Prepared by: Pramish Shakya Gurukul CA

CHAPTER-5 MARKETING INFORMATION SYSTEM

Coverage:
1. Meaning of marketing information system
2. Features of marketing information system
3. Importance of marketing information system
4. Components of marketing information system
 Internal records system
 Marketing intelligence system
 Marketing research
 Decision support system (DSS)
5. Marketing research process
 Define the problem
 State research objectives
 Develop research plan
 Collect needed data
 Analyze the data
 Report findings
6. Exam questions

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Introduction
Marketing is all about understanding the market and consumers and gaining profit by satisfying
them. Every marketer must know the condition of the market, behavior of the consumers and
different factors affecting the purchasing decision of the consumers. It is therefore every
marketer must have clear information about the market and their consumers. This enables them
to create the perfect marketing mix.

Prof. Philip Kotler said that in today’s competitive market, not that company will succeed that
has brand power, nor will that company succeed that has better technology and nor will that
company succeed that has better capital resources but that company will succeed that has better
source of information and better interpretation of that information. Information is the most
valuable resource. This enables the marketers to understand the need of market and thus allows
them to better satisfy them.

Our recent incidents in the marketing world also have proven this fact. Apple Company which
was in the verge of bankruptcy, immerged from their pitiful economic condition to being world’s
first trillion dollar company. The main source of their success was their ability to obtain the
information about the market and understand it. Their former CEO, late Mr. Steve Jobs
understood the need of the market and provided revolutionary products which the consumers
embraced with wide open arms.

While Apple climbed the ladder of success, Nokia on the other hand had tremendous downfall in
their market. They once ruled the mobile phone market. They had the widely established brand,
money which could buy every possible resource, technology and manpower. The company got
acquired by Microsoft. The CEO of Nokia said that they did not do anything wrong, but what
happened was not right. The reason behind this is that they failed to understand the market and
its information.

Therefore, every marketer must develop a network of system which enables them to get the
information feed from the market and interpret it properly.

Meaning of marketing information System

Marketing information system is the integrated system that acquires the information from the
market, analyses and interprets the information for the marketers to make decisions and
strategies. It is the system that provides much needed information to the marketers to create the
best suited marketing mix and make decisions about marketing strategies that will obtain the best
result in the market.
According to Prof. Philip Kotler, “marketing information system consists of people, equipment,
and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate
information to marketing decision makers.

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According to William J. Stanton, “ Marketing information system is an on-going, organized

procedure to generate, analyze, disseminate, store and retrieve information for use in making
marketing decision.“
Marketing information system is a system that collects, analyzes, interprets, stores and provide
necessary information to the decision makers. This system consists of four different components.
I. Input: The system begins with the input of information from different sources. The
information is fed through internal and external sources. The need assessment is
conducted to know the actual data requirements. The information is collected through
surveys, researches, interviews, data collection from secondary resources, internal
information resources etc.
II. Processing: the collected information is sorted, analyzed, evaluated, interpreted, stored
and retrieved when necessary.
III. Output: After processing data, a conclusive report or processed information is prepared
which can now be used by decision makers to make decisions and strategies.
IV. Feedback: This is part of the system that provides information to redesign the input and
processing according to the changes in need and environment.

Features of marketing information system

1. Inter-related components
The first feature of MIS is that all the components involved in collecting, processing and storing
the data into usable information are inter-related and complement each other. All the personnel,
equipment, procedures, computer hardware and software, calculation and interpretation all are
inter-related and complement each other.

2. Processing
MIS not only collects the data but it processes them to create usable information. It collects the
data and then processes them through analysis, interpretation and calculations to form
information needed to make decisions and strategies.

3. Timeliness
MIS provides the right information at the right time. Market is volatile and marketers must have
right information at the right time to make right decisions and strategies. MIS provides the much
needed insight about the market in time.

4. Accuracy
Marketers need accurate data and information in order to make accurate decisions. MIS provides
the real picture of the market with the accurate values.

5. Consistency
MIS works continuously and consistently, providing up to date information to the marketers. The
market keep changing in regards to environmental factors. MIS keep constant eye over the
environment and provide the exact interpretation of the data with regards to the current time.

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6. Accessibility
MIS insures that the information and data are accessible to the decision makers all the time.
Information is the valuable asset to any organization. So it has to be safely stored. However, MIS
gives uninterrupted access to the authorized authority so that they are capable of making right
decision at the right time.

Importance of marketing information system

Every marketer need better information to make better decision and strategies. The well fed
information leads to clear insight of the market and allows the marketer to grab the opportunities
and avoid the threats. The importance of MIS can be defined through following:

1. Marketing planning
Every organization need clear insight of the market with accurate and up to date information to
determine their current and future path and goals. Marketers need data and information about the
changing environment, changing taste and preferences of the consumers, current strategies set by
competitors and their possible future moves etc. MIS provides clear insight of these variables
and enables the marketer to grab opportunities, segment and target the market, prepare better
marketing mix and set clear marketing as well as organizational goals.

2. Marketing program implementation

MIS provides clear knowledge about the market. This insures better implementation of well-
planned marketing program. MIS provides information regarding the sales trend, consumer’s
response to the marketing mix, the stage of the product life cycle and competitors’ price and non-
price strategies. MIS collects the feedback from the consumers to our marketing strategy;
insuring customers’ expectations are met.

3. Marketing Control
MIS collects the feedback of customers towards our marketing mix and marketing strategies.
This allows the marketers to understand the first hand response of their customers. This also
allows them to make necessary changes and take corrective measures.

4. Environmental adaptation
MIS provides the up to date information about the changes in the environment and also informs
about the probable changes in environment in future. This allows the marketers to prepare for the
environmental changes and adapt to the changes.

5. Marketing decision making

MIS plays a vital role in making marketing decisions. MIS collects data and information from
the market and interprets it to the marketers. This allows the marketers to take better decision
with better insight to the market.

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Components of marketing information system

MIS consists of following components:

1. Internal records system

2. Marketing intelligence system
3. Decision support system
4. Marketing research system

1. Internal record system

This is the information resource from within the organization. Lots of information can be
obtained through analysis of data collected and recorded during the operation of the organization.
The data related to sales, finance, account, past strategies and their review and results can be
obtained from internal sources. The internal sources consist of following records:

 Customer-related records: These records consist of customer demands, their

consumption pattern, their feedback towards past marketing strategies etc. This
information is crucial while making inventory decisions, physical distribution, production
etc.
 Sales reports: These records provide information regarding sales trend, consumer’s
feedback to promotional programs, consumer’s review towards the product and their
expectations.
 Other records: Other records such as accounting records, financial records, decision
records, minutes, audit reports and annual reports are also valuable resources to the
information pool.

2. Marketing intelligence system

Marketing intelligence system is a very important tool used by managers to obtain up to date
information about the market. This system collects and provides day to day happenings in the
marketing environment. Marketers use different tools and sources to surveillance the market. The
sources of marketing intelligence system are:

 Marketing managers: They are the one who actually jumps into the market pool. They
keep themselves up to date with everything happening in the market. They are directly in
contact with the customers, suppliers, distributors and other people in the market. They
are highly trained and enthusiastic towards collecting information form the market.
 Sales force: They are the one who are in direct contact with the customers. They face the
customers, know their likes and dislikes, handle their complaints and receive their
compliments. They are the first hand source of information from the market.

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 Middlemen: They are the bridge between the marketer and the customers. They have
proper knowledge about the market, suppliers, competitors and the customers.
 Specialists: They are highly trained and capable in collecting information from the
market. They are specialized in collecting crucial information from the marketing
including the information related with competitors’ strategies.
 Outsourcing: Organizations can hire outsiders to collect the information from the
market. There are many firms whose job is to collect data and prepare reports to be sold
to other needy organization.
 Marketing information section: Large organization have their own marketing
information department or section whose main task is to collect data and information
from the market.

Marketing Research

Research is a systematic process of finding a solution or coming up to a conclusion through

collecting data and analyzing them. It defines the problem situation, set the objective to figure
out the solution, collects data, information, opinions and views from different sources, analyses
the information and finally come up with solution or conclusion of the situation. Market research
figures out the opportunities in the market, brings out solution for problem situations and gives
way to further planning and decision making.

According to Philip Kotler, “Marketing research is the systematic design, collection, analysis,
and reporting of data and findings relevant to a specific marketing situation facing the
company.”

Features of marketing research are:

i. Systematic: Research is a systematic process where the whole research follows a step by
step process in an organized manner. It is never prepared haphazardly.
ii. Objective: Research is always objective oriented. It creates specific needful objectives
and works towards achieving those objectives. The objectives are problem or situation
specific.
iii. Problem- oriented: Research always has the objective to solve problems. The Research
is carried out to solve the problem situation.
iv. Decision making: Every research is conclusive and comes up to a decision. The main
goal of research is to provide conclusion and suggestion to make decision.

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3. Decision support system (DSS)

Decision support system provides the pool of information, set of methods to support the decision
and set of models to make the decision. It use different methods, algorithms and calculations to
guide the marketing managers to take proper calculated decisions.

According to William Stanton, “A decision support system is a procedure that allows a manager
to interact with data and methods of analysis to gather, analyze, and interpret information.”

A decision support system stores information, analyses and synthesized the collected information
and provides the necessary data, information and support to the marketing managers while
making decisions.

Decision support system has major three components.

i. Data bank
ii. Methods bank
iii. Model bank

i. Data bank

Data bank is the collection of data, records and information collected from various internal and
external sources. The data can be collected from inter records such as sales records, customer
records, reports, annual reports, audit reports, market intelligence reports and researches.
Similarly they collect data from external sources such as financial data, census data, statistical
data published by government, reports and researches published in newspapers or magazines,
environmental information collected and compiled by different sources etc.

Data back provides necessary data about consumers, sales trend, consumption trend, market
response, economical condition etc.

ii. Methods bank

The data has to be analyzed and interpreted before creating information necessary for making
decisions. The decision support system has collection of statistical tools or methods to analyze
data and bring out results. Different statistical tools such as multiple regressions, discriminant
analysis, factor analysis, cluster analysis, conjoint analyses etc are used to analysis the data.

iii. Model banks

There are different models under which the interrelationships between different variables are
defined. These definitions help the marketing analyst to make decisions and prediction of
marketing environment. Decision support systems consist of the collection of different models
that eases the marketer to analyze the data.

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Marketing research process

Research is a systematic way of collecting, sorting, analyzing, evaluating, presenting and

concluding the data and information to find solution for a problem situation. Therefore, the
research should be conducted in a systematic manner. The properly conducted research process
consists of following steps:

1. Define the problem

The research is always problem specific. Every research has specific objective leading to the
solution of problem or situation. Therefore, the first step in every research is to define the
problem or situation. The situations can be decreased sales, introduction of new product, new
market survey, and competitor analysis etcetera.

2. State Research objectives

Next step in research is to state the objective of the research. Every research has its set of
objectives leading to the solution of problem situation. The objective should be stated clearly and
accurately. The objective set must be measurable and achievable. Different hypothesis can be
made and objectives set accordingly.

3. Develop research plan

After defining the problem and setting the objectives, next step in research process is research
plan. Proper planning must be set before conducting the actual research. Following contents
should be planned in research:

 Data sources: The primary and secondary data sources should be figured out and their
collecting techniques must be planned.
 Research methods: The different methods of research should be planned. Different
methods such as survey, observation case study, focus group research, experiment,
consumer panel etc can be used to collect and observe the data.
 Research instruments: Different instruments for research should be finalized while
developing research plan. Different instruments such as questionnaire method, interview
method and mechanical instruments can be used.
 Sampling plan: The population of the research area should be specified. The sample
size, sample unit and sampling procedure should also be planned and specified.
 Contact method: The contact method to reach to the population and sample should be
planned. The samples can be contacted via mail method, interview, email and phone etc
should be finalized.
 Analytical tools: The analytical tools to analyze the data should be figured out and
finalized. Different statistical tools can be used to analyze the data such as regression,
correlation, analysis of variance etc.

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4. Collect needed data

After planning the overall research process, next step is to collect the necessary data. Primary
data can be collected through questionnaire, interview and observation while secondary data can
be collected from different sources such as newspapers, reports, government reports, government
statistical reports etc.

5. Analyze the data

After collecting the data, next step is to analyze the data. The data are collected and sorted for
analysis. Different statistical tools, methods are used to analyze and interpret the data.

6. Report finding

The final step in research is to find out the solution or achieve the objective of the research. All
the findings after analyzing the data are presented. Necessary solutions and suggestions are
presented in the report

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Exam questions

1. What do you understand by Marketing Information System (MIS)? Explain marketing

research as a major part of MIS. (5)
2. Explain the following (2)
a) Marketing research process
b) Decision support system as a component of MIS
c) Marketing Information System (MkIS)
3. What is marketing research? Give your opinion about the essentials of marketing
research process. (2+3=5)
4. What is marketing information system? Explain the role of decision support system in
a firm’s marketing information system. (2+3=5)
5. Give the meaning of marketing research and also point out the marketing research
process. (2+3=5)
6. What are the components of marketing information system? (5)
7. Point out the components of marketing information system and explain briefly the
Marketing Decision Support System. (2+3=5)
8. Explain the significance of marketing information system. (5)
9. What is marketing information system? Explain internal record system and marketing
intelligence system in short. (2+3=5)

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