6.

1 Marketing Information System

6.4.1 Definition Marketing Information System (MIS)

Two definitions of a marketing information system (MIS) are:

(a) “A structured, interacting complex of persons, machines and procedures designed to

generate an orderly flow of pertinent information, collected from both intra- and extra-
firm sources, for use as the basis for decision making in specified responsibility areas of
marketing management”.

(b) A system that “consists of people, equipment, and procedures to gather, sort, analyse,
evaluate and distribute needed, timely and accurate information to marketing decision-
makers”. (Phillip Kotler).

These definitions imply that MIS is a system that is carefully designed to process and avail
pertinent and timely information to marketing-decision makers.

6.4.2 The Components of MIS

A firm's marketing information system usually consists of four main components: Internal
Records System, Marketing Intelligence System, Marketing Research System, and Marketing
Decision Support System.

(a) Internal Records System (Internal Database)

The most basic information system used by marketing managers is the "internal records
system" or internal database". Internal records information" is information gathered from
sources within the organisation to evaluate marketing performance and to detect
marketing problems and opportunities. This information may be largely derived from
accounting database and may include reports on sales, prices, accounts opening and
closures, customers' financial information and so on.
(b) Marketing Intelligence System (External Database)
While the internal records system supplies marketing managers with "results data", the
marketing intelligence system supplies managers with "happenings data". Marketing
intelligence information is everyday information about developments in the marketing
environment that helps marketing managers prepare and adjust marketing plans.

In many respects the marketing intelligence system can be regarded as the "external
database" of MIS because it covers all types of information collected from external
sources. It may take the form of press cuttings, trade journals, discussions and
information from competing organizations or subscriptions to some specified external
database.

(c) Marketing Research System

The marketing research system is that component of the MIS which gathers information
by means of deliberate planned focused studies on specific marketing problems facing the
organisation. Besides information from internal and marketing intelligence sources,
marketing managers often need focused studies of specific problems and opportunities.
For example, they may need a market survey, a product-preference test, a sales forecast
by region or an advertising-effectiveness study.

Marketing research information is used to identify and define marketing opportunities

and problems, to generate, refine, and evaluate marketing actions; to monitor marketing
performance; and to improve understanding of the marketing process.

(d) Marketing Decision Support System

The marketing decision support system consists of a series of analytical techniques which
enable marketing managers to process, interpret and make full use of information
provided by the other three sources. Various statistical tools, decision models, systems
and the use of microcomputer software and high level programming may be integrated in
 the marketing decision support system depending on the marketing decision-makers
information needs. The most commonly used decision support systems include:
1. Time series sales models
2. Linear Programming
3. Analysis of variance (ANOVA) models
4. Regression and correlation models

6.4.3 The Role of MIS

In order to carry out their analysis, planning, and implementation and control responsibilities,
marketing managers need information about developments in the marketing environment. The
role of MIS is to:
a) Assess the manager's information needs;
b) Develop the needed information; and
c) Distribute the information in a timely fashion to the marketing managers.

6.4.4 The Marketing Research System

(a) Marketing Research Versus Market Research

According to Kotler (2001), marketing research is the systematic design, collection,

analysis, and reporting of data and findings relevant to a specific marketing situation
facing the company.

The American Marketing Association defines marketing research as the systematic

gathering, recording and analyzing of data about problems relating to the marketing of
goods and services.

Marketing research should not be confused with market research, which refers to finding
out information about the market for a particular product or service.
 The fundamental differences between marketing research and market research are that:

 Market research is a formal procedure for researching into an identified market. It

studies a market for a particular product or service. The scope of market research
activities is limited to an identified "market" (or group of customers).

 Marketing research is a formal procedure for researching the entire marketing

activity of an organisation.

Thus, market research is only one of the elements of marketing research. Marketing
research is broader than market research and includes not only market research but also
covers a wide variety of variables (pricing, distribution, advertising, etc) that can affect
the marketing of goods and services.

(b) Marketing Research System Versus Marketing Information System (MIS)

Many people often confuse between the marketing research system and MIS. Although
the two systems share a common purpose, i.e. providing information for marketing
decision-makers, some fine lines of contrast exist. These include the following:

 The focus of marketing research is on the handling of external information while

MIS handles both internal and external information.
 Marketing research is concerned with solving problems while MIS is concerned
with preventing as well as solving problems.
 Marketing research tends to operate on an ad hoc and project-to project basis
while MIS is a continuous process especially in connection to the monitoring of
the external environment.
 Marketing research tends to concentrate on past information while MIS tends to
be future oriented.
 MIS, is often computer-based while a marketing research system is not
necessarily computerized.
  A marketing research system is just one component of MIS while MIS consists of
other components (i.e. internal records, marketing intelligence and marketing
decision support systems) besides marketing research.

(c) Importance of Marketing Research

The importance of Marketing and Market research arise from the fact that they provide
information which can be used by marketing decision makers. If the information
provided is accurate, reliable and timely, its use should reduce the risk involved in
decision making and thus increase the chances of making the right choice as well as the
opportunity for greater monitoring and control of marketing operations.

Marketing research can help an organisation’s marketing decision marker with the
following decisions or questions:

 What is the size of the market for a particular organisation services?

 Who are the organisation’s customers?
 What are the organizations’ buying motives?
 What are the trends in the market?
 Is the organisation’s advertising well received?
 Are customers satisfied with the organisation’s products?
 What are the most attractive/least attractive features of the organisation’s products
compared to competitor's products?
 What is the size of the organisation’s market share?
 When should an organisation launch a new product?
 Why has the organisation lost customers to competitors? etc.

6.2 ACTIVITY
Identify the various ways in which your organization collects internal data. Also identify the
external databases to your organization.

Do Jua kali businesses have a Marketing Information System? Discuss

Differentiate between Marketing Intelligence and Market Research Systems.

6.3 SUMMARY

MIS is a system that “consists of people, equipment, and procedures to gather, sort, analyse,
evaluate and distribute needed, timely and accurate information to marketing decision-makers”
MIS consists of FOUR components. Internal records system, Market Research, Market
intelligence and Market decision support system.

6.4 Suggestion for further reading

1. Kotler P. and Armstrong G.,(2008), Principles of Marketing, 12th Edition, Prentice Hall.

2. Kotler, P & Keller, K.L., (2006), Marketing Management. 12 th ed. Upper Saddle River, NJ: Pearson –
Prentice Hall
3. Etzel, M.J., Walker, B.J. and Stanton, W.J., (2007), Marketing, 14TH edn. McGraw-Hill, Irwin.
LECTURE 7: THE MARKETING RESEARCH PROCESS:

7.4 The Marketing Research Process:

The six main stages in the research process are as follows:

1. Defining the problem
2. Defining the research objectives
3. Developing the research design
4. Collecting the data
5. Analysing the data and
6. Presenting the findings

7.4.1 Defining the Problem

Defining the problem and the research objectives is the first and most important step in the
research process. A research problem is the question or issue to be studied. It defines the focus of
the study and the direction of the research effort and resources.

Why must Research Problem be defined appropriately?

1. Because Research problem is the baseline foundation for any research project.
2. No problem, No Research!
3. Wrong Problem, Wrong Research!
4. Unless the problem is well defined, the cost of information gathering may well exceed the
value of the findings
An old adage says, "A problem well defined is a problem half solved".

Defining the problem is often the hardest step in the research process. A problem should not be
defined too broadly nor too narrowly. If management fails to define the problem clearly
exploratory research may be required to help bring the problem into focus.

7.4.2 Research Objectives

When the problem has been carefully defined, the marketing manager and researcher must set
the research objectives, that is, the outputs or end results of the research effort.

7.4.3 Developing the Research Plan (Research Design)

Research design is the framework or plan for the study used as a guide in collecting and
analysing data.

There are three types of research design that researchers often use:

i) Exploratory Research Design – Involves gathering preliminary data to shed

light on the nature of the problem and possibly suggest some hypotheses or new
ideas.

ii) Descriptive Research Design - Involves describing certain variables of interest to

the researcher. This is a research design in which the major emphasis is on
determining the frequency with which something occurs or the extent to which
two variables co-vary

iii) Causal Research Design - Involves testing hypotheses about cause and effect
relationships e.g. does X cause Y?
Managers often start with explanatory research and latter follow with descriptive or causal
research. The research plan calls for decisions on the data sources, research approaches, research
instruments, sampling plan and contact methods.

7.4.4 Data Collection

Data Sources
To meet the manager's information needs the research plan can call for gathering secondary data,
primary data, or both.

 Secondary data consist of information that already exists somewhere having

been collected for another purpose. The internal sources of secondary data for an
organisation include the profit loss statements, balance sheets, sales figures, sales-
call reports, invoices, inventory records, and prior research reports. External
sources of secondary data include government publications, periodicals and
books, and commercial data.
 Primary data consist of original information gathered for the specific purpose at
hand. The normal source of primary data is through direct interviewing of
individuals or groups of people.
Researchers usually start their investigation by reviewing literature on secondary data to see
whether their problem can be partly or wholly solved without collecting costly primary data.
Secondary data offer the advantages of lower cost and quicker availability. On the other hand,
the data needed by the researcher might not exist, or the existing data might be outdated,
inaccurate, incomplete, or unreliable. In this case, the researcher will have to collect primary data
at greater cost and longer delay but probably with more relevance and accuracy.

Research Approaches
Primary data can be collected in four broad ways: observation, focus group, surveys and
experiments.
Observational Research - is the gathering of primary data by observing relevant people, actions
and situations. It is best suited for exploratory research purposes.

Focus - Group Research - is the gathering of primary data through personal interviewing of a
group that consist of six to ten people gathered for a few hours with a trained interviewer to talk
about a product, services or organization.

Focus-group research is a useful exploratory step to take before designing a large - scale survey.
It yields insights into consumer perceptions, attitudes, and satisfaction that help define the issues
to be researched more formally. However, the interviewer needs objectivity, knowledge of the
subject matter and industry, and knowledge of group dynamics and consumer behaviour
otherwise the results can be misleading.

Survey Research - the gathering of primary data by asking people questions about their
knowledge, attitudes, preferences, and buying behaviour. Survey research stands midway
between observational and focus-group research, on the one hand, and experimental research on
the other hand.

Experimental Research - the gathering of primary data by selecting matched groups of subjects,
subjecting them to different treatments, controlling extraneous variables, and checking whether
observed differences are statistically significant.

Experimental research is the most scientifically valid research. To the extent that extraneous
factors are eliminated or controlled, the observed effects can be related to the variations in the
stimuli. The purpose of experimental research is to capture cause-and-effect relationships by
eliminating competing explanations of the observed findings.

Application of Research Approaches

Generally speaking, observation and focus groups are best suited for exploratory research,
surveys are best suited for descriptive research, and experiments are best suited for causal
research.

Research Instruments
Marketing researchers have a choice of two main research instruments in collecting primary
data: the questionnaire and mechanical devices.
1. Questionnaires: This is by far the most common instrument in collecting primary data.
Broadly speaking a questionnaire consists of a set of questions presented to respondents
for their answers. The questionnaire is very flexible in that there are many ways to ask
questions. Questionnaires must be carefully designed and tested before they can be used
on a large scale.

2. Mechanical devices: These are less frequently used in marketing research e.g. use of
supermarket scanners and surveillance cameras.

Sampling Plans
The marketing researcher must design a sampling plan which calls for three decisions: Target
population, sample size and sampling procedure:

 Target population. This answers, who is to be surveyed? The marketing research

must define the target population that will be sampled.
 Sample Size: This answers, how many people should be surveyed?
Large samples give more reliable results than small samples. A sample is a
segment of the population selected for marketing research to represent the
populations as a whole.

 Sampling Procedure: This answers, how should the respondents be chosen?

To obtain a representative sample, probability sampling is usually used.
 Contact Methods
This answers "How the subject should be contacted?" The choices are mail, telephone, or
personal interviews.

 The mail questionnaire is the best way to reach individuals who would not
give personal interviews or whose responses might be biased or distorted by the
interviews. Mail questionnaires require simple and clearly worded questions, and
the response rate is usually low and/or slow.

 Telephone interviewing is the best method for gathering information quickly;

the interviewer is also able to clarify questions if they are not understood. The
response rate is typically higher than in the case of mailed questionnaires.
However, only people with telephones can be interviewed and interviews have to
be short and not too personal.

 Personal interviewing is the most versatile of the three methods. It provides

additional observations about the respondent, such as dress and body language. Its
main drawbacks are that it is the most expensive method and requires more
administrative planning and supervision. It is also subject to interviewer bias or
distortion.

(c) Collection of Data

After developing the research plan the researcher must collect the data. This will involve:
i) Administering the questionnaire;
ii) Conducting in-depth interviews or group discussions with the selected sample;
iii) Conducting discreet observations so that the targets do not realize they are being
observed and hence their behaviour;
iv) Conducting experiments.

(d) Analyzing the Data

 The next step in the marketing research process is to extract pertinent findings from the
data. Depending on the type of collection methods, the results will be analyzed
accordingly:

 Questionnaires will have to be pre-coded or input into a computer by the

interviewer.
 Answers to in-depth interviews would be analysed by identifying key statements
from the interviews, and common characteristics and attitudes identified.
 The researcher will tabulate the data and develop one-way and two-way
frequency distributions.
 Averages and measures of dispersion will be computed for the major variables,
etc.

7.4.5 Analyzing the Data

The questionnaire is checked for completeness, comprehensibility and legibility. The

questionnaire is coded and transcribed. Once the data is input in a computer it is then analyzed
using computer spreadsheet packages like excel , SPSS etc.

7.4.6 Presentation of the Findings

Involves the following two:-
a) Interpretation and collection of the results
b) Presentation of results
The information generated from the computer is interpreted often using frequencies and
percentages. The otherwise separate information is collected to form one or a few meaningful
points.

After interpretation the service researcher comes up with recommendations to help solve the
problem.
The researcher then writes a final report about the research findings. A good research report must
have:
a) A title page
b) Content page
c) Executive summary
d) An introduction
e) Terms of reference (objectives of the research)
f) The methodology of research
g) The main findings
h) Conclusions and recommendations

Oral Presentation
If the researcher is required to make an oral presentation of the study the researcher should take
into account the following factors:
a) The original research problem and objectives
b) The extent to which the problem has been solved
c) The people present (i.e. key people)
d) The available time
e) The use of visual aids
f) Avoid use of jargon and technical language
g) Make presentation enjoyable and entertaining
h) Involve audience (i.e. ask for comments)
i) Put weighty focus on results and recommendations (because this is what concerns the
senior executives most).