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Marketing Information System Chap 3

Marketing communication (Unity University)

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CHAPTER Three
3. Managing Marketing
Information
Brief Contents
3.1. Introduction
3.2. Importance of Marketing Information System
3.3. Marketing Information System – Scope
3.4. Marketing Information System – Characteristics
3.5. Marketing Information System – Importance
3.6. Marketing Information System – Functions
3.7. Marketing Information System – Components
3.8. Categories of Marketing Information
3.9. Marketing Information System: Advantages and Disadvantages

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3.1. Introduction
With the increasing use of the computer, companies are becoming more interested in the
development of a corporate wide, integrated management information system. The purpose of
such a system is to bring all of the flows of recorded information in the entire company into a
unified whole. Thereby it is hoped that the manager’s capacity to plan and control the company’s
activities will be improved. Such a system is often seen as a marked improvement over current
procedures.
As companies have attempted to introduce such a system, however, a consensus seems to be
growing, especially among some computer hardware manufacturers, that a more realistic
approach is to begin with smaller systems, such as one in marketing, or in production.
The human mind simply cannot grasp the whole management operation with efficient clarity and
detail to permit it to be structured and modeled. New concepts will probably have to be
developed to aid us in thinking about such a complex phenomenon. In the meantime,
management can proceed to develop the smaller systems. In building the smaller systems too, we
can benefit by learning from the mistakes that were made with global systems.
Marketing information systems are really the frameworks used for managing, processing and
accessing data. They can be simply a sharing of information by key departments, but are more
likely to be some form of integrated system based around information technology. The important
issue is that the information from such a system is presented in a way that is useful to the
marketing decisions.
While it is essential for organizations to have systems by which marketing information can be
stored, processed and accessed, it should be clear from the points made regarding the nature of
information in general, and marketing information in particular, that such systems have
fundamental limitations. At best the system can only handle such tangible and intangible
information as is made available to it.
There are three basic components of a good marketing information system:
1. Information acquired via market intelligence
2. Information from operating data
3. Information library.
Market intelligence is all of the data available from the many external sources. It may have been
acquired formally or informally but will usually be checked for reliability before it is entered into
an MkIS.

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Information from operating data, such as production or accounts, has been covered under the
heading of operational information. It is usually different from marketing information as it is
collected for very different reasons. Nevertheless, there is likely to be some marketing relevance
in this data and that must input into the MkIS.
The information library is a collection of all the formal research gathered by an organization that
is still relevant and up to date. It might also include research surveys carried out by trade
associations or by associated companies, as such reports are sometimes available and they do add
to knowledge. Thus the MkIS will contain a comprehensive collection of all relevant information
which could help achieve better marketing decisions.
Computer-based systems are particularly useful for handling numerical information, but can
provide only limited assistance when handling qualitative information based on descriptions and
ideas. The need to address this problem has been recognized, and much work has been done to
develop ‘decision support systems’ designed to provide the information needed for marketing
decisions.
The definitions of marketing systems as given by various philosophers are:
Cundiff, Still and Govoni define MIS as, “Marketing information system is an organized set of
procedures, information handling routines and reporting techniques designed to provide the
information required for making marketing decision.”

K. Cox and K. Gonod hold, “MIS is a set of procedures and methods for the regular and planned
collection, analysis and presentation of information in making marketing decisions.”

Professor Alder Lee opines “Marketing information system is an interacting, continuing, future
oriented structure of people, equipment and procedure designed to generate and process an
information flow which can aid business executives in the management of their marketing
programs.”

It is defined as “a set of procedures and methods for the regular, planned collection, analysis, and
presentation of information for use in making marketing decisions.” – (K. Cox and R. Good)

Marketing information is an ongoing repetitive process of collection, analysis and presentation of

information, whereas the marketing research subject is an intermittent or irregular activity — on
a project-to-project basis and it is concerned with solving specific marketing problems. Of
course, it is a major component of marketing information system.

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3.2. Importance of Marketing Information System

Such marketing information systems are beginning to evolve, as the following two examples
illustrate:
1. MIS to Help Develop Marketing Plans:
To help its managers develop their marketing plans, the Gillette Company uses information
gathered from five different types of regularly recurring research projects. The five projects were
designed to provide the managers a complete picture of the razor and blade market, including
detailed descriptions of consumers, competition, and distribution. The five projects, and the
usefulness of the information they gather, are as follows.

These five projects provide Gillette marketing managers with information on market shares,
brand loyalty and brand switching, consumer attitudes, brand and advertising awareness, product
advantages versus competition, inventory levels, out-of-stock, retail prices and display, local
advertising, and more.

As the data are gathered from recurring studies, the managers have a complete picture of current
market and competitive conditions from the most recent set of studies, and they know the recent
trends that exist in all of these data. All of these items of information provide the Gillette man-
agers an excellent historical record on which to base the development of their new marketing
plans.

2. MIS to Evaluate the Marketing Plan’s Effectiveness:

Gross margin, marketing expenditures, and contribution to earnings are recorded for each market
area and also totally. This information is also shown for each market (1) as a percentage of the
total for all markets and (2) as the dollar amount of change this year compared with last year.
Additionally, the total industry sales in dollars, the firm’s market share, the percentage of retail
distribution achieved for the product, and television media costs are shown for each market, both
for this year and last.

With these data, management can observe changes in demand (as reflected in total industry
sales); changes in sales, costs, and earnings, changes in competition (as reflected in market share
and retail distribution percentages) and, changes in advertising costs (as reflected in television
media costs). This information is available by market and for all markets. With such information

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management can reappraise a product’s marketing expenditures plan as well as the effectiveness
of the advertising-sales promotion mix used and then make changes.

For example- in Area A, advertising and promotion expenses of $100,000 produced $260,000 of
contribution to earnings, while in Area E advertising and promotion expenses of $400,000
produced only $280,000 of contribution to earnings. This suggests that the company might
increase its total contribution to earnings by shifting some advertising and promotion money
from Area E to Area A.
3.3. Marketing Information System – Scope:
Scope # 1. Strategy Implementation:
MIS helps in product launches, authorizes the co-ordination of marketing strategies, and is an
integral part of Sales Force Automation (SFA), Customer Relationship Management (CRM), and
customer service systems implementations. It permits decision makers to more effectively
manage the sales force as well as customer relationships.
Some customer management software companies are extending their CRM applications to
include Partner Relationship Management (PRM) capabilities. This has become increasingly
important as many marketers are choosing to outsource important marketing functions and form
strategic alliances to address new markets.
Scope # 2. Strategy Development:
Information needed to develop marketing strategy is also provided by MIS. 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. MIS gives the foundation for the development of information
system-dependent e-commerce strategies.
Scope # 3. Market Monitoring:
MIS enables the identification of emerging market segments, and the monitoring of the market
environment for changes in consumer behavior, competitor activities, new technologies,
economic conditions and governmental policies at the time of using market research and market
intelligence.
Scope # 4. Wider Applications:
Under modern marketing ideologies, MIS includes operational, sales and marketing process-
oriented systems, which serve in daily marketing operational activities such as direct mailing

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(database marketing), telemarketing and operational sales management. The users are middle
management and operative sales and marketing personnel.
Scope # 5. Support Management and Decision Making:
Marketing information systems support management decision making. Management has five
distinct functions and each of them needs support from MIS. These are planning, organizing,
coordinating, decision-making and controlling.
Scope # 6. Functional Integration:
MIS the co-ordination of activities within the marketing department and between marketing and
other organizational functions like engineering, production, manufacturing, product
management, finance, logistics, and customer service.
3.4. Marketing Information System – Characteristics
1. MIS is an ongoing process. It operates continuously.
2. MIS acts as a data bank and facilitates prompt decision-making by manager.
3. MIS operates in a rational and systematic manner and provides required information.
4. MIS is future-oriented. It anticipates and prevents problems as well as it solves marketing
problems. It is both a preventive as well as curative process in marketing.
5. The gathered data is processed with the help of operations research techniques. Modem
mathematical and statistical tools are available for problem-solving in the field of marketing.
6. MIS is a computer-based method of data collection, processing, and storage.
7. Management gets a steady flow of information on a regular basis — the right information, for
the right people, at the right time and cost.
8. Marketing Information System stands between the marketing environment and marketing
decision-makers. Marketing data flows from the environment to the marketing information
system. Marketing data is processed by the system and converted into marketing information
flow, which goes to the marketers for decision-making.
3.5. Marketing Information System – Importance:
1. Anticipation of Consumer Demand:
Mass production and mass distribution in ever- expanding markets are based on anticipation of
consumer demand. Under customer-oriented marketing approach, every marketer needs up-to-
date knowledge about consumer needs and wants. In a dynamic economy, consumer tastes,
fashions and liking are constantly changing.
Without precise information on the nature, character and size of consumer demand, marketers
will be simply groping in the dark. Decisions based upon hunches, guess-work, intuition or

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tradition cannot give desirable results in the modern economy. They must be supported by facts
and figures.
2. Complexity of Marketing:
Modern marketing process has become much more complex and elaborate. Ever-expanding
markets and multinational marketing activities require adequate market intelligence service and
organized information system.
3. Significance of Economic Indicators:
Forces of demand and supply are constantly changing. These determine prices and general
market conditions. In a wider and complex economy, fluctuations in demand, supply and prices
are tremendous. Marketer must have latest information on the changing trends of supply,
demand, and prices.
For this purpose, he relies on the market reports and other market intelligence services.
Economic indicators act as barometer indicating trend of prices and general economic
conditions. Intelligent forecasting of the future is based on economic indices, such as national
income, population, price, money flow, growth-rate, etc.
4. Significance of Competition:
Modern markets are competitive. A marketer cannot make decisions in a competitive vacuum.
Modern business is a many-sided game in which rivals and opponents continuously try to
formulate strategies to gain advantage over one another.
Predicting the behavior of one’s competitors and overtaking of the competitor will need the
services of marketing intelligence. A marketer cannot survive under keen competition without
up-to-date market information, particularly regarding the nature, character, and size of
competition to be met.
5. Development of Science and Technology:
Ever-expanding markets create conditions that lead to technological progress. The energy crisis
since 1974 gave a great encouragement to discover other alternative sources of energy, i.e.,
atomic energy, solar energy, wind energy and so on. Modern marketer must be innovative.
‘Innovate or perish’ is the slogan in the existing marketing environment. Marketer must have
latest information regarding technological developments. New products, new markets, new
processes, new techniques are based on facts and figures.
6. Consumerism:

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In an ever-widening market, we do have a communication gap between consumers, users, and

marketers. This gap is responsible for unrealistic marketing plans and programs. Many marketers
are isolated from day-to-day marketing realities. This has led to consumer dissatisfaction.
Consumerism and increasing consumer grievances indicate that products do not match consumer
needs and desires and marketers have no up-to-date knowledge of real and precise consumer
demand. Many marketers have discovered that marketing agencies in charge of distribution do
not offer expected services to their customers. Up-to-date Marketing Information System alone
can establish proper two-way flow of information and understanding between producers and
consumers in a wider market.
7. Marketing Planning:
We are living in the age of planning and programming. Our plans and programs are based upon
information supplied by economic research (economic forecasts) and marketing research
(marketing forecasts), which provide the requisite information about the future economic and
marketing conditions.
For instance, sales forecast is the base of production plan, marketing plan, financial plan, and
budgets. Marketing information alone can inter-relate and co-ordinate the product and
user/consumer demand so that both supply and demand can travel on the same wavelength.
8. Information Explosion:
We live in the midst of information explosion. Management has literally a flood of information
knocking at its door. Computer is the most immediate force behind the information explosion.
The speed with which the computer can absorb, process, and reproduce large quantities of
information is simply staggering. When a computer is effectively programmed, it can certainly
add tremendously to the quality of information flow. As multinational companies’ troop in and
competition turns fierce, the winner will be the one who satisfies customer needs most
comprehensively through well-organized Marketing Information System.
3.6. Marketing Information System – Functions:
The Marketing Information System performs three functions:
1. Collection of market information.
2. Interpretation of information.
3. Dissemination of information.
1. Collection of Market Information:
The first stage of market intelligence function is gathering the information adequately, timely and
relevant from the angle of marketers. Marketing executive gathers market information in many

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ways by tapping different sources of information collecting is the process of locating and tapping
the sources of information.
The different sources of market information can be divided into:
i. Internal sources,
ii. External sources, and
iii. Market research.
i. Internal Sources of Information:
The internal sources of information are the records maintained by the marketing organization.
They are financial records of sales, purchase, cash transactions, returns, etc. This information is
helpful for the marketing executives to have sales analysis in terms of product, customer analysis
and territorial analysis.
The internal sources are:
a. Product analysis – Product analysis is the study of actual position of different products. How
they are received by the customers, its speed, i.e., slow or fast and causes of decline or rise over
the past period.
b. Customer analysis – Customer analysis helps to get classified information by income, age
group preference to a particular brand and price range. This helps the marketer to shift his
operating ability to those areas where there is necessity of stress to better the performance.
c. Territorial analysis – Territorial analysis gives the break-up picture relating to an area. This
helps to have a control over activities of sales forces (salesmen). Effort can be made to pad up
(improve) the position in those areas where sales are declining and efforts can be made to
maintain the market and extend the market in new areas.
ii. External Sources of Information:
The efficiency of a marketing firm can be judged not by comparing the internal records but by
comparing the firm with others in the same line.
The external sources are:
a. Trade associations and chambers of commerce – Chambers of commerce and trade
associations have their own publications. They may be monthlies or quarterlies. Even the
regulated markets and cooperative societies have such useful publications.
b. Competitors – The best source perhaps is that provided by rivals. The success of a business is
getting the secrets of other business. Business tactics or strategies followed by rivals have got to
be mastered. Competitors never let their secrets out. A wise marketer has many ways of getting
the required information via the employees.

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c. Government publication – Different departments of Government of a Nation may be Central or

State publishes up- to-date information. In India departments of agriculture, statistics, industries
and commerce, foreign trade, etc., have been disseminating the vital data to marketers.
The examples are – RBI Bulletin, forward Market Bulletin, and Monthly Bulletin of Statistics,
Planning Commission Reports, Reports of Export Promotion Councils, Census Reports and
Indian Trade Journal, etc. The information given is up-to-date and authentic that helps the
marketer to rely on such intelligence.
iii. Other Sources:
There are a number of concerns who have taken it as their business to provide information in the
form of articles, reports, facts, opinions, criticisms, etc. The best examples of these kinds are –
Eastern Economists, Capital, Southern Economists, Commerce, Yojana, Indian Finance, etc.
Even the newspapers like Economic Times, Financial Express are taken into account. The
University Departments, Colleges and Research Centres are the good sources of rich
information.
2. Interpretation of Information:
Interpretation of information is the second stage of marketing information system. Collection of
data is comparatively easier. However, interpretation is the crux of market information function.
Interpretation of data refers to providing analysis of the information to arrive at certain
generalizations.
Much depends on the dynamic thinking capacity or creative mind of the marketer to have correct
generalizations or arriving at correct and logical conclusions. Decision-making is based on
interpreting the critical appraisal of the given facts, opinion or estimates. That is why
interpretation of data can be called as crucial yet delicate process of creativity.
3. Dissemination of Market Information:
Flow of information is as important as the flow of goods in the marketing system. Effective
management of marketing information means not only systematic analysis but also providing or
passing the information at different levels in the organization.
The marketing executive who has arrived at certain conclusions in respect of the problems faced
must communicate to the men of action. There must be a combination of thinking and doing.
Thinking has value only when doing is followed.
3.7. Marketing Information System – Components:
There are three divisions or components of marketing information system:
1. Internal Marketing Information:

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It is secured through accounting system. Data on sales, inventories, marketing costs, cash flows,
accounts receivables and payables (credit sales and credit purchases), trading returns, financial
returns, etc., constitute the information generated from within.
2. External Marketing Information:
It is in the form of marketing intelligence. It keeps marketers well informed about current
marketing environment, changing consumer demand, changing competition, changing prices, etc.
Census data, newspapers, trade journals, magazines, trade shows and exhibitions, books,
company annual reports, salesmen’s reports, suppliers, wholesalers, retailers and customers,
special publications of trade associations, government reports, etc., provide valuable sources of
market intelligence.
A marketer is interested in market intelligence because it is the only source of securing latest
information about competition and customers. In a sense, marketing intelligence is an organized
feedback process of marketing communication (inflow of information).
Salesmen act as ears and -eyes of the marketing firm in the market place. They are intelligence
agents who can supply vital current information on buyer behavior, channel behavior and also on
competitors.
There are professional market intelligence agencies who sell intelligence services to interested
marketers.
Market intelligence data will have to be classified, edited, analyzed and evaluated and distributed
to the right people in the right form as early as possible. Many marketing decisions are based on
market intelligence which acts as a mirror of marketing conditions reflecting faithfully how
things are going on in the competitive market.
3. Marketing Research:
It is a systematic search for information. It involves data collection, analysis and interpretation. It
exists primarily as a tool of managerial decision-making process: Marketing research is defined
as the collection and analysis of data relevant to marketing decision-making and the
communication of the results of this analysis to marketers. Of course, research cannot make
decisions. It only helps experienced marketers in their task of decision-making.
It is a valuable instrument to keep a marketer always on the right path under competitive market
pressures and to fulfill customer demand at a profit to the marketer. Please note that marketing
research provides special information on request when a marketer has typical marketing
problems demanding unique information for their satisfactory solutions.

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MR studies are project- oriented. Mostly they involve special studies relating to market
segmentation, buyer behavior, product or brand preferences, product or brand usage, advertising
and sales promotion, physical distribution, dealer behavior, competition, etc.
3.8. Marketing Information System – Categories of Marketing Information
Marketing as a business activity has developed as a result of recognizing that the success of an
organization depends upon creating and retaining customers. In the short term these decisions are
likely to be concerned with meeting the needs of customers efficiently. In the longer term they
are likely to focus more on the organization’s need to respond to the ever-changing expectations
of the users of its products and / or services.
Included within the category of marketing information are:
i. Market and environmental information
ii. Customer and potential customer information
iii. Competitor information
iv. Product, price, and other information about the offering
v. Distributor, and advertising and promotional information.
All of these are drawn from the different levels of the marketing environment and the behavior of
customers.
In fact we could define marketing information as any information which is relevant to, or affects,
the profitable exchange of a product/service between an organization and its customers.
Although marketing information can be either tangible or intangible there is often little evidence
of tangible marketing information in many organizations. There might be some files containing,
for instance, catalogues showing the products offered by competitors, but they are usually limited
in comparison with the files needed by the production functions of an organization.
Marketing information can be obtained from various resources and they are:
i. Desk Research – Information accessible from available internal company documents and other
external records and publications, articles and advertisements.
ii. Marketing Intelligence – Collecting data from operational points through the company’s
suppliers, its own sales force and marketing intermediaries about customers and competitors, its
own products and those of competitors.
iii. Marketing Research – Marketing research can be defined as the total system of designing,
collecting, analyzing, tabulating and reporting of data relevant to a marketing issue through a
company’s internal resources or delegated external specialists such as marketing research
agencies.

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iv. Marketing Decision Support System – MDSS is a process of collection of data, systems, tools
and techniques with supporting software and hardware to gather and interpret information on
business and the environment.
v. Marketing information – gathering system is an extensive subject, which needs to be addressed
separately due to its specific, complex role and activities. However, some of the types of
information needed to be ascertained and analysed will be helpful to decide on the priorities,
strategy and tactics a company must adopt.
They are:
1. Environment Analysis.
2. Industry Attractiveness.
3. Product life Cycle.
4. Portfolio Analysis.
5. Value Chain.
6. Gap Analysis.
7. SWOT Analysis.
The above helps a business organization to identify, the environment in which it operates, the
performance of the industry it manages, the performance and profitability of brands it markets,
the strengths, weaknesses, the opportunities and threats it may have to face.
3.9. Marketing Information System: Advantages and Disadvantages
Advantages of MIS:
1. Control Systems:
(a) Typical Applications:
(i) Control of marketing costs.
(ii) Diagnosis of poor performance.
(iii) Management of fashion goods.
(iv) Flexible promotion strategy.
(b) Benefits:
(i) More timely computer reports.
(ii) Flexible on-line retrieval of data.
(iii) Automatic spotting of problems and opportunities.
(iv) Cheaper, more detailed, and more frequent reports.
2. Research Systems:
(a) Typical Applications:

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(i) Advertising strategy.

(ii) Pricing strategy.
(iii) Evaluation of advertising expenditures.
(iv) Continuous experiments.
(b) Benefits:
(i) Additional manipulation of data is possible when stored for computers in an unaggregated
file.
(ii) Improved storage and retrieval capability allows new types of data to be collected and used.
(iii) Well-designed data banks permit integration and comparison of different sets of data.
Disadvantages of MIS:
1. Expensive – Establishment of MIS is costly affair as it involves huge cost to be incurred on
setting up of hardware and software for the required purpose.
2. Not Preferred – The database marketing has been primarily used as a tactical tool. There is a
possibility that MIS lead to less reliable and less secure data. MIS system may become slow,
large, and hard to manage.
3. Depends on Database – The database marketing depends on the data quality. While the
observational data is powerful, the corrupted observational data could be ‘powerful misleading’.
The quality also depends on the quality of analysis and the extent to which the databases are
linked.
4. Requires New Set of Skills – The database often demands new skills and organizations from
new analytical and decision-making skills in sales and marketing to a revamped information
system organization that could support the entirely new class of users.

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