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Marketing Information System

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Explains what is Marketing Information System (MkIS), its components, uses and how it works and its use for cooperatives.

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Marketing Information System

  1. 1. Marketing Information System Cooperative Management Information System and Internal Control Group 3 Antiga, Monique Chelsea De Vera, Angerica Flores, Eisha Mitri Go, Willesa Liporada, Racquel Ruiz, Sarah Lourene Silvano, Chris Lois Prof. Ireneo C. Delas Armas, Jr. 2nd Semester, SY 2013-2014 BCFMA3-1
  2. 2. DEFINITION Not to be confused for a management information system, marketing information systems are designed specifically for managing the marketing aspects of the business. A formal MkIS can be of great benefit to any organization whether profit making or non- profit making, no matter what its size or the level of managerial finesse. It is true today that in many organization an MkIS is integrated as part of a computerized system. A marketing information system (MkIS) is intended to bring together disparate items of data into a coherent body of information. An MkIS is, as will shortly be seen, more than raw data or information suitable for the purposes of decision making. An MIS also provides methods for interpreting the information the MkIS provides. "A marketing information system is a continuing and interacting structure of people, equipment and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate information for use by marketing decision makers to improve their marketing planning, implementation, and control". 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." Kotler, et al. (2006) defined it more broadly as "people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers." FEATURES OF MARKETING INFORMATION SYSTEM (MkIS) 1. Continuous system : MkIS is a permanent and continuous system of collecting information. It collects information continuously. 2. Basic objective : The basic objective of MkIS is to provide the right-information at the right-time to the right-people to help them take right decisions. 3. Computer based system : MkIS is a computer-based system. It uses computers for storing, analyzing and supplying information. It also uses micro-films for storing information. Therefore, it is very quick and accurate. 4. Future-oriented : MkIS is future-oriented. It provides information for solving future problems. It is not past-oriented. 5. Used by all levels : MkIS is used by all three levels of management, i.e. top, middle and lower. It is used for making marketing plans, policies and strategies. This is used to solve marketing problems and to take advantage of business opportunities. 6. Sources : MkIS collects information from both, internal and external sources. For example, information is collected from company records, publications, etc.
  3. 3. 7. Collects marketing information : MkIS collects all types of marketing information. It collects information about the consumer competition, marketing environment, government policies, etc. It supplies this information to the marketing managers. 8. Helps in decision making : MkIS supplies up-to-date and accurate information. It helps marketing managers to take quick and right decisions. ROLE OF MARKETING INFORMATION SYSTEM IN DECISION-MAKING The existence of an adequate information system which would secure data acquisition and analyses, as well as the transformation of above mentioned data into useful information is an essential condition for a company to function effectively. Successful companies should be flexible enough to adapt to the changes brought by intensive alternations in business environment. The design of marketing information system has been initiated for this particular purpose. The main task of this application is to improve the efficiency of a company’s operations through the implementation of the research process. Marketing information system is the fundamental precondition for the successful realization of the research project, i.e. the means used by producers in order to collect information about the, needs of the consumers. Marketing information system represents efforts of the companies to provide pertinent decision-making information to marketing managers on regular basis. COMPONENTS OF MARKETING INFORMATION SYSTEM (MkIS) The explanation of this model of an MkIS begins with a description of each of its four main constituent parts: the internal reporting systems, marketing research system, marketing intelligence system and marketing models. It is suggested that whilst the MkIS varies in its degree of sophistication - with many in the industrialised countries being computerised and few in the developing countries being so - a fully fledged MkIS should
  4. 4. have these components, the methods (and technologies) of collection, storing, retrieving and processing data notwithstanding. The expected outputs of MkIS are Marketing Research, Product Development, Promotion and Advertising, and Product Pricing. A. Internal Reporting Systems Firstly, with any business it is greatly important to keep an eye on what is going on inside the business. A lot can be missed if the performance is not closely monitored and then analyzed. The internal reporting systems enable a company to always be aware of how they are performing as a team and what issues may need addressing. Marketing managers get lots of information from the internal-records of the company. These records provide current information about sales, costs, inventories, cash flows and account receivable and payable. Many companies maintain their computerized internal records. Inside records help marketing managers to gain faster access to reliable information. The internal records that are of immediate value to marketing decisions are: orders received, stockholdings and sales invoices. These are but a few of the internal records that can be used by marketing managers, but even this small set of records is capable of generating a great deal of information. These are information gathered from sources within the company to evaluate marketing performances and to detect marketing problems and opportunities. Most marketing managers use internal records and reports regularly, especially for making day-to-day planning, implementation and control decisions. Internal records information consists of information gathered from sources within the company to evaluate marketing performance and to detect marketing problems and opportunities. B. Marketing Intelligence Systems The marketing intelligence systems are used to deal with the costs of running a marketing department and a business as a whole. It will process all the facts and figures delivering what needs to be spent where and what may be using too much money. It collects information from external sources. It provides information about current marketing-environment and changing conditions in the market. This information can be easily gathered from external sources like magazines, trade journals, commercial press, trade press, census, so on. This information cannot be collected from the Annual Reports of the Trade Association and Chambers of Commerce, Annual Report of Companies, etc. The salesmen’s report also contains information about market trends. It can also gather information from Sales Force, Dealers and Distributors, and suppliers.
  5. 5. The company can also learn about competitors from what others say about them in business publications and at trade shows. Or the company can watch what competitors do - buying and analyzing competitors' products, monitoring their sales and checking for new patents. Companies also buy intelligence information from outside suppliers. This is a largely informal process of observing and conversing The information which is collected from the external sources cannot be used directly. It must be first evaluated and arranged in a proper order. It can be then used by the marketing manager for taking decisions and making policies about marketing. C. Marketing Research Systems The marketing research systems allow a company to really find out what their customers/potential customers think of the current trends and their views on certain items, or polices. Marketing research can also delve into a customer's habits in the hope the company can spot a gap in the market or service; they believe they can deliver to the customer, which will benefit their usual routine. Marketing Research can gather quantitative information from survey research, telephone, mail, personal observation and experiments; and qualitative information from projective tests and focus groups. MR is conducted to solve specific marketing problems of the company. It collects data about the problem. This data is tabulated, analyzed and conclusions are drawn. Then the recommendations are given for solving the problem. Marketing research also provides information to the marketing managers. However, this information is specific information. It can be used only for a particular purpose. MkIS and MR are not substitutes of each other. The scope of MkIS is very wide. It includes ‘MR’. However, the scope of MR is very narrow. Marketing research is a proactive search for information. That is, the enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases, data is collected in a purposeful way to address a well-defined problem (or a problem which can be defined and solved within the course of the study). The other form of marketing research centers not on a specific marketing problem but is an attempt to continuously monitor the marketing environment. These monitoring or tracking exercises are continuous marketing research studies, often involving panels of farmers, consumers or distributors from which the same data is collected at regular intervals. Whilst the ad hoc study and continuous marketing research differs in the orientation, yet they are both proactive.
  6. 6. D. Marketing Models The marketing model will act as a concept or theory and a lot of campaigns will be built with this guidance in mind. These are the tools which help the marketing managers to analyze data and to take better marketing decisions. They include hardware, i.e. computer and software programs. Computer helps the marketing manager to analyze the marketing information. It also helps them to take better decisions. In fact, today marketing managers cannot work without computers. There are many software programs, which help the marketing manager to do market segmentation, price fixing, advertising budgets, etc. Within the MkIS there has to be the means of interpreting information in order to give direction to decision. These models may be computerised or may not. Typical tools are:  Time series sales models  Brand switching models  Linear programming  Elasticity models (price, incomes, demand, supply, etc.)  Regression and correlation models  Analysis of Variance (ANOVA) models  Sensitivity analysis  Discounted cash flow  Spreadsheet 'what if models These and similar mathematical, statistical, econometric and financial models are the analytical subsystem of the MkIS. A relatively modest investment in a desktop computer is enough to allow an enterprise to automate the analysis of its data. Some of the models used are stochastic, i.e. those containing a probabilistic element whereas others are deterministic models where chance plays no part. Brand switching models are stochastic since these express brand choices in probabilities whereas linear programming is deterministic in that the relationships between variables are expressed in exact mathematical terms. Three levels of decision making can be distinguished from one another. Again, MkIS has to support each level. 1. Strategic decisions are characteristically one-off situations. This level of decision making is concerned with deciding on the objectives, resources and policies of the organisation. Strategic decisions have implications for changing the structure of an organisation and therefore the MkIS must provide information which is precise and accurate. This process generally involves a small group of high-level managers who deal with very complex, non-routine problems. 2. Control decisions deal with broad policy issues. Such decisions are concerned with how efficiently and effectively resources are utilised and how well operational units are performing. Management control involves close interaction with those who are
  7. 7. carrying out the tasks of the organisation; it takes place within the context of broad policies and objectives set out by strategic planners. 3. Operational decisions concern the management of the organisation's marketing mix. These involve making decisions about carrying out the "specific tasks set forth by strategic planners and management. Determining which units or individuals in the organisation will carry out the task, establishing criteria of completion and resource utilisation, evaluating outputs - all of these tasks involve decisions about operational control. DISTINGUISH BETWEEN MkIS AND MARKETING RESEARCH (MR) 1. Meaning a. MkIS means to collect, analyze and supply relevant marketing information to the marketing managers. The marketing managers use this information for taking effective marketing decisions. It is a permanent and continuous process. b. Marketing Research (MR) is a systematic process of collecting and analyzing information to solve a specific marketing problem. 2. Purpose a. The main purpose of MkIS is to provide relevant information to marketing managers and enable them to make effective marketing decisions. b. However, the main purpose of Marketing Research (MR) is to solve a specific marketing problem. 3. Scope a. The scope of MkIS is wide. Marketing Research (MR) is one of its component. It is not only used to solve problems but also helps to prevent problems in the future. b. The scope of Marketing Research (MR) is narrow. It is one small part of MkIS. It solves a specific present marketing problem. 4. Nature a. MkIS is more nonspecific or general in nature. It can solve many types of marketing problems. b. Marketing Research (MR) is more specific or particular in nature. At one time, it can only solve a single type of marketing problem. 5. Reports a. MkIS gives four types of reports namely, plan-reports, periodic-reports, triggered- reports and demand reports. b. Marketing Research (MR) provides only one report called as ‘MR Report.’ 6. Orientation a. Orientation of MkIS is more future-oriented when compared to MR. b. However, the orientation of Marketing Research (MR) is more past and present one when compared to MIS. It concentrates more on earlier and latest information. It uses this information to solve a current marketing problem.
  8. 8. 7. Problems a. MkIS deals with and attempts to solve many different marketing problems at one time. For this, it collects, stores, analyze and supply relevant market information to the marketing managers. b. Marketing Research (MR) only deals with a single marketing problem at one time. It doesn't solve multiple marketing problems simultaneously. 8. Data a. In MkIS, the data is collected more frequently, usually almost daily. This is a must for every company. b. In Marketing Research (MR), the data is not collected as frequently as MkIS. It is collected on a required basis. 9. Operation a. MkIS is a permanent and continuous system. Here, the inflow of market information never stops. Data is constantly collected and stored for further analysis. It is properly analyzed, studied and well-organized before supplying to the marketing managers. MkIS has a starting but no ending point. b. Marketing Research (MR) is not a continuous system. Here, data is collected only when a company faces a specific marketing problem. It has a starting and ending point. 10. Computers a. MkIS is heavily based on the use of computers. Here, computing technologies are widely used to ease and facilitate data collection, its storage, analysis, retrieval and supply of relevant information to marketing managers of the company. b. Unlike MkIS, Marketing Research (MR) hardly makes use of computers. It uses computers only for analyzing some information and is not entirely based on computing technologies. IMPORTANCE OF MARKETING INFORMATION SYSTEM Marketing information includes all the data, in terms of facts, opinions, views, guidelines and policies, which are necessary to make vital marketing decisions. The data is collected from customers, competitors, company sales force and other staff, government sources, specialized agencies and sources. MkIS provides relevant, reliable and required information in respect of business environment-both internal and external environments. Such information is vital for successful decision making. ADVANTAGES OF MKIS 1. Market Monitoring: MkIS helps managers to recognize marketing trends. The changing trends may be in respect of prices, product design, packaging, promotion schemes, etc.
  9. 9. managers can take effective decisions in respect of prices, product designs, etc., in response to changing trends in the environment. 2. Strategy Development: The MkIS provides the information necessary to develop marketing strategy. It supports strategy development for new products, product positioning, marketing communications (advertising, public relations, and sales promotion), pricing, personal selling, distribution, customer service and partnerships and alliances. The MkIS provides the foundation for the development information system-dependent e-commerce strategies. 3. Facilitates Marketing Planning and Control: Effective market planning is required in terms of product planning, pricing, promotion and distribution. Such planning will be possible only f the company is possessing adequate and relevant information. 4. Quick supply of information: A firm has to take quick decision for this purpose; it requires fast flow of information which is facilitated by a properly designed MkIS. Due to timely supply of marketing information, the marketing managers can make quick and effective decisions. 5. Quality of decision-making: In every aspect of marketing, there is need to make constant and correct decisions. A properly designed marketing information system promptly supplies reliable and relevant information. With the help of computers and other data processing equipments, the marketing managers can make the right decisions at the right time. 6. Tapping of business opportunities: There are number of business opportunities which have remained untapped for various reasons are due to unavailability of sufficient information. MkIS makes it possible to tap business opportunities as it can supply required and reliable data. 7. 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 MkIS specialists, it is possible to collect marketing intelligence which is vital to make effective marketing decisions. 8. Help managers to recognize change: A business firm may be handling or marketing a wrong line of products. As such the company will not be able to make profits. And if it is does, profits may not be adequate. A firm which is well equipped with MkIS will be able to realize the need to change the line of business. 9. Integration of Information and Functional Integration: Firms, which are largely decentralized can gather information which is scattered at many centers or departments and integrate it for effective decision making. It also enables the coordination of activities within the marketing department and between marketing and other organizational functions such as engineering, production, product management,
  10. 10. finance, manufacturing, logistics, and customer service.Such integration is possible if there is a centralized MkIS. 10. Strategy Implementation: The MkIS provides support for product launches, enables the coordination of marketing strategies, and is an integral part of sales force automation (SFA), customer relationship management (CRM), and customer service systems implementations. The MkIS enables decisionmakers to more effectively manage the sales force as well as customer relationships. 11. Builds relationships within the organization: An MkIS brings together many different kinds of data, people, equipment, and procedures to help an organization make better decisions. 12. Convenient Storage: MkIS can organize data collection and store these imporatant data for over several time periods. ESSENTIAL REQUISITES OF A GOOD MkIS 1. Unified and centralized: MkIS must be unified and centralized. It collects and stores different types of market information. All of this information must be unified and centralized. That is, all the marketing information must be brought together (unified) and kept at one central place (centralized). So, it must be at the central-office. This will result in easy access and quick reference. The managers will be able to find all the required information at one place. 2. Facilitate decision making: MkIS must facilitate decision making. That is, it must guide the marketing managers in decision making. It must provide required information to the managers to help in taking decisions. This information must be of a good quality. That is, it must be relevant, reliable, and up-to-date. This will result in an accurate decision-making process. So, it must not only be a data bank. It must play a positive role in the decision-making process. 3. Quick and accurate information: MkIS must provide quick and accurate information. Today, managers have to take quick-decisions because the marketing is moving very fast. If they don't take quickest decisions, then they will lose many marketing opportunities. Therefore, it must provide quick information to the managers. This information must also be accurate, regular and continuous. It must be a user-oriented one. It must collect, classify, verify, store and supply information quickly and accurately. 4. Economical: MkIS must be economical. That is, it must not be very costly. The expenditure on it must be minimum. It must not exceed its value. It must give maximum benefits to the company at a minimum cost. It will be economical only if it is selective. It must be particular in collecting, analyzing, storing and supplying information. It must
  11. 11. use a minimum number of employees in its operation. It must be economical because it is not directly productive. It is a service and support function. 5. Selective: MkIS must be selective. That is, it must not collect all the market information. It must only collect relevant information. It must collect information, which is very essential and useful for decision making. If it is not selective there will be a waste of time, energy, storage space and money. 6. Future-oriented: MkIS must be forward looking i.e. future-oriented. It must not be a past-oriented one. It must give more importance to future-oriented information. It must provide information for solving problems, which may come up in the future. The company will be successful if their marketing managers are future-oriented. The marketing managers can be so only if the MkIS is also future oriented. 7. Supply information regularly: MkIS must supply information regularly. The business environment is changing constantly. So, the marketing managers have to take marketing decisions continuously. Therefore, they require a regular and continuous flow of market information. This information must be provided by MkIS. So, it must supply information regularly to the marketing managers. 8. Use new techniques: MkIS must use new techniques for collecting, analyzing, storing and supplying information. It must use computers and micro-films. It must use new communication techniques. It must also make the use of the Internet and latest software programs. These newer techniques will increase the efficiency and accuracy of MkIS. MkIS will also become more economical by using new techniques. EXAMPLE OF MkIS Agricultural MkIS in Asia and Pacific Region
  12. 12. Different countries have developed different systems, with variations only partly related to the amount of money invested in the system. They are also related to planning priorities, and the type of commodity produced. Most countries in Asia operate a marketing information service with the express aim of promoting efficient marketing and raising farm incomes. The form it takes varies according to the level of economic development, and especially the extent to which agriculture has changed from subsistence to commercial farming. In Indonesia, Japan, Korea, Malaysia, Philippines, Taiwan ROC, and Thailand, agricultural marketing information is a national government service which receives regular government funding. It is usually run by the Ministry of Agriculture or its equivalent, sometimes by several Ministries (for example in Thailand, marketing information it is jointly operated by the Ministry of Agriculture and Cooperatives and the Ministry of Commerce). There are often additional independent services for particular interest groups. For example, Japan has an information service operated by ZEN-NOH, the national farmers' cooperative organization. Malaysia, a major agricultural exporter, is the only one of the seven not to have a single government service covering all major crops. Instead, each major export crop has its own price information service, run by the special government agency that is also responsible for extension and technical research for that crop. Information about vegetables and other domestic food items in Malaysia is the work of FAMA, the Federal Agricultural Marketing Authority.