marketing information system-chapter two

Chapter two
Foundational concepts in MkIS
By: Hilemariam Kebede/PhD/

BASIC CONCEPTS IN MkIS …
• INFORMATION NEEDS AND SOURCES
– INFORMATION NEEDS
• Information needs are collected through
– User analysis: personal interviews, observations, survey,
etc
– Activity/task analysis, and record searches
• What does the user need from an information system?
– information content and functionality corresponding to
specifications;
– reliable and efficient (technical) operation;
– A system as easy to use as possible, i.e. user friendly
system;

• Information needs depend on
– The kind of activities performed and the type of decisions made
by the users
– The level of the organization at which the user/manager is
functioning
» Top management needs summarized reports and mostly
depends on external sources of information
» Lower level management mostly use factual and detailed
information which is obtained from internal sources
– The profession of the user
» The information needs of technical and professional
specialist depend upon the nature of their specialization.
» These users usually require raw, non-summarized data
because their specialties generally involve detail analysis.

– Sources of information
• Formal sources
– Primary sources via different data collection methods
– Secondary sources
» Statistical sources
» Databases available in different media
» Other documentary sources
» Web pages
» Discussion groups
» Online bulletin boards
• Informal sources
– Business contacts
– Invisible colleges

• Data, Information, and Knowledge processing
– Data processing
• Has an objective of getting the right information to the right
person at the right time
• Involves the selection and combination of facts in order to
convey a meaningful message.
• Should meet the following criteria
– Accuracy: The input data to the processing system must be
accurate. The individual steps in the processing of data must
also be accurate.
– Timeliness: The right information delivered too late can be as
useless as no information at all.
– Meaningful: The information produced by the data processing
must be meaningful to the people using the information.

• Data processing involves the following operations
– Verification
– Validation
– Sorting
– Merging
– Computing
– Comparing
– Updating
– Printing, etc…

• Data may be processed
– Manually
– Mechanically
– Electronically
• Which one of these is appropriate for an
organization?
– It depends on the size and function of the organization.

– Information processing
• includes all those activities which turn a set of
uncorrelated facts into a meaningful correlated
whole for use in the management processes of
planning, decision-making and control
• The relation of data to information is that of raw
materials to finished products.

• The following may be used in information processing
– Word processing
» The creation of text-based documents
– Image processing
» Converting visual information (graphics, photos, and so
forth) into a format that can be managed within a computer
system or transmitted between people and locations
– Voice processing
» The processing of spoken information.
– Information Processing involves
» information acquisition,
» organization,
» integration,
» utilization, and
» evaluation from the different sources for gaining and using
information.

• Process of generation of information
– Data acquisition
» Capturing data initially. Device used depends on the form
in which data is available
– Data transformation
» Rearranging/sorting
» Classifying
» Calculating
» Summarizing
– Management of information
» If the information is to be communicated, the format for the
reporting must be selected. And also appropriate channels
of communication need to be selected and used.
» In case the information generated is to be used in future,
decide on what mass storage medium is appropriate.

– Knowledge processing
• It includes
– knowledge creation,
– knowledge sharing and
– knowledge application.

• Users of information
– Users of an organization's information can be:
• external;
– The organization's bankers take decisions affecting the
amount of money they are prepared to lend.
– The public might have an interest in information relating to
an organization's products or services.
– The media (press, television etc) use information generated
by organizations in news stories etc., and such information
can adversely or favorably affect an organization's
relationship to the environment.
– The government (e.g. Department of Trade and Industry)
regularly requires organizational information.
– The Inland Revenue Authorities require information for
taxation.
– An organization's suppliers or customers take decisions
whether or not to trade with the organization.

• Internal
– The board of the company; or public sector
equivalent.
– Directors with functional responsibilities.
– Divisional general managers, reporting to these
directors.
– Division heads.
– Department heads.
– Section leaders or foremen.
– Discretionary employees (those who are expected to
act on their own initiative to some extent).
– Non-discretionary employees (those who work under
instruction all the time with little scope for initiative).

• Internal users of information by function are
– marketing;
– finance;
– administration;
– production;
– technical;
– personnel;
– Research, etc.

• Types of Information in terms of management
hierarchy
– A more functional classification of information is
based on the types of decisions for which it is used.
– Information, as required at different levels of
management can be classified as:-
– operational,
– tactical and
– strategic.

• Operational Information
– relates to the day-to-day operations of the
organization
– is needed by the lower level management.
– Examples: cash positions and daily sales.
– Is derived almost entirely from internal sources;
– Is highly detailed, being the processing of raw data;
– Relates to the immediate term;
– Is task specific;
– Is prepared constantly, or very frequently;
– Is largely quantitative.

• Tactical information
– helps middle level managers allocating resources and establishing
control to implement the top-level plans of the organization.
– For example:
• information regarding the alternative sources of funds and their uses in
the short run,
• opportunities for deployment of surplus funds in short term securities, etc.,
may be required at the middle levels of management.
– Is derived from a more restricted range of external sources, so is thus
primarily generated internally;
– Summarized at a lower level - a report might be included with
summaries and raw data as backup;
– Is relevant to the short and medium terms;
– Describes or analyses activities or departments;
– Is prepared routinely and regularly;
– Is based on quantitative measures.

• Strategic information
– While the operational information is needed to find out how the given
activity can be performed better, strategic information
• is needed for making choices among the business options.
• helps in identifying and evaluating these options so that a manager makes
informed choices which are different from the competitors and the
limitations of what the rivals are doing or planning to do.
• is used by managers to define goals and priorities, initiate new programs
and develop policies for acquisition and use of corporate resources.
– In addition to this, strategic information
• Is derived from both internal and external sources;
• Is summarized at a high level;
• Is relevant to the long term;
• Deals with the whole organization (although it might go in some detail);
• Often prepared on an 'ad hoc' basis;
• Is both quantitative and qualitative;
• Is Incapable of providing complete certainty, given that the future cannot
be predicted.

• The Attributes of Information
– Accuracy:
• Information is true or false, accurate or inaccurate.
– Form:
• The actual structure of information. qualitative or quantitative, summary form or detailed
form, printed or displayed on screen
– Frequency:
• how often it is needed, collected, produced.
– Breadth:
• the scope of events, places, people, and things that are represented by information. A
broad scope of sales information, for example, may include all the sales territories of a
company doing business in the country. A narrow scope may include just one territory for
the company or part of one territory.
– Origin:
• the source from which it is received, gathered, or produced.
– Time horizon:
• Information is oriented toward the past (historical information), toward present situations,
or toward future activities and events.
– These attributes of information pertain to individual pieces of information.
However, it is common to use several pieces of information together. Certain
attributes are associated with sets of information; these characterize the set for the
situation in which it will be used. They are relevance, completeness, and timeliness.

– Relevance:
• Information is relevant if an individual needs it in a
particular decision-making or problem-solving situation.
– Completeness:
• If a given set of information tells the user everything that
needs to be known about a particular situation, we say
that it is complete.
– Timelines:
• Any manager has two important concerns:
– (1) Is the information available when I need it? and
– (2) Is it outdated when I receive it or when I want to use it?

• Further characteristics of information systems used at
operational, tactical, and strategic levels of management
– Operational systems
• Repetitiveness: The information they produce is usually generated
repetitively at periodic intervals, such as daily, weekly, or monthly.
• Predictability: The information they produce usually does not
contain any surprises or unexpected results for the manager or
other users of the system.
• Emphasis on the past: The information produced usually
describes past activities of the organization.

• Detailed Nature: The information produced is very detailed.
• Internal Origin: the data for operational systems usually
spring entirely from internal sources.
• Structured Form: The form of the data used as input and
the form of the information produced by operational-level
systems is usually very structured.
• Great Accuracy: the accuracy of the data used as input to
such systems is usually very high.

– Tactical systems
• Periodic Nature: the information from a tactical system is
sometimes produced periodically.
• Unexpected Findings: the information produced by a tactical
information system may not be the information that was expected to
be produced.
• Comparative Nature: the information produced is usually
comparative in nature rather than merely descriptive. Tactical
information systems should provide managers with information that
alerts them to variances from accepted standards or results that are
not within the normal range, so that remedial actions can be taken
swiftly.
• Summary Form: the information produced is usually not detailed
but in summary form.
• Both Internal and External Sources: The data used for input to
the system may not be confined to sources internal to the
organization.

– Strategic information systems
• Ad Hoc Basis: strategic planning information is more often
produced when it is needed, on an ad hoc basis.
• Unexpected Information: The information produced by the
system may not be the information that was anticipated.
• Predictive Nature: The Information produced is usually
predictive of future events rather than descriptive of past
events.

• Summary Form: The information produced is usually not
detailed but in summary form. Long-range planners are not
usually interested in detailed information. They are usually
concerned with more global data.
• External Data: A large part of the data used for input to the
system may be acquired from sources external to the
organization.
• Unstructured Format: The data used for input to the system
may contain data that are unstructured in format.
• Subjectivity: The data used for input may be highly
subjective and their accuracy may be suspected.

Characteristic Operational Tactical Strategic planning
Frequency Regular, repetitive Mostly regular Often ad hoc
Dependability of results Expected results Some surprises may
occur
Results often contain
surprises
Time period covered The past Comparative Predictive of the future
Level of detail Very detailed Summaries of data Summaries of data
Source of data Internal Internal and external Mostly external
Nature of data Highly structured Some unstructured
data
Highly unstructured
Accuracy Highly accurate data Some subjective data Highly subjective data
Typical user First-line supervisors Middle managers Top management
Level of decision Task-oriented Control and resource
allocation oriented
Goal oriented
Comparison between the three levels of information systems

• System concepts
– A system can be described as a set of elements joined together
for a common objective. A system is defined as a number of
components, entities that form a whole. These entities interact in
such a way as to achieve a common goal.
– Systems boundary: A boundary delineates an area of
responsibility. It sets the scope of activities to be supported by
the system. It separates the system from its environment.
– Systems and subsystems: A subsystem is a component of a
system which performs its own specialized task that is related to
the overall objective of the total system.
– Outputs and Inputs: The inner workings of a system or
subsystem are organized to produce outputs from inputs.

– An interface is a connection at system or subsystems boundaries.
– Systems and Their Environment: The system's environment consists of its
goals, needs and activities.
– Open and closed Systems: Open systems operate in an external environment
and exchange information and material with that environment. The external
environment consists of the activities external to the system boundary with which
the system can interact.
• An open system needs to receive feedback to change and continue to exist in its
environment.
• A closed system is relatively self-contained; exchange with its environment does not
occur.
– Closed systems do not get the feedback they need from the external environment and tend to
deteriorate.
– Systems Feedback: Feedback is required to show whether the system is
performing as expected. It tells whether the objective set for the system are met
or not. That is, feedback is form of control, because it requires continuing
adjustments in the activities of the system. The good thing about feedback it that
it usually increases effort.

– System Entropy and Negative Entropy: Entropy is a measure
of disorder that exists in systems. Systems can become run
down if they are not maintained. The process of maintaining a
system is negative entropy.
– Abstract and physical systems. An abstract system is
conceptual, a product of the human mind.
• Social, theological, cultural systems are abstract systems.
– A physical system is a set of elements--- rather than ideas or
constructs--- that operate in relation to one another to
accomplish a common goal or purpose.
• Examples of physical systems include:
– Computer systems: Collection of hardware elements that work interdependently
under some means to control, to process data, and produce output reports.

• Communication system: Collections of components that can represent and transmit
bits of information from one point to another.
• Marketing systems: Collection of people, equipment, and procedures that develop,
produce, and distribute commodities, ideas and other entities to consumers or users.
– A system must have an objective or goal.

• Information systems
– An information system is an information processing
system that:
• Receives information and requests for information from its
environment and
• provides information and answers to requests to its
environment.
– The environment can include the user, developer, other
systems, etc.
• can store information in time;
• can derive a new information from a given information;

• Put in a more general form, an information system:
– Takes in data from the environment using one of the sensing and
communication technologies (INPUT);
– Analyzes this information using computer hardware and software
(PROCESS);
– Displays the product as useful information (OUTPUT);
– Either you or the computer uses this information to act on the
environment (FEEDBACK).

• The steps put in sequence
diagrammatically:
Feedback
Data Process Information

• Elements of an information system
– Computer Hardware
• Microcomputers
• Desktops
• Portables
• Workstations
• Minicomputers
• Mainframes
• Supercomputers

– Software
• System software
• Applications software
– Procedures
• Formal operating procedures are physical components
because they exist in a physical form such as a manual or
instruction booklet. Three major types of procedures are
required:
– User instructions (for users of the application to record data,
employ a terminal to enter or retrieve data, or use the result)
– Instructions for preparation of input by data preparation
personnel
– Operating instructions for computer operations personnel

– Human Resources
• computer operators,
• systems analysts,
• programmers,
• data preparation personnel,
• information systems management,
• data administrators, etc.

• Classification of information systems
– Transaction Processing Systems (TPS)
• Transaction processing systems’ focus is data.
• Transaction processing systems (TPS) form the basis of
many of the information processing applications in
organizations of today.
• The processing of transactions can be accomplished in a
– batch mode, wherein all similar items are grouped or bundled
and processed together daily or weekly,
– or on-line, wherein each transaction is processed as it is
generated.
– The essential activities of transaction processing system
includes data capture and validation, transaction-dependent
processing steps, and database maintenance.

– Office Automation Systems (OAS)
• Office automation systems are information
technology applications designed to
– increase data workers’ productivity by supporting the
coordinating and communicating activities of the typical
office.

– Management Reporting Systems
• The focus of these systems is information.
• They are designed to supply information for routine
responsibility reporting from databases.
• The principal identifying attribute of management reporting
systems (MRS) are:
– they are built for situations where information requirements are
reasonably well known,
– they are oriented toward reporting on the past and present,
and,
– they generally report on internal operations.
• These characteristics clearly deal with operational and
tactical types of activities.

– Decision Support System (DSS)
• Decision support systems provide managers with
opportunities to evaluate alternatives related to a given
problem or task.
• The principal identifying attributes of decision support
systems (DSS) are:
– directly support the decision-making process permitting
projection.
– clearly relate to managers, their information needs, and
activities.
• Group decision support systems (GDSS) use computer
mediated-communication tools, such as networks,
anonymous input and voting, and whiteboards, to support
groups as they make decisions.

– Executive information systems
• The focus of these systems is accessibility. That is,
senior executives need access to internal and
external information.
• Principal identifying attributes of executive
information system (EIS) are:
– they provide immediate access to information reflecting:
» Key success factors and access to internal and
external information
– easily tailored to user’s preferences.
– critical for senior executive’s types of activities and
decisions.

– Expert Systems
• Are computer programs designed to operate within a narrow
problem domain and to capture and present to the user
expert knowledge.
• These systems can be developed to assist decision- makers
in such diverse areas as classification, diagnosis, and
monitoring, among others.
• Consist of
– a knowledge base,
– a friendly user interface,
– an inference engine to control the system operation as well as
the application of the system’s knowledge,
– and an explanation subsystem to permit the system to explain
to the user how it arrived at conclusions.

– Knowledge Work Systems (KWS)
• Serve information needs at the knowledge and
other levels of the organization.
• Knowledge work systems, such as scientific or
engineering design applications,
– promote the creation of new knowledge and
– ensure that new knowledge and technical expertise are
properly integrated into the business.

Decision Support Systems
Decision support systems (DSS)
Offer potential to assist in solving both semi-
structured and unstructured problems

Decision Making as a Component
of Problem Solving
Intelligence
Design
Choice
Implementation
Monitoring
Problem
solving
Decision
making

Solution Types
Optimization model
Finding the best solution
Satisficing model
Finding a good -- but not necessarily the best
-- solution to a problem
Heuristics
Commonly accepted guidelines or procedures
that usually find a good solution

Problem Solving Factors
• Multiple decision objectives
• Increased alternatives
• Increased competition
• The need for creativity
• Social and political actions
• International aspects
• Technology
• Time compression

Characteristics of a DSS (1)
• Handles large amounts of data from
different sources
• Provides report and presentation flexibility
• Offers both textual and graphical
orientation

• Supports drill down analysis
• Performs complex, sophisticated analysis
and comparisons using advanced software
packages
• Supports optimization, satisficing, and
heuristic approaches

• Performs different types of analyses
“What-if” analysis
• Makes hypothetical changes to problem and
observes impact on the results
Simulation
• Duplicates features of a real system
Goal-seeking analysis
• Determines problem data required for a given result

Capabilities of a DSS (1)
• Supports
Problem solving phases
Different decision frequencies
Frequency
low high
Merge with
another
company?
How many
widgets
should I order?

Capabilities of a DSS (2)
• Highly structured problems
Straightforward problems, requiring known
facts and relationships.
• Semi-structured or unstructured problems
Complex problems wherein relationships
among data are not always clear, the data may
be in a variety of formats, and are often
difficult to manipulate or obtain

Decision Making Levels
Operational-level
managers involved with
daily decisions
Strategic-level managers
involved with long-term
decisions
LowHigh
Decision Frequency
Strategic
Tactical
Operational

Integration of TPS,
MIS, and DSS
• In many organizations they are integrated
through a common database
• Separation of DSS transactions in the
database from TPS and MIS transactions
may be important for performance reasons

Web-Based
Decision Support Systems
• Web-based decision support systems
Decision support system software provides
business intelligence through web browser
clients that access databases either through the
Internet or a corporate intranet

Components of a DSS
• Model management software (MMS)
• Coordinates the use of models in the DSS
• Model base
• Provides decision makers with access to a
variety of models
• Dialogue manager
• Allows decision makers to easily access
and manipulate the DSS

Database Model base
External database
access
Access to the
internet, networks,
and other computer
systems
Dialogue manager
DBMS MMS
External
databases

Model Base
• Model Base
Provides decision makers with
access to a variety of models and
assists them in decision making
• Models
Financial models
Statistical analysis models
Graphical models
Project management models

Advantages and
Disadvantages of
ModelingAdvantages
• Less expensive than custom approaches or real systems.
• Faster to construct than real systems
• Less risky than real systems
• Provides learning experience (trial and error)
• Future projections are possible
• Can test assumptions
Disadvantages
• Assumptions about reality may be incorrect
• Accuracy of predications often unreliable
• Requires abstract thinking

Group Decision Support
System
• Group Decision Support System (GDSS)
 Contains most of the elements of DSS plus
software to provide effective support in group
decision-making settings

Databases
Model base GDSS processor GDSS software
Dialogue
manager
External database
access
Users
Access to the internet
and corporate intranet,
networks, and other
computer system
External
databases

Characteristics of a GDSS
(1)
• Special design
• Ease of use
• Flexibility
• Decision-making support
Delphi approach (decision makers are geographically
dispersed)
Brainstorming
Group consensus
Nominal group technique

Characteristics of a GDSS
(2)
• Anonymous input
• Reduction of negative group behaviour
• Parallel communication
• Automated record keeping
• Cost, control, complexity factors

Components ofa GDSS and
GDSS Software
• Database
• Model base
• Dialogue manager
• Communication capability
• Special software (also called GroupWare)
 people located around the world work on the same
project, documents, and files, efficiently and at the
same time

GDSS Alternatives
Local area
decision network
Wide area
decision network
Decision room
Teleconferencing
high
low
close distant
Location of group members
Decisionfrequency

• Knowledge Management systems are the set of processes developed in an
organization to create, gather, store, maintain, and disseminate the firm's
knowledge.
• The major information systems that support knowledge management are
office systems, knowledge work systems, group collaboration systems,
and artificial intelligence systems
• Knowledge work systems help create and integrate new knowledge within
the organization. Knowledge management systems codify knowledge and
experience, make the collected knowledge and experience available when
and where it is needed, and provide links to external sources of
knowledge.

• Knowledge workers perform three key roles that are critical to the
organization and to the managers who work within the organization:
• Keeping the organization current in knowledge
• Serving as internal consultants regarding the areas of their knowledge
• Acting as change agents
• Knowledge workers rely on traditional office systems but often require
highly specialized knowledge work systems with powerful graphics,
analytical tools, and communications and document management
capabilities.
• These systems require great computing power, access to external
databases, easy-to-use interfaces, and optimization for the specific tasks to
be performed.

marketing information system-chapter two

marketing information system-chapter two

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to marketing information system-chapter two

Similar to marketing information system-chapter two (20)

More from Hailemariam Kebede

More from Hailemariam Kebede (6)

Recently uploaded

Recently uploaded (20)

marketing information system-chapter two