Marketing information systems


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Marketing information systems

  1. 1. There is plenty of information around - but often too much of the wrong kind and not enough if the right kind.MARKETING INFORMATION SYSTEMSR.A. ProctorThe Nature of Marketing • There is not enough information of the rightMarketing management is about finding ways of kind.satisfying customer wants and needs, while • Information is too dispersed to be useful.achieving organizational objectives or • Information arrives too late to be useful.requirements in terms of profit or some other • Information often arrives in a form that leavesmeasure of corporate performance. It brings no idea of its accuracy and therefore lackstogether all customer-impinging resources, such as credibility.product design and specification, advertising andother forms of promotion, pricing policy, selling, Clearly, there is a need to overcome these kinds ofchannels of distribution and physical distribution to problems and complaints and it is for this reasonachieve this end. These customer-impinging that marketing information systems have evolved.resources are often summarized under fourheadings and referred to as the four Ps of themarketing mix (price, promotion, place and Marketing Information Systemsproduct). The art or science of marketing The concept of marketing information systems hasmanagement is concerned with making been around for many years. Early systems weredecisions/policies with respect to the elements of paper-based systems but, with the emergence ofthe marketing mix such that the companys computers with large storage capacities and laterinterface with its markets is both profitable and microcomputers with similar features, marketingcustomer satisfying. information systems have become more "electronic" in nature. MIS (marketing informationThe Need for Marketing Information systems) can be classified under five headings:managers require information to help them forecastchanges in product demand, increase selling • Planning systems - which provide informationProductivity, and exercise control over sales and on sales, costs and competitive activity,distribution expenses. Marketing is an ongoing together with any kind of information which isprocess; decisions are made and results of these needed to formulate plans.decisions have he monitored. Consumer andcompetitor reactions to the companys decisions • Control systems - these provide continuoushave to be studied to ensure that the best strategy is monitoring of marketing activities and enablebeing employed. Information on these matters is marketing executives to identify problems andused to correct deviations from plans. For example, opportunities in the marketplace. At the sameif a target of a 5 per cent increase in new clients time, they permit a more detailed andhas been set for the salesforce then it is necessary comprehensive review of performance againstto monitor how effective the salesforce is in terms plans.of reaching the target set. Such information can • Marketing research systems - such systemsthen be used to adjust targets, if the need arises. allow executives to test decision rules and cause/effect hypotheses. This permits theInformation is needed for decision making. assessment of the effects of marketing actionsUnfortunately, in many firms, it is often difficult to and encourages improved learning fromobtain information of the right kind. The kinds of experience.complaints one often encounters are [1]: • Monitoring systems - these systems provide• There is too much information of the wrong management with information concerning the kind. external environment in which they are operating.
  2. 2. One can define a marketing information system as • Planning, analyzing and evaluating salesone which scans and collects data from the activities.environment, makes use of data from transactionsand operations within the firm and then filters, • Market measurement and sales forecasting.organizes and selects data before presenting them • Quantitative aspects of market information to management. The firm indicated that the system had notMarketing Information Systems in currently been designed to plan, monitor or controlthe United Kingdom the promotional activities of the firm, although itMany firms in the UK are starting to develop indicated that this might be included at a later marketing information systems. A My subsequent visit to the firm proved rathersurvey by Martech Ltd [2] of UK firms found that, fruitless since, although it was working on thein the companies they surveyed, computerization development of a system, it was not keen tohad grown very rapidly over the previous two discuss progress in any detail.years with penetration increasing from 15 per centto about 50 per cent - that is, 70 per cent of the Firm number two was developing a marketingsystems mentioned in the survey had been information system too. I saw little evidence of itimplemented in the previous two years. Martech when I visited the firm.also noted that most of the growth had beenconcentrated on fragmented solutions to tackle a Firm number three indicated that it had aparticular element of the marketing/sales function marketing information system in operation. When Iwith a particular emphasis on salesforce visited the firm I found there was some use ofproductivity. Few companies had moved beyond decision support systems. I found a microcomputerthe isolated productivity tool stage towards being used for project management planning. Theintegrated marketing information systems covering package in use was being applied specifically incustomer service, account management, product connection with new development and made use ofmanagement, forecasting, sales management, PERT analysis. At the time of the visit, the peopleadvertising and promotion, distribution, pricing, concerned were still learning to use the package.competitive tracking or marketing research. There was also a relatively sophisticated forecasting package in use. This was againRecently, the writer contacted 20 medium- to microcomputer based and was employed tolarge-sized firms, based north of Birmingham, to forecast demand for existing product lines. Thereenquire as to the state of their marketing was also a "home-made" microcomputer-basedinformation systems. Only six firms responded to database system, written in BASIC, in which wasthe request for information and a visit was kept all the data on product prices, discounts,arranged to three of them to discuss the nature of customer records etc. The company also had atheir marketing information systems. mainframe-based system which was connected remotely to a PC in each one of a number ofThe first of the six firms indicated that a system distributor outlets. Every night the system was ablehas currently being designed by the marketing to scan the records held on the PCs and thedepartment and that it would be capable of following morning produce a report for tophandling the following tasks: management on the sales of the previous day at the distributor outlets. Unfortunately, the system was• Setting prices and evaluating different pricing only partially complete at the time of my visit. strategies.• Monitoring and evaluating new product- market opportunities. COMPUTERIZED MIS IN THE UK ARE STILL IN THE EARLY• Evaluating the optimality of the current product-market portfolio. STAGES OF DEVELOPMENT• Analyzing customer accounts. I was unable to visit the three other firms but they did provide me with data on the state of their
  3. 3. marketing information systems. Firm number four Central to a marketing information system is theindicated that it was using microcomputers in a concept a database. There may be one or morenumber of different art s of marketing activity. databases present in such a system. TheThe firm was in the retailing business and had determination of this is a technical matter and it ismodelled store sales so as to be able to estimate difficult to state any hard and fast rules on thisnew site potential. It was also using lap-top point. The various boxes in the diagram show thecomputers in stores for survey interviews with kind of information required by executives in thecustomers. course of conducting marketing activities. Information is required about the market and itsFirm number five was actively into database various characteristics. Clearly, the kind ofmarketing. Its database was used for: information held in the database should reflect how• Analyzing customer accounts: customers were a firm segments its market. Indeed, many firms graded by size and credit-worthiness and supply goods and services to more than one market recorded geographically in the database. SIC so that the database will have to be organized in code and employee size were also shown. such a way that the individual markets can readily Customers were analyzed by product use and be identified. Different methods of segmenting the this was used to target them with relevant market may be employed for different products so mailshots. that this too has to be taken into account. Quantitative information relating to the number of• Planning, analyzing and evaluating sales population members who have the various activities: leads that were generated through characteristics used as a basis for segmentation is direct marketing activity were allocated by also kept in the database. Not only does current computer to the appropriate salesman. The quantitative information have to be held in the result of each enquiry was monitored and database but so also do past data. Without a analyzed by product and sales area. This, the substantial number of years data it is difficult to firm felt, enabled it to evaluate the success of forecast changes in the future. its salesforce and that of campaigns.• Promotional activities: all enquiries/leads Figure 1. Schema for a Marketing Information System generated by advertising, PR, direct mail and Market telemarketing were analyzed to determine Segment characteristics Geographic, psychographic, etc. revenue, cost per sale, and cost per enquiry. Competition Prospects and clientsFirm number six indicated that, at the time, it did Strengths Details of wants and needsnot have a marketing information system, as such. Strategies Shortcomings Contacts made, opportunties identifiedWhilst the sample of firms here is tiny it seems to Marketing research Analysis Modelssupport the findings of the Martech survey that, by Tools Forecasts Pricing Marketing mix Promotionand large, computerized marketing information Product Placesystems in the UK are still in the early stages ofdevelopment. Marketing analysis and control Marketing plans Volume. profit, sales targets Opportunities Marketing effort Performance against plansA Schema for Marketing InformationSystems Marketing environmentFigure 1 shows a schema for an integrated Economic, legal, cultural, technological Monitoring systemmarketing information system. The arrows indicatethe flow of information between different Closely related to the information held on thecomponents. Developing such an information market itself is information held on competitionsystem can take place piecemeal, and the system and on prospects and clients. In the case ofwill not necessarily become integrated until all the competition, it is important to have information oncomponents are in place and it is possible to pass sales/market share and profitability of products byinformation between the component parts with the market segment. It is also useful to hold data onminimum of effort. what competitors commit in the way of resources
  4. 4. to products - classified by market segment. Armed various dimensions. These include saleswith this information a firm can then analyze the performance m unit terms, as well as in moneydata in the database and assess strengths and terms; ROI and contribution to profit and overheadshortcomings of a competitors product-market of individual products. They also includeportfolio. Information about competitive strategy is profitability of different market segments;more difficult to obtain. However, much can be information on achieved levels of distribution;learned from studying the quantitative data present effectiveness of advertising campaigns etc. Thein the database and, if historical data are kept, results of market analysis in identifyingthese can help to illuminate competitive strategy in opportunities in the marketplace may also bean objective manner. placed here.ONE NEEDS TO KEEP A THERE IS ALWAYS A DANGERCOMPLETE LISTING OF ALL THAT TOO MUCH INFORMATIONPROSPECTS AND ALL CLIENTS MAY BE ENTEREDIn the case of prospects and clients one needs to The marketing research part of the marketingkeep a complete listing of all prospects and all information system contains various models andclients, noting any purchases or purchase other analytical tools. The analytical tools haveintentions they have. This information may be access to data which are contained in any part ofobtained from both on-the-ground salespeople, the database. Thus, it is possible to use these toolssalespeople in the order office and from any other to compare marketing plans with what has in factperson in the organization who is able to provide been achieved, or it is possible to analyzesuch information. Any special requirements or competitors performance in relationship to theunfulfilled wants and needs should be recorded firms performance.together with information regarding contacts madewith actual or potential customers. The monitoring system looks at what is going on in the external environment. In particular it focusesThe marketing mix part of the information system on economic, legal, cultural and technologicaldatabase contains information on pricing, products, developments which have a bearing on thepromotions and distribution strategies and policies business. Such data need careful filtering to ensureboth past and present together with current and that executives are not overloaded withprevious evaluations of how different market information or presented with irrelevantsegments respond to changes in these variables. information.The marketing plans part of the information systemdatabase contains the current rolling marketing Tools of analysisplan complete with the sales forecast and volume, The surveys above underlined the absence of fullyprofit and sales targets by products and market integrated marketing information systems.segment. However; partial information systems or decision-The data held in the marketing environment support systems are needed when it comes todatabase relate to economic, legal, cultural and looking at marketing information handling andtechnological data. Much of the information will analysis. A database package and spreadsheets,be qualitative and descriptive in nature and will together with free standing linear programmingtend to be used to aid judgment and decision packages, elementary statistics packages, amaking alongside quantitative analyses provided forecasting tool and a project management toolby the marketing analysis and control part of the (PERT) are likely to be the main tools of analysis.information system. However, there are obviously many opportunities for developing and using a wide range of purpose-The marketing analysis and control part of the built decision-support information system contains the"performance database" which provides Using a Marketing Informationinformation on what the firm has achieved along System
  5. 5. As we have seen above there are two basic. the sources of data. An important source of data isingredients to a marketing information system. On the internal accounting system of the company.the one hand, there is a database or a number of This system reports orders, sales, stocks, debtorsdatabases containing a variety of data about the and creditors etc., and enables management tofirm, its competitors, its markets and the compare actual and expected levels ofenvironment. On the other hand, there is the performance. It also enables management to spotprovision of a wide variety of analytical tools opportunities and problems. The salescapable of exploring the data and turning it into order/invoicing system is the kernel of such ameaningful information for management. system. Often this is computerized and information can be made directly available to the marketingWhen designing a marketing information system a information system without any difficulty.number of important questions need to beanswered in the first place. These are: Competitive information and information on customers wants and needs can be gleaned from(1) Exactly how much information will be entered salespeoples reports. Reports, of course, need to in the database? be filed into the information system in electronic(2) What information will be entered into the form. This requires that either the sales staff have database? to do this themselves or, alternatively, someone(3) How will it be entered into the database? else has to scan all sales reports and abstract(4) How will it be manipulated once it is in the information to put into the computerised system. database? The former method is decidedly more attractive(5) To whom will reports be sent? but it calls for the design of electronic forms which can easily be completed by sales staff. SalesThe question of how much information is reports tend to be filled in at home at weekends orextremely important. There is always a danger that in hotel bedrooms during the working week. Atoo much information may be entered. This will portable laptop computer directly connected via aonly serve to overload managements information modem link with the firms mainframe computerprocessing abilities. In addition, any data or provides an attractive solution to the problem.information which is not used by management is Alternatively, floppy disk files handed in weekly toclearly redundant and will be taking up valuable the computer support staff in the company couldstorage space in the information system. From time provide an adequate methodto time it is necessary to review the informationavailable in the information system and to removeany that is not being used. DATA SHOULD BE KEPT IN A DISAGGREGATED FORM IN THEAN IMPORTANT SOURCE OF DATABASEDATA IS THE INTERNALACCOUNTING SYSTEM Data on the environment and competitive activity can often bought from consultants and marketingClosely allied to the question of how much research agencies in an electronic form.information to enter is the question of whatinformation should be entered. In order to be able Data should as far as possible be kept in ato answer this question i~ ~ is important that the disaggregated form in the database. This allowsdesigner of the system carefully addresses the anyone to manipulate and analyse the data to suitmatter beforehand with people who will use the their own particular purposes. Summary statisticalsystem. In addition, periodic reviews need to be f~ analyses of data may well be kept in a separate filetaken alter the system has been implemented to within the database, if it is felt that it is informationmake sure that the system is still providing user which people may want frequently.satisfaction. Having a computer-based information systemThe question of how the data will be entered is means that information in the form of reports canlinked to who will enter the data and what will be be made available quickly to management.
  6. 6. software and large relational databases help adviseSales management requires information to help it users on which segments to target. Marketingallocate the salesforce effectively and assess the research can tell management how to price aperformance of sales staff equitably. Sales staff, product, which distribution channels to use andtoo, should be able to access the system easily and how to get more out of advertising and otherget support and information about such things as: promotional expenditure. Outputs of the marketing information system can• The quantity of the product on hand. take the form of reports. Example reports might be:• Prices and price discounts. • A new product report, comprising an• Status information on invoices, time of estimation of sales potential and customer delivery and back orders. buying habits and motives.• Delivery dates. • A pricing strategy report to help management reach pricing objectives.• Complete product specifications. • A product-mix report to advise managementThe system should also aid the process of entering on how to manage the product mix to bestorders and reduce the salespersons paperwork (see advantage - e.g. by changing the number ofabove: using a lap-top portable computer). lines or the depth within a line or simply pruning or simplifying lines.For control purposes sales performance analysis is • A product life cycle report to help marketersrequired. This amounts to a detailed study of the manage the product through its various stagestotal sales revenue of a company over a specific in the life cycle and possibly anticipateperiod of time. An analysis is made of total sales marketing requirements at a subsequent stage.volume by product line, by salesperson, byterritory and by customer groups. These sales are • An advertising effectiveness report to helpthen compared with company goals and industry assess who is the target audience, what tosales. communicate, when to communicate and what media to use. • A customer analysis report to spotlightWE CAN EXPECT TO SEE customer trends, complaints and requests and aCONSIDERABLE complete breakdown of profitability byDEVELOPMENTS IN THE NEXT customer.FEW YEARS • An order-processing control report to allocate stock to fill customer orders, process backForecasting is the estimation of the market size and orders, answer order status enquiries, productthe companys share of that market. Marketing shipping reports by invoice and producebudgets, sales strategies and sales quotas are freight and labour costs.influenced by these estimates. The forecasts alsohelp the planning and control of manufacturing, Reports may be produced on a regular basis, asdistribution management and advertising and defined by the users of the system.promotion as they are reflected through thebudgeting process. Information on salesprofitability is also made available. This shows the Conclusionrelative profitability of customers, territories, Computerised marketing information systems inproduct lines, etc. many UK firms are largely in their infancy. However, with rapidly growing usage ofMarketing research/intelligence helps to define mainframe, minicomputers and microcomputersmarketing problems. It also helps executives find we can expect to see considerable developments innew customers and to adapt products to meet this area in the next few years. There is a good dealchanging customer requirements. User-friendly to be done by many companies to improve their
  7. 7. marketing information systems. To achieve thisfirms need help and assistance in choosing asystem which best meets their own particular need.Obtaining a system is not by itself the solution tothe problem, however. Employees need to betrained both how to use the system and how tooperate it.Many universities, polytechnics and colleges arenow running information technology modules aspart of the curricula in business and managementcourses. This underlines the growing importance ofthe subject area. Much more attention in business,however; has to be given to the need to implementinformation systems in the area of marketing.References(1) Kotler, P. and Lilien, G., Marketing Decision Making: A Model Building Approach, Harper and Row, 1983.(2) "The Martech Survey into Marketing Information Systems", Martech Information Systems, West Africa House, Ashbourne Rd, London W5 3QR, June 1989.R.A. Proctor teaches in the Department of Economicsand Management Science, University of Keele, UK.Source Management Decision, Vol. 29, No. 4,1991.pp. 55-60. ©MCB University Press Limited. 0025-1747