, and to assist management in seeing the important elements of a particular situation and examining the relationships between these elements.
A successful marketing information system provides a structure for analysis, planning and control of a given set of activities. Creating a management information system and marketing information system for any business is a complex, individualized process.
Lancaster and Massingham distinguish between marketing information system and marketing research. Marketing research is concerned with the task of generating information, whereas the marketing information system is focused on managing the flow of information to marketing decision makers. This distinction is important because information is worthless unless it is relevant and effectively communicated.
Marketing Information System – Reasons for the Need of MIS
In the present day of dynamic and competitive market environment, the needs of Marketing Information System are ever greater.
Following points highlight the needs of marketing information system in the context of present day situation:
1. To Recognize Market Trends – Marketing Information System helps managers to recognise market trends in respect of price, designs of products fashions, etc. Timely information of the market trends enables the firm to follow the right course of action.
2. To Facilitate Marketing Planning and Control – Effective marketing planning is required in terms of product planning, pricing, promotion and distribution. Such planning will be possible only if the firm is possessing adequate and relevant information. This is possible only through an effective Marketing Information System.
3. To Ensure Quick Supply of Information – In today’s competitive business world, a firm has to take quick decisions to cope with the market needs. For this purpose, it requires fast flow of information; which is facilitated by a properly designed Marketing Information System.
4. To Improve Quality of Decision Making – Properly designed Marketing Information System supplies reliable and relevant information. With the help of computers and other data processing equipments, the marketing managers can make the right decision at right time.
1. Competitive Pressures:
They require the Organizations to have the ability to compete, to produce, and to market developed products more quickly than before.
2. Increase in Consumer Expectations:
The steady increase in consumer expectations and what they expect of products, in terms of its ability to satisfy their needs, and the consequences of less serious or inaccurate decision taking due to the lack or inaccuracy of the information upon which the decision will be built, and its impact on the organization’s success and sustainability.
3. Emergence of Large Markets:
The widespread production and distribution contributed to the emergence of large markets, and their requirements of a large number of intermediaries between producers and final consumers, these intermediaries become a barrier to the flow of data that can guide the development of marketing decisions related to the consumers needs and desires, as a result the widening gap between producers and final consumers reinforce the importance of marketing information system in bridging this gap.
4. Information Revolution:
Each organization has more than one source of information, but the problem lies in how to use and manage this information, with the development of computers and other operating data equipment, it has become quick and inexpensive for management to run and analyze vast amounts of marketing data and provide information necessary for effective decisions.
Marketing Information System – Top 4 Subsystems of a Well Designed MIS
A well-designed market information system consists of four subsystems:
a. The first is the internal records system, which provides current data on sales, costs, inventories, cash flows, and accounts receivable and payable. Many companies have developed advanced computer-based internal reports systems to allow for speedier and more comprehensive information.
b. The second market information subsystem is the marketing intelligence system, supplying marketing managers with everyday information about developments in the external marketing environment. Here a well-trained sales force, purchased data from syndicated sources, and an intelligence office can improve the quality and availability of marketing intelligence flowing to company marketing managers.
c. The third subsystem, marketing research, involves collecting information that is relevant to specific marketing problems facing the company. The marketing research process consists of five steps – defining the problem and research objectives; developing the research plan; collecting information; analyzing the information; and presenting the findings. Good marketing research is characterized by the scientific method, creativity, multiple methodologies, model building, and cost/benefit measures of the value of information.
d. The fourth system is the Marketing Decision Support System (MDSS marketing system) that consists of statistical and decision tools to assist marketing managers in making better decisions. MDSS is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware. Using MDSS software and decision models, the organisation gathers and interprets relevant information from the business and the environment and turns it into a basis for marketing action. MDSS experts use descriptive or decision models, and verbal, graphical, or mathematical models, to perform analysis on a wide variety of marketing problems.
To carry out their responsibilities, marketing managers need estimates of current and future demand. Quantitative measurements are essential for market opportunity, planning marketing programs, and controlling the marketing effort. The firm prepares several types of demand estimates, depending on the level of product aggregation, the time dimension, and the space dimension.
Marketing Information System – Purpose of MIS to Marketing Managers (3 Main Sources)
The information needed by marketing managers that serves as input to MIS comes from three main sources:
1. Internal Company Information:
E.g., sales, orders, customer profiles, stocks, customer service reports, etc.
2. Marketing Intelligence:
Marketing intelligence is a set of procedures that marketing people use for continuous monitoring and gathering information about developments in the market that helps them to prepare and adjust their marketing plans. This can be information gathered from many sources, including suppliers, customers, distributors, reading newspapers, trade magazines, surfing internet etc.
It is possible to buy intelligence information from outside suppliers (e.g. IDC, ORG, MARG) who set up data gathering systems to support marketing intelligence requirements of all players in a market and sell these information as product to them. More recently marketing intelligence has gained considerable importance primarily due to its capability to underpin strategic success.
Marketing intelligence coupled with competitive intelligence (gaining quick information about competitors through formal and informal channels) is collectively referred as Boundary Spanning. Boundary spanning strategy is using marketing intelligence and competitive intelligence in tandem with internals information sources to develop and execute business plans to gain competitive advantage.
3. Market Research:
Management cannot always wait for information to arrive in bits and pieces from internal sources. Also, sources of market intelligence cannot always be relied upon to provide relevant or up-to-date information (particularly for smaller or niche market segments). In such circumstances, businesses often need to undertake marketing research either conducted in-house or outsourced as specific studies to support their marketing strategy.
A typical Marketing Information system integrates various functions of marketing so well that entire marketing works seamlessly. The information between various participating parties flows smoothly and caters their respective needs in timely and effective manner leading to an overall improvement of marketing productivity.
James O’Brien a well-known author in Management Information System has proposed following components of marketing information system:
1. Interactive marketing
2. Sales force automation
3. Marketing research and forecasting
4. Customer service and support
5. Advertising and Promotion
6. Product management
7. Sales Management.
Marketing Information should not be approached in an infrequent and unsystematic manner.
If information management is done this way, a firm could face following problems:
1. Market opportunities may be missed.
2. There may be a lack of awareness of environmental changes and competitors’ actions leading to revenue loss.
3. Marketing actions may be reactionary rather than anticipatory and proactive.
4. Data collection may be difficult to analyze over several time periods.
5. Marketing plans and decisions may not be properly reviewed.
6. Previous studies may not be stored and made available as and when required.
The information management of a marketing department typically comprises of three steps that are as follows:
1. Data Creation – This could be of following two types –
(a) Continuous monitoring – It is the procedure by which the changing environment is regularly viewed and data from various internal and external sources are captured.
(b) Marketing research – Used to obtain information on particular marketing issues.
2. Data warehousing – Involves the retention in integrated manner of all types of relevant company records and information collected through continuous monitoring and marketing research.
3. Dissemination – Analyzing the stored data in warehouses, making relevant and useful information available to managers for decision making.
Depending on a firm’s resources and the complexity of its needs, a marketing intelligence network may or may not be fully computerized. The ingredients for a good MIS are consistency, completeness, and orderliness. Marketing plans should be implemented on the basis of information obtained from the intelligence network.
A Marketing Information System offers many advantages:
1. Organized data collection.
2. A broad perspective to market, competition and consumers.
3. The storage of important data over a period of time.
4. An avoidance of crises by retrieving critical data quickly.
5. Comprehensive and coordinated marketing plans could be developed and executed with little effort.
6. Speed in obtaining sufficient information to make decisions.
7. Offers capability to do a cost-benefit analysis.
The disadvantages of marketing information system are:
1. High initial time to design and implement MIS and train users.
2. High labor costs on continuous basis to design develop and maintain the MIS.
3. Complexity of setting up an information system.
4. Information overload to managers. Marketers often complain that they lack enough marketing information of the right kind, or have too much of the wrong kind.
However a marketing information system that is well designed and has strong in built analyzing capability is the solution all above problems because rewards of an efficient and effective MIS outperform the associated costs. At the end we could only say that it just the beginning of an internet along with Information technology driven age where paradigms of marketing are expected to change beyond expectation. Sitting in this time it would be difficult for any prophet to describe in what ways our life will be altered.
Marketing Information System – Benefits
A Marketing Information System is important as it offers the following benefits:
1. Aids in Recognising Trends:
A good marketing information system helps a marketing manager to recognise changing market trends. Trends are constantly changing and a marketing manager should be able to predict and respond to the changing trends. The changing trends may be in respect of prices, product design, packaging, promotion schemes, etc. A Marketing Information System helps managers to take effective marketing decisions in respect of prices, product designs, etc., in response to changing trends in the environment.
2. Help Managers to Recognise Change:
A sound marketing information system will point out the changing trends and thus aid a marketing organisation to change the product mix or to introduce a new line according to the changing market demand.
3. Instant Supply of Required Information:
Marketing is a dynamic function and a marketing organisation needs to respond quickly to the various changes taking place in the marketing environment. Here the Marketing Information System helps the marketing manager by supplying the required information in a quick and timely fashion, leading to effective decision-making.
4. Quality of Decision-Making:
Decisions have to be taken in every area of marketing by a marketing manager every day. A properly designed marketing information system promptly supplies reliable and relevant information. With the help of this information, the marketing manager can make the right decisions at the right time.
5. Facilitates Marketing Planning and Control:
An effective Marketing Management System makes it possible for a marketing manager to effectively plan and control all marketing activities. Marketing planning with respect to product planning, price planning and decisions, promotion and distribution is made more effective through the use of the Marketing Information System, as decisions related to all such aspects are taken on the basis of scientifically collected and analysed data and not in a vacuum.
6. Provides Marketing Intelligence:
Marketing intelligence refers to information of the events that are happening in the external environment, i.e. changes in customer tastes, expectations, competitors strategies, government policies, international environment, etc. With the help of MIS specialists, it is possible to collect marketing intelligence which is vital to make effective marketing decisions.
7. Integration of Information:
Large firms with widespread marketing departments can gather information which is scattered at many centers or and integrate it for effective decision-making. Such integration is possible if there is a centralised MIS.
8. Tapping of Business Opportunities:
An effective Marketing Information System helps a marketing manager in tapping, untapped markets. It thus makes available business opportunities to the Marketing Manager.
Marketing Information System – 3 Main Kinds of MIS
There are three kinds of systems namely:
i. Marketing control system – It provides the management information relating to the trends and problems in the market as also the marketing opportunities. The system is useful for controlling the marketing cost and finding out reasons for poor sales.
ii. Marketing planning system – It furnishes information required for future planning of products in a most convenient and intelligible form. The problems handled by this system are sales forecasting, promotional planning, credit management, etc.
iii. Marketing research system – This is useful for analysing and solving current marketing problems. It measures characteristics of different types of customers and their behaviour. Marketing research handles problems concerning advertising, price, etc.
Marketing Information System – 7 Main Functions
Marketing information system performs various types of functions as follows:
1. Market Identification Function – The determination of potential buyers and their characteristics is vital in order to satisfy their needs and desires. This enables the marketer to know –
a. Where the buyers are located?
b. When do they buy?
c. How frequently do they buy?
d. In what quantity do they buy?
2. Purchase Motivation Function – An assessment of various social, economic and psychological forces which influence the purchase behaviour of the market is made under this function.
3. Product Adjustment Function – This function includes all such activities which are necessary to match the product/ service offerings with the market.
4. Physical Distribution Function – The actual movement of goods from the production centre to the point of consumption is considered in this function.
5. Communication Function – This function includes decisions on advertising, personal selling, sales promotion, publicity, packaging issues, etc.
6. Transaction Function – It includes all such activities which are needed to facilitate the transfer of ownership title of goods/ services between parties in a transaction.
Marketing Information System – 3 Inputs to the MIS
The three inputs to the marketing information system are examined individually:
Internal company data can be a fruitful source of information, but it is often not fully utilized. The data collected in the form of database about the daily operations of the companies, and includes the necessary data records to obtain information regarding the scale of activity and the current performance in sales, cost, inventory and cash flow…. etc.
Sources of information available from the internal accounting system are multifarious and represent the most obvious data that can be of use within the marketing information system. Other departments can input valuable data and such information can be collected from Research and Development, Human Resource and Production in particular where measures of output and productivity can be used.
The market intelligence system is concerned with collection and analysis of ongoing developments in the marketing environment. This is normally regarded as a sub-set under marketing research where it is referred to as ‘desk research’. However, it is logical to consider it as a component part of the marketing information system here, so marketing research follows later. The main sources are secondary data sources, the principal ones of which are now summarized.
This is the final input to the marketing information system and the method used can be one, or a combination of survey research, observation and experimentation.
i. Survey Research:
Survey research is a method of market research that is generally used to collect primary data. It is based’ on questioning an audience or segment of the market. Market surveys are conducted to gather information about products and services in order to analyse and understand customers’ behaviour.
Market surveys are an important part of market research that measure the feelings and preferences of customers in a given market. Varying greatly in size, design, and purpose, market surveys are one of the main pieces of data that companies and organisations use in determining what products and services to offer and how to market them.
While collecting primary data, sometimes it is not just the obvious but the implicit that also needs to be incorporated. Individual responses collected through surveys sometimes need to be supplemented with observation that incorporates people’s actual behaviour. When the consumers’ buying decisions are videotaped it becomes possible to observe how they buy a product. This gives a more accurate picture of consumers’ buying habits and shopping patterns.
A major advantage of observational techniques is that they may be used without the observed respondent’s knowledge. This is particularly useful when such knowledge would influence or bias the results, or where perhaps respondents would not be willing to participate at all. Understandably, use of observation without the knowledge of the respondents raises a number of ethical and legal issues.
This is a more formal approach to primary data collection. As in any experimental design, the essence of this approach is to determine causal relationships between factors and to support or refute hypotheses about these relationships. The most usual marketing research application is that of test marketing. This is a technique in which the product under study is placed on sale in one or more selected localities or areas and its reception by consumers and the trade is observed, recorded and analysed.
Performance in test markets gives some indication of performance to be expected when the product goes into general distribution and it includes likely sales and profitability of the product when marketed on a national or international scale, and feasibility of the marketing operation, meaning the soundness and integration of all elements that enter into it.
It is often an economic necessity to reduce new product risk by using one or more small and relatively self-contained marketing areas, wherein the marketer can apply a full-plan marketing strategy in order to gain at least a reasonably reliable indication that the product can be sold profitably in the eventual total marketplace.
The problem with the experimental approach to marketing is the difficulty of designing and administering the experiment in a scientific way. It is difficult controlling extraneous factors that might affect test results. The marketer may want to use experimentation to assess the impact on sales of different prices.
It would seem relatively simple to do this by running several test markets using different prices while holding the other elements of the marketing mix constant. In these circumstances, any differences in sales between the test markets would be purely down to differences in prices.
Internal records provide an input to the marketer for their marketing decision making. Right from order to payment cycle to the sales data to prices to costs to inventory levels to receivables and payables, all these information play a key role in decision making process.
a. Order to Payment Cycle:
Order to payment cycle is the heart of the internal record system. Distributors, dealers, retailers send the orders to the company. On the basis of these orders, production and inventory calculations are made to produce and supply at the desired level. In the era of internet, intranet and extranet; the process has become much faster, accurate and efficient.
b. Sales Information System:
Similarly, timely and accurate reporting on current sales is helping the companies to be at the right time, with the right product and with the right quantity. All the dealerships of Maruti Suzuki are connected through extranet and minute by minute information is updated, so that you get your white Swift or red A-Star or your blue Wagon-R in time.
c. Databases, Data Warehousing and Data Mining:
In this information age, when there are a lot of databases like customer database, product database, sales persons database etc.; it is important that databases are managed and warehoused properly. Once databases are stored, it can be mined on the basis of marketing information required.
In India, ICICI Bank is using the techniques of data mining to acquire new customers. These customers may be totally new to ICICI or in most of the cases; ICICI Bank taps their customer base and offers them various other services. For example: If you are having an ICICI Bank Account, you have special privilege offers from the bank for new services like Home Loans, Car Loans, Credit Cards, Personal Loans and others.
ICICI Bank has also got Loan on Phone Scheme and Pre Approved Offers into each of their services; so that the relationship with the customer can not only be maintained, but can also be expanded with new service offerings. Ultimately in the long run, the business of ICICI Bank will grow manifold by using the data mining techniques.
d. Marketing Intelligence System:
In the era of cut throat competition and information overload, the company needs to put in place an effective and efficient marketing intelligent system. It helps the company in understanding today’s and tomorrow’s customer needs better.
‘A marketing intelligence system is a set of procedures and sources, managers use to obtain everyday information about developments in the marketing environments. Marketing Managers collect marketing intelligence by reading books, newspapers and trade publications; talking to customers, suppliers and distributors; monitoring social media on the internet via online discussion groups; e-mailing lists and blogs; and meeting with other company managers.’ – Philip Kotler
The success of marketing intelligence system lies on the following:
i. Distributor, Dealers, Retailers:
Distributors, dealers and retailers are the backbone of the marketing information system. They can provide data on day to day happening of the market, as they are aware about the company as well as the competitors. Most of the times, retailers keep multiple products at their shop. These retailers can give the information needed by the marketing intelligence system.
Many companies are also hiring mystery shoppers to gauge the customer experience and service quality, all across the world. But who is a mystery shopper?
A Mystery Shopper is like an undercover agent. Your job is to evaluate a business – either through onsite visits or telephone calls – as if you were an actual shopper or potential customer looking for a particular service. You need to evaluate and provide feedback about the greeting and attitude of store employees and the location’s appearance.
Bare International is one of the companies, who are helping the companies to understand the market better in India and 100 other countries in the world. Companies like Bare International assign shopping research assignment to its affiliated shoppers.
Each mystery shopping research assignment is different because each of their clients are different, right from restaurants to gyms to department stores to multiplexes to telecom services provider to car dealerships to something else. Mystery Shoppers learn specific information about individual businesses prior to each assignment, so that evaluations are performed correctly. So, if you want to enjoy movie at a multiplex free of cost or you want to go shopping without paying anything, then you can also become a mystery shopper by joining an organisation like Bare International (www(dot)bareinternational(dot)com).
ii. Sales Force:
Sales force is the link between the company and the distributors, dealers and retailers. The effectiveness of these distributors, dealers and retailers in providing information, is also dependent on the company’s sales force. As the sales force is the first hand contact in the company, it can be very useful in providing the correct information.
iii. An Eye on Competition:
In today’s era of cut throat competition, a company needs to be careful all the time as the competition can take the fizz away from you. That’s why ‘Successful companies design and operate systems for gathering continuous intelligence about competitors.’
A company needs to network itself not only with the distributors, dealers, retailers and sales force. But it should also look out for information through social networking sites and industry specific websites. It can also gather information through road shows and trade fairs.
iv. Customer Advisory Panel:
Customer advisory panel can do wonders for the company. In top B-schools, there is an advisory panel to provide valuable insight into the course curriculum. In Indian Railways also, there is a system of customer advisory panel. In almost all the retail operation, a process of customer feedback is maintained for better insight into the business.
v. Governmental Data:
Governmental data forms the basis of marketing calculations including market forecast. The census of India provides the biggest source, besides the National Sample Survey Organisation (NSSO) data, Economic Surveys, Industry specific surveys and others.
vi. Private Data Sources:
Market research firms provide a lot of data to the companies. In India, ORG-MARG, A C Nielsen, IMRB, TAM Media Research etc. provide syndicated research data.
vii. Online Customer Feedback System:
Online customer review forums like mouthshut(dot)com and industry specific sites like motoroids(dot)com, team-bhp(dot)com, autocarindia(dot)com, Vicky(dot)in, zigwheels(dot)com etc. for automobile industry, techtree(dot)com, tech2(dot)com, technoholic(dot)com, thinkdigit(dot)com etc. for technology can provide a lot of input for marketing. Blogs are also turning out to be a major source of customer feedback now.
A company needs to be proactive in using these resources. The management needs to be involved in getting the market updates. These updates can shape the marketing strategy and its implementation in a better way.
Marketing Information System – 7 Main Advantages
With an increasingly competitive and expanding market, the daily information need of every business enterprise is profound. It is therefore imperative that every business enterprise develops its own Marketing Information System.
The advantages which an organisation enjoys from Marketing Information System are discussed below:
1. Organised Data Collection:
It is possible to collect lots of data from the market. But what management requires for effective decision making is the availability of ‘organised’ data. To ensure effective managerial decision, organising of data in various groups and sub-groups as per needs of the organisation is very important; else the data are meaningless. The Marketing Information System helps to organise the firm’s database thereby improving its productivity.
2. A Broad Perspective:
With a proper Marketing Information System in place, the whole organisation can be tracked which can used to analyse independent processes. This helps in establishing a broader perspective enabling the management to know which step can be taken to facilitate improvement.
3. Storage of Important Data:
Stored data often serve most crucial need of management. For example, several times in pharmaceuticals, when one drag is being produced, they may need data of another drag which was produced years back. Similarly, in Media, photographs are stored in archives. This storage of important data plays a crucial role in execution and thus proves that Marketing Information System is important not only for information but also for execution.
4. Avoidance of Crisis:
The best way to analyse a stock (Share Market) is to see its past performance. Top websites like money control thrive on Marketing Information System. Similarly, Marketing Information System helps management to keep tracks of margins and profits. With an amazing information system established, management can know where the organisation is moving at a point of time; which helps it to avert a crisis long before it takes place.
Consumer durables and Fast Moving Consumer Goods (EMCG) have huge number of processes which needs to be co-ordinated. These companies depend completely on Marketing Information System for the proper running of the organisation. There are dedicated people for Marketing Information Systems in such organisations. This is mainly because of the speed required to access information and implement them.
6. Analysis and Planning:
Marketing Information System is critical for planning we cannot do planning without adequate information. For planning, the first thing needed is the organisation’s capabilities, then the business environment and finally competitor analysis. In a proper Marketing Information System all these are resent and are continuously updated. Thus, Marketing Information System is very important for planning and analysis.
7. Control of Execution:
Just as the Marketing Information System helps in a crisis, in normal times as well it serves as controlling device as the management has information of the various ongoing processes and what is happening across the firm. Thus, it provides management with sense of control.
Marketing Information System – 3 Major Disadvantages
1. Possibility of Bias of the System:
The system depends basically, on individuals in the supply, summary, generation, and dissemination, and interpretation of data. The possibility of bias of the system in terms of providing data that support preferred actions, rather than evaluating all possible actions has been raised.
Analysts have drew attention to the inaccuracy of the organizations research for the use of information, the goals of individuals may be a particularly important factor for the objectiveness of marketing information system in managing the operation of providing the information to choose among alternatives, and making planning decisions.
Managers who use the marketing information system data may impose their private choice on the information, as well as on the ways of manipulating, them. It should be noted that there are many obstacles that prevent the free of flow of information, such as fear of the implementation, and personal reasons, mainly from the standpoint of self-protection within the organization.
Marketing information system faces interactions problems especially in the stages of creation and developments of the system. In addition to other problems related to planning and control, there is die problem of the degree of change resistance that can be directed to this change in different kinds of circumstances, which is the result of the new entity existence or evolution as an innovation. Change is one of the main causes of organizational conflict in terms of creating tension and anxiety which lead to resistance and then the struggle to avoid or change the direction of change.
3. Nature of the Organizational Environment:
One of the problems facing the use of marketing information system is the way in which institutional relations hinder the use of marketing information systems. Kotler described 23 cases of potential conflict between sections resulting from the various assertions placed on certain matters by the various departments in a way that reflect personal approaches of individuals, as well as differences in goals between departments.
Marketing Information System – Emerging Trends
Information system in an organisation is like the nervous system in the human body that integrates the various components of the organisation in a single whole.
Recently because of rapid change in the management system, information systems have undergone rapid developments such as-
i. Manual Reporting System:
In Manual Reporting System, this flow is in the form of periodical progress reports from the lower levels in the organisation to the higher levels and the communication of decisions from the higher to the lower levels. The reports received from the operational levels are consolidated and summarised at each higher level.
The main purpose of these reports are to ensure accountability and work productivity. Often, targets of work are assigned to the operational staff and the report highlights the comparison of actual performance with the assigned targets. In this way it may also provide the basis for measurement of performance of the operational staff.
Despite a number of draw backs in this process the periodical reports may be used for long term trends and general awareness on the part of the operational system at lower levels.
The widespread use of second generation computers during the sixties brought about centralisation of information processing. The centralisation brought about by the computer was not due to any advantage of centralisation but to take advantage of the economies of scale associated with the computer processing.
In this process the documents from various department were to be lend to a central information system department and the processed on computer to generate detailed because it was not possible to afford computer at every level.
It is based on periodical information from lower levels, retained the basic character of manual system i.e. the periodic flow of information computer helped in availability of information in shorter time. It made the quick use of information in decision making and preparing plans and programmes of long term nature.
Unfortunately, this system has a number of demerits such as transforming process of documents from various sets to the central computer and their verification there requires a lot of time. This results in delay in taking decisions on the basis of the results of this process.
Real time system became possible with developments in Computer system by way of reserving the informations in reserve memory. All the relevant data files and a complete set of programmes are stored in the central computer. The terminal operators have to sue only a simple command language which selects the appropriate modules of computer program.
The program module located the relevant data on the file and makes it available to the operators. The two basic operations, performed from the terminal are ‘Query’ and ‘Update’. While the query operation involves the reference to an item of data in file, the update involves a change in the status of that data.
It is an effective and prompt method mainly used in the west for operations, such as, banking insurance, marketing, production, planning and control, railway, reservation etc. In practice, both batch processing and real time system use files of data separate for each application stored on computer media.
While batch processing basically requires the sequential access of records, real time systems used facility of random access of an isolated records from the file.
iv. Data Base System:
A data system is a collection of interrelated data which are independent of application program and which can serve many application, present and future. It may contain all the data items otherwise stored separately in the employee file, department file and the project file without redundancy.
The data items are organised into a logical structure called ‘Schema’. This structure defines the logical relationships between entities. For example, an employee must belong to one and only one department but he may be working in one and more projects simultaneously.
A department may have more than one employee and the salary of each employee in the department comes from the department budget. These logical relationships are known to the data base system software and they are not just treated as isolated data items as in the file system.
Data base system provides an integrated view of data which is particularly useful for higher levels of management. It can handle unplanned queries, provides a logical view of data which is consistent with the physical reality and eliminates the frequent needs of change in the application programmes due to changes in the organisation of data.
Dynamic Restructuring of data base is possible as new types of data and new applications are added independent of existing application program. This system is proved to be useful for the large corporations.
v. Decentralised Processing System:
Decentralised Processing system was evolved to take advantage of data base technology and economy of scale in data storage on the one hand and inexpensive processing devices on the other hand. National Information Centre of the Govt. of India is one such system in the country.
The main large computer is used at top and a number of small mini and micro computers have been installed at various department of the Govt. of India. The central computer would maintain data bases of interrelated data originating from more than one departments.
vi. Distributed Processing System:
In the Distributed Processing System, the information processing in the organisation is distributed amongst various functional departments, each having its own independent computer.
There is a need among these computerised centres to share the computing as well as information resources. One department may like to refer to the files maintained by another department.
One of the centres may have a specific programme which the other may like to use occasionally. Therefore, they need to be connected in a suitably designed network.
Corporate method of distributed processing designed for specific applications in business and governments are different from sources sharing network. This network may have vertical distribution, horizontal distribution or some combination of vertical and horizontal distribution.
vii. Distributed Data Base System:
In Distributed Data Base System, data are physically distributed among processing centres but are structured in an integrated logical frame work or schema. In a traditional data base system programmer or user refers to a logical record or files. The data base software derives that records from the physical records.
The same is true in a distributed data base system, but now the data might be in a distant location and the system has to find them. The user does not want to know where the data are stored. He merely refers to a logical records and expects it to be provided.
The distribution and networking should be completely invisible to them. Distributed data base may consist of a local data base and global data base software at each location.