Unit 5- Marketing Information System

Marketing Information System

1. Unit 5- Understanding the Marketing-Information Systems By- Prachi Agarwal

2. What is MKIS? A  marketing information system  ( MKIS ) is a  management information system  (MIS) designed to support  marketing   decision making . Jobber (2007) defines it as 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." In addition, the online business dictionary defines Marketing Information System (MKIS) as "a system that analyzes and assesses marketing information, gathered continuously from sources inside and outside an organization or a store ."Furthermore , "an overall Marketing Information System can be defined as a set structure of procedures and methods for the regular, planned collection, analysis and presentation of information for use in making marketing decisions." (Kotler, at al, 2006)

3. Components of MIS MIS is made of parts, subparts or subsystems which are called the components. Typically, according to Philip Kotler, a marketing information system consists of four interrelated components – Internal Reports (Records) System, Marketing Research System, Marketing Intelligence System, and Marketing Decision Support System, as shown in Figure

4. 1. Internal Records System: Internal records system is a major and easily accessible source of information. It supplies the results data. It consists of all records of marketing operations available within organisation . This system concerns with collecting, analyzing, interpreting, and distributing needed information from records of various departments of the company. Main sources include various records on sales and purchase, ordering system, sales force reporting system, inventory level, receivable-payables, marketing staff, costs, the past research works, and other literatures/reports available within organisation . Particularly, for sales orders and sales force reporting, the computer technology is excessively used for accurate, efficient, and speedy transmission of information.

5. 2. Marketing Intelligence System: Marketing intelligence system is: The set of procedures and sources used by managers to obtain every-day information regularly about pertinent developments in the marketing environment. A manager can try to expose external environment in various ways. Marketing intelligence system consists of various methods. A manager can use one or more below mentioned methods: i. Reading newspapers, books, and other publications. ii. Watching TV, hearing radio, or Internet surfing. iii. Talking to customers, dealers, suppliers, and other relevant parties. iv. Talking to other managers and employees of his company as well as of other companies. v. Maintaining live contacts with other officials and agencies. vi. Purchasing useful information from professional sources. vii. Assigning marketing intelligence task to professional agencies, etc.

6. 3. Marketing Research System Marketing research is a powerful and independent branch of the MIS. In certain cases, managers need detailed information on the specific problem of the specific marketing area. Thus, it is a formal study of specific problems, opportunities, or situations. Normally, it is carried out for solving the specific problem. In this sense, it is not a part of routine activity. It collects need-based information. Nowadays, it is treated as the separate discipline or subject. Philip Kotler defines: “Marketing Research is the systematic design for collection, analysis, and reporting of data and findings relevant to specific marketing situations facing the company.” Marketing research consists of collecting primary and secondary data from various respondents using various tools through various methods for definite period of time, analyzing data using appropriate statistics tools, and presenting findings in forms of a report. It is conducted by internal expert staff or external professionals. 

7. 4. Marketing Decision Support System (MDSS): Previously, the component was known as Analytical Marketing System. While former three components supply data, the marketing decision support system concerns more with processing or analyzing available data. This component can improve efficiency and utility of the whole marketing information system. The system is used to help managers make better decisions. John D. C. Little defines: “A marketing decision support system (MDSS) is coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organisation gathers and interprets relevant information from environment and turns it into a basis for making decisions.” According to the definition, the MDSS includes tools, techniques or models used for: Data collection, Data analysis, Interpreting results, and Supporting managerial decision-making.

8. Advantages of Marketing Information Systems Organized Data collection  –  Lots of data can be collected from the market. But the main word here is “Organized”. Organizing data is very important else the data is meaningless. Thus  MIS  helps you to organize your  database  thereby improving productivity . A broad perspective  –  With a proper MIS in place, the complete organization can be tracked which can be used to analyse independent processes. This helps in establishing a broader perspective which helps us know which steps can be taken to facilitate improvement . Storage of Important Data  –  Several times in pharmaceuticals, when one drug is being produced they may need data of another drug 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 again that MIS is not important only for information but also for execution.

9. Avoidance of Crisis  –  The best way to analyse a stock (share market) is to see its past  performance . Top websites like moneycontrol thrive on MIS. Similarly MIS helps you keep tracks of margins and profits. With an amazing information system established, you can know where your organization is moving and probably avert a crisis long before it has taken place. Ignoring hints received from MIS reports is foolhardy . Co-ordination  –  Consumer durables and FMCG companies have huge number of processes which  needs  to be co-ordinated . These companies depend completely on MIS for the proper running of the organization. There are dedicated  people  for marketing information systems in such organizations. This is mainly because of the speed required to access information and implement it . Analysis and  Planning  –  MIS is critical for planning. You cannot do planning without information. For planning, the first thing which is needed is the organizations capabilities, then the business  environment  and finally  competitor analysis . In a proper MIS, all these are present by default and are continuously updated. Thus MIS is very important for planning and analysis.

10. Types of Management Information Systems Management Reporting System- A management reporting system is a database designed to report on the finances and operations of all levels of management in an organization. A company's management reporting system is commonly used by middle managers to generate regular reports comparing current and past financial performance to determine financial growth and to track how the middle managers themselves are performing. Upper management uses the data generated by the reporting system to compare the company's current financial position and its efficiency of operations against its predetermined goals for the company. Process Control- A process control system monitors a business's physical or industrial processes such as metal fabrication, petroleum processing or automobile assembly. The control system is constantly collecting data and is programmed to generate regular reports on system performance. A manager looks to the process control reports to tell how often, over the course of a set period of time, a particular event occurs during the production process, or how often over that period of time the company deviated from a repetitive production process. This information is key to tracking the overall efficiency of production and the safety of machinery and employees.

11. Sales and Marketing- A sales and marketing system supports management in executing and tracking the effectiveness of the organization's sales and marketing functions. These include: developing products forecasting sales compiling and tracking the advertising outlets and schedules managing distribution channels pricing, discounts and promotions implementing effective advertising and sales promotions  . Inventory Control- The inventory control system tracks everything having to do with inventory, including sales, spoilage, theft, and inventory on hand, which allows management to determine when individual items are getting low and need restocking, either in the company's warehouse or in any of its individual retail locations. It tracks movement of inventory into the warehouse, from warehouse to store, store sales and returns.

12. Human Resources(Office Automation/Enterprise Collaboration) An office automation, or enterprise collaboration, information management system enables managers to control the flow of information throughout the organization. Any electronic communication device or medium used in the organization by managers to communicate with other managers, with their employees, or for employees to communicate with each other falls under the umbrella of the office automation information system. These devices and media can include land-line phones, cell phones, Internet, Intranet, multimedia, voice mail and email, file sharing and video conferencing.

13. Marketing Research Marketing research  is "the process or set of processes that links the producers, customers, and end users to the marketer through information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications ." It is the systematic gathering, recording, and analysis of   qualitative  and  quantitative  data about issues relating to  marketing  products and services. The goal of marketing research is to identify and assess how changing elements of the  marketing mix  impacts  customer behavior . The term is commonly interchanged with  market research ; however, expert practitioners may wish to draw a distinction, in that  market  research is concerned specifically with  markets , while  marketing  research is concerned specifically about marketing processes.

14. Types of Marketing Research

15. Exploratory Market Research:  The researcher uses the exploratory research when he has a very little information about the research problem and needs to gain insights about it before finding the solutions to it. It requires the researcher to clear his concept, gain insights, formulate problems, eliminate impractical ideas and formulate a hypothesis to check the relevancy of the research design.This can be done by using the secondary data, i.e. information available both inside and outside the organization, conducting observational studies, consulting experts, and processing feedback from the marketplace and surveys. Descriptive Market Research:  The descriptive research is concerned with testing the hypothesis to find out the accurate answers of the research problem. Such as, who are the prospective buyers of the product?, How the products are consumed?, What fraction of the population uses the product?, What is the demand forecast? And who are the potential competitors?The objective of the descriptive market research is to measure the frequency with which the things occur and the extent to which the variables under study are correlated

16. Causal Market Research:  The causal market research is conducted to establish the cause-and-effect relationship between the variables, such as if the packaging of the product is changed then what will be its effect on the product durability? Thus, this research is carried out to explain the facts that why a certain change in one variable is observed due to the change in the other. Predictive Market Research:  As the name suggests, the predictive research is conducted to forecast or predict certain market variable for which the research is designed. Such as predicting the future sales, projection of growth, test market to predict the success of a new product, defining of firm’s product line, etc.

17. The marketing research can be further classified on the basis of the type of data generated and the degree of mathematical accuracy required as: Qualitative Market Research Quantitative Market Research

18. Qualitative Market Research Definition:  The  Qualitative Market Research  deals with the feelings, attitudes, opinions, and thoughts of an individual to ascertain their underlying reasons for behavior. In other words, the research conducted to determine what people think or feel about the situation and what are the factors that influence their behaviors is called qualitative market research . The purpose of the qualitative market research is to study the psychology of an individual and obtain the insights and depth of buyer’s perceptions, behavior, and needs. Majorly the organizations carry out the qualitative research to identify the consumer perceptions, such as What do they feel about a product? What they like or dislike about it? What are their expectations from a new product? What do they feel about the competitor’s product? What are the barriers that influence their purchase behavior?

19. Quantitative Market Research Definition:  The  Quantitative Market Research  deals with the hard facts and statistical data rather than the opinions, feelings, and attitudes of the individuals. Here, the data are quantified to draw inferences about the customer’s behavior, attitude and preferences in numerical terms that can be easily interpreted and compared with other data facts. The quantitative market research is often used to determine what proportion of the population possesses certain characteristics, attitudes, behaviors, knowledge and then its significance level is checked using the statistical analysis method. The quantitative research is based on large samples and addresses questions as: How often customer buys the product? What proportion of the population makes job searches online? How many customers will buy a product if a certain promotional strategy is introduced? How many customers rated the ambiance of the restaurant as ‘outstanding’.

20. Importance of Marketing Research Identifying problem and opportunities in the market: It helps in identifying new market opportunities for existing and new products. It provides information on market share, nature of competition, customer satisfaction levels, sales performances and channel of distribution. This helps the firms is solving problems. Formulating market strategies: Today , markets are no more local. They have become global. Manufactures find it difficult to contact customers and control distribution channels. Competition is equally severe. The consumer needs are difficult to predict. Market segmentation is a compli­cated task in such wide markets. The marketing intelligence provided through marketing research not only helps in framing but also in implementing the market strategies.

21. Determining consumer needs and wants: Marketing has become customer-centric. However, large-scale production needs intermediaries for mass distribution. Due to prevalence of multi channels of distribution, there is an information gap. Marketing research helps in collecting information on consumers from structured distribution research and helps in making marketing customer oriented. For effective communication mix: In an era of micro- rather than mass-marketing, communica­tion plays a vital role. Marketing research uses promotional research to study media mix, adver­tising effectiveness and integrated communication tools. Research on such aspects will help in promoting effectively a company’s product in the market.

22.  Improving selling activities: Marketing research is used to analyse and evaluate performances of a company within a market. It also studies effectiveness of a sales force. It helps in identify­ing sales territories. Such information helps the companies in identifying areas of shortcoming in sales. It also examines alternative methods for distribution of goods. For sales forecasting: The most challenging task for any production manager is to keep optimum levels of inventory. However, production is undertaken in anticipation of demand. Therefore, scientific forecast of sales is required. Marketing research helps in sales forecasting by using market share method, sales force estimate method and jury method. This can also help in fixing sales quotas and marketing plans

23. To revitalize brands: Marketing research is used to study and find out the existing brand position. It finds out the recall value of brands. It explores the possibilities of brand extension or prospects of changing existing brand names. The main purpose of marketing is to create brand loyalty. Marketing research helps in developing techniques to popularize and retain brand loyalty. To facilitate smooth introduction of new products: Marketing research helps in testing the new products in one or two markets on a small scale. This helps in finding out consumer response to new product and develop a suitable marketing mix. It reveals the problems of the customers regarding new products. Thus, it controls the risk involved in introducing a new product.

24. Thank you