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Marketing Management
LESSON
4
MARKETING INFORMATION SYSTEM (MIS)
CONTENTS
4.0 Aims and Objectives
4.1 Introduction
4.2 MIS
4.2.1 Database
4.2.2 Internal Records
4.2.3 External Sources
4.3 Computer Networks and Internet
4.4 Data Mining and Data Warehousing
4.5 Marketing Intelligence Systems
4.6 Marketing Research Process
4.7 Let us Sum up
4.8 Lesson -end Activity
4.9 Keywords
4.10 Questions for Discussion
4.11 Suggested Readings
4.0 AIMS AND OBJECTIVES
In this lesson we shall discuss about–Marketing Information System (MIS). After going
through this lesson, you will be able to:
(i)
Understand computer networks and Internet.
(ii)
Discuss data mining and data warehousing.
(iii) Define marketing intelligence systems and marketing research process.
4.1 INTRODUCTION
Marketing Information System (MIS) assesses the information needs of different managers
and develops the required information from supplied data in time regarding competition,
prices, advertising, sales, distribution and market intelligence etc. Most of today’s
information systems are computer applications in a sophisticated data-driven age. These
enable marketers to be more better informed about their customers, potential customers
and competitors. New applications are being developed at a faster pace.
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Marketing Information
System (MIS)
4.2 MIS
The term ‘Marketing Information Systems’ refers to a programme for managing and
organising information gathered by an organisation from various internal and external
sources. MIS assesses the information needs of different managers and develops the
required information from supplied data in time regarding competition, prices, advertising
expenditures, sales, distribution and market intelligence, etc. Information sources for
MIS include a company’s internal records regarding marketing performance in terms
of sales, and effectiveness and efficiency of marketing actions, marketing databases,
marketing intelligence systems, marketing research, and information supplied by
independent information suppliers.
Internal
Sources
Marketing
Database
Data Retrieval
System
Information
for
Marketing
Decisions
External
Sources
Evaluation of Information Needs
Figure 4.1
4.2.1 Database
A database refers to the collection of comprehensive information about customers and
prospects such as demographic and psychographic profiles, products and services they
buy, and purchase volumes, etc., arranged in a manner that is available for easy access
and retrieval. Databases allow marketers access to an abundance of information, –
often through a computer system – such as sales reports, news articles, company news
releases, and economic reports from government and private agencies, etc., that can be
useful in making various marketing decisions.
4.2.2 Internal Records
Modern technology is making information required for marketing decisions ever more
accessible. It is possible to track customer buying behaviour and better analyse and
understand what customers want. The integration of various modern technologies is
allowing companies to access valuable information. Ever increasing numbers of market
researchers and managers are having access to e-mail, voice mail, teleconferencing,
video conferences, and faxes.
Internal database is the most basic starting point in developing a strong MIS. Marketers,
not just the growing numbers of large retailers in our country, need information about
what is demanded more by customers and what is not. Internal record systems help in
tracking what is selling, how fast, in which locations, to which customers, etc. Availability
of all such information relies on reports available on orders received from sales people,
resellers, and customers, copies of sales invoices, prices, costs, inventories, receivables,
payables, etc. Getting inputs and designing systems to provide right data to the right
people at the right time is critical for marketing decisions.
Box 4.1
Tanniru R. Rao is a happy man. The president and CEO of Market Probe have enough reason. His
market research firm is listed among the top 50 market research agencies in the world. Rao, however,
believes that market research, in India, is still at a nascent stage.
Contd...
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Marketing Management
“You need more qualified people to do the field work and that is still not happening here,” he says.
Established in 1976, the company specialises in marketing research and customer loyalty studies
with offices in Canada, Europe and the US. Recently, it started operations in India with centres in
Mumbai, Bangalore and Delhi. With billings of $15 million for calendar year 1999, Market Probe is
looking to spread the importance of specialised research in India. “In our business, long-term relations
are essential and we make it a point to continue the relationship with our clients since, typically, our
customer loyalty studies are continuous,” says Rao. The timing is just perfect. Many Indian serviceoriented companies are looking at customer retention and loyalty programmes to strengthen their
brand and services. And what is Rao targeting?
“Automotive companies, banks and hotels, initially. Then, it would extend to other businesses as
well,” says Rao. But reliability is one issue that has always raised eyebrows when one mentions
research reports in India. How is he planning to get over it? “We work with clients and offer tactical
and strategic recommendations to satisfy their needs, as well as the needs of the customer with
commitment from our end,” explains Rao. The company already has clients such as Arvind Mills,
BPL, Hindustan Lever and Reckitt & Coleman among other big names.
“Our first attempt will be to replicate our global customer base to India and also add new clients,”
adds Rao. With vast experience in customer satisfaction research, employee satisfaction research,
new product development, brand health management and custom research tools to meet demands of
clients, Market Probe is geared to face the challenge with its diverse and unique research. “Matured
markets pose a problem as many people are not willing to speak. I guess India being still new to such
research techniques, the response will be far better,” explains Rao.
Rao, an alumnus from Indian Statistical Institute (ISI) and his team have developed new quantitative
applications of Kruskal’s Analysis for derived attribute importance and LISREL models for loyalty
modelling and survival analysis for customer retention forecast. There are proprietary products too
under the Market Probe stable that include Satisfaction Navigator (SATNAV) and Customer Retention
Forecasting System (CRFS) based on company’s experience and extensive client list. Not to be just
left with quantitative research techniques, the company is also into qualitative research, wherein it
has copyright tools and projective techniques such as Life maps, Auto Drive and Interactive Workshop
Method to facilitate focused outputs for strategic management of brands. “We also plan to have
research and training in India to facilitate spreading our research techniques in Asia and Pacific
regions,” adds Rao. With an international client list like AT&T, Xerox Corp, Kodak, American
Express and General Motors, among other Fortune 500 companies, Market Probe is all set to make
a definite impact in the Indian research scenario. “We are confident about our services and I feel that
Market Probe will have a very favourable response from India,” adds Rao.
( Source: Narain Krishnamurthy, “Stats and Facts,” A&M, July 2000 ).
Accumulated data about customers in various internal records is an important source to
build database such as customer inquiries, existing customers and past purchasing histories
of these customers. The key information in this regard consists of RFM (Recency,
Frequency, and Money) variables. Recency refers to the time of purchase, frequency
reflects the number of times the customer made a product purchase from the firm, and
money denotes the quantity and monetary value of the purchase. RFM helps analyse
and develop a customer index that reflects which customers are more profitable for the
business. USP Age, in its September 2004 issue has reported that BPCL has been
compiling its database for the past four years and has a formidable collection of more
than 1.4 million customers. Shopper’s Stop has been compiling data of its regular customers
through its loyalty programme, First Citizen. Further, a company in India can obtain a
database for as little as 50 paise to Rs. 5 per contact. Companies involved in Direct
Marketing such as Catalogue Selling and Mail Order Marketing are heavy users of
databases.
4.2.3 External Sources
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Census Bureau is one key source of information regarding various demographic variables.
Besides Census Bureau of India, other sources include Newspapers, Trade Publications,
Technical Journals, Magazines, Directories, Balance Sheets of companies, Syndicated
and published research reports. Various third party information suppliers offer a variety
of information about customers as per marketer’s requirements, for a price. For example,
Reader’s Digest markets a database covering 100 million households. It is one of the
best databases to assess potential markets for consumer products. It lets Reader’s Digest
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management know the likes and dislikes of many of its readers. Behaviour Scan is a
single source information service that monitors consumer household televisions and records
the programmes and commercials watched. This source is an example that screens
about 60,000 households in 26 US markets. Many companies develop their own databases.
According to Laurence N. Goal, a single source providing information about household
demographics, purchases, television viewership behaviour, and responses to promotions
is called a single-source data. When consumers from these households go shopping in
stores equipped with scanner-installed computers, they present their credit cards to billing
clerks for payment. This permits each customer’s identification to be electronically coded
so that the marketer can track his or her purchases.
Marketing Information
System (MIS)
Some Important Data Sources
1.
The Thomas Register: It is the world’s most important industrial buying guide for
industrial products. Thomas Register of Indian Manufacturers is available in print,
CD, and through Internet. It has 120,000 listings of 40,000 industrial manufacturers
and service providers covering 10,000 different product and service categories.
2.
The Source Directory: Source Publishers, Mumbai publish this directory. Currently
Mumbai and Delhi editions are available. It provides contact information on ad
agencies and related services, marketing and sales promotion consultants, market
research firms, music companies, telemarketing, and different media.
3.
Yellow Pages: Tata Press and GETIT yellow pages are leaders. Currently, yellow
pages publications are available for all cities and major towns of India. New Horizons
is a joint venture between Living Media and Singapore Telecom and have been
publishing directories for specific businesses.
4.
Internet: It is a source of extensive data on almost any subject. Different types of
published data, research findings, statistics, and figures are available either free or
on payment.
4.3 COMPUTER NETWORKS AND INTERNET
Present day computer networks enable marketers to access data sources and customers
with immediate information about products and performance. Through such networks,
marketers can exchange e-mails with employees, customers, and suppliers. Online
information services such as Compu Serve and America Online typically offer their
subscribers access to e-mail, discussion groups, files for downloading, chat rooms, and
databases and other related research materials. Marketers can subscribe to “mailing
lists” that periodically deliver electronic newsletters to their computer screens.
This helps increased communication with a marketer’s customers, suppliers, and
employees and boosts the capabilities of a company’s marketing information system.
Online information services are available only to subscribers. However, the Internet
allows global exchange of e-mails, discussion through newsgroups on almost any subject,
downloading of files, chat rooms, etc. A well-maintained database enables a company to
analyse customer needs, preferences, and behaviour. It also helps in identifying right
target customers for its direct marketing efforts.
4.4 DATA MINING AND DATA WAREHOUSING
The term ‘data mining’ refers to automated data analysis of large amount of data stored
in a data warehouse. This is similar to extracting valuable metals from mountains of
mined ore. The purpose is to unearth – with the help of modern computing power –
meaningful patterns of information that might be missed or remain undiscovered. Data
mining creates customer database, which is extremely important for all narrowly defined
target-marketing efforts. Data mining also leads to build database on resellers, distribution
channels, media, etc. Data warehousing refers to storing subject-based, integrated, nonvolatile, time variant data in support of managerial decisions. It can be viewed as a
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Marketing Management
central collection of clean, consistent, and summarised information gathered from several
operational systems. With increasing computing capabilities, organisations are collecting
large amounts of a variety of information or data possibly faster than they can use, and
for this reason all the collected data or information needs to be sorted, classified and
warehoused, so that it can be retrieved when needed in a meaningful manner.
4.5 MARKETING INTELLIGENCE SYSTEMS
In the current fast-paced business climate, keeping up with macro-environmental changes,
and competition is becoming increasingly difficult. Marketing intelligence system refers
to systematic and ethical approach, procedures, and sources that marketing managers
use to gather and analyse everyday information about various developments with regard
to competitors and other business trends in the marketing environment. This intelligence
is collected from various sources such as newspapers, trade publications, business
magazines, talking with suppliers, channel members, customers, other managers, and
sales force people.
About competitive intelligence, the general idea is that more than 80 per cent information
is public knowledge. The most important sources from which to obtain competitive
intelligence include competitors’ annual and financial reports, speeches by company
executives, government documents, trade organisations, online databases, and other
popular and business press. The company can take certain steps to obtain quality marketing
intelligence. The company should take steps to train and motivate field sales personnel
about the types of information to report regularly on any relevant developments in the
marketplace. Besides sales force, the company can take steps to motivate channel
members to pass along important intelligence. The company can also purchase
competitors’ products, and attend trade fairs.
Some important questions that managers should ask about competitive intelligence are:
l
How fast does the competitive climate in our industry change? How important is it
to keep our knowledge about these changes current?
l
What are the objectives of our company about competitive intelligence?
l
Who are the important clients for competitive intelligence? To whom should the
intelligence effort be reported?
With rapid developments in the area of software applications that run on PCs, it is becoming
increasingly possible to keep track of client lists and the various kinds of contacts that
are made with each client. Many such programmes keep track of clients’ names,
addresses, phone and fax numbers, e-mail addresses, personal details such as birthdays,
likes and dislikes, product/brand usage, hobbies, club memberships, etc.
Most of today’s information systems are computer applications in a sophisticated datadriven age. These enable marketers to be better informed about their customers, potential
customers, and competitors. This helps marketers to be more productive and establish
and sustain competitive advantage. New applications are being developed at a faster
pace. The ultimate focus of most such systems is to enable marketers to know enough
about any given customer and the competitive context, to fine-tune their marketing efforts
to better serve the target market so that customer’s needs are met perfectly. This is the
ultimate dream for every marketer.
4.6 MARKETING RESEARCH PROCESS
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While the Marketing Information System has its focus on managing the flow of relevant
information to decision-makers in the marketing department, marketing research is
concerned with the function of generating information for marketing decision-makers.
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There are occasions when there are no easy answers for a variety of marketing situations
that marketing managers face. Such situations may call for conducting formal marketing
studies of specific problems and opportunities. Marketing research is intended to address
carefully defined marketing problems or opportunities. It helps in identifying consumer
needs and market segments, furnishes information necessary for developing new products
and formulating marketing strategies, enables managers to measure the effectiveness of
marketing programmes and promotional activities, develops economic forecasting, helps
in financial planning, and quality control. Research undertaken without precisely defining
the problem and objectives usually results in wasting time and money.
Marketing Information
System (MIS)
For conducting marketing research, companies develop systematic procedures for
collecting, recording, and analysing data from secondary and primary sources to help
managers in making decisions. Marketing research is different from market research,
which is information collected about a particular market or market segment.
In the process of marketing research, companies collect a lot of different types of
information. David G. Bakken is of the opinion that it is easy to think of all these in terms
of three Rs of marketing:
l
Recruiting New Customers.
l
Retaining Current Customers.
l
Regaining Lost Customers.
To recruit new customers, the researchers study different market segments to develop
the right products and services consumers need and want. To retain customers, the
marketer may conduct customer satisfaction studies. Marketers realise that good
relationship with customers is important for long-term positive sales results. Regaining
lost customers can be a formidable problem. It needs innovative marketing and outstanding
communications. The information collected with respect to the first and the second Rs
helps regaining the lost customers.
Check Your Progress
1.
Explain three R’s of Marketing?
2.
What is internet?
4.7 LET US SUM UP
A database refers to the collection of comprehensive information about customers and
prospects such as demographic and psychographic profiles, products and services they
buy, and purchase volumes, etc., arranged in a manner that is available for easy access
and retrieval. Internal database is the most basic starting point in developing a strong
MIS.
Census Bureau is one key source of information regarding various demographic variables.
Internet is a source of extensive data on almost any subject. Different types of published
data, research findings, statistics, and figures are available either free or on payment.
4.8 LESSON-END ACTIVITY
Develop a questionnaire to find out what four important services a beauty parlour should
offer to females aged 18-25 among middle-income groups.
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4.9 KEYWORDS
Database
Internal Records
External Records
Data Mining
Data Warehousing
4.10 QUESTIONS FOR DISCUSSION
1.
What are the different approaches used by Internet marketers to accomplish their
objectives?
2.
Discuss some important Data Sources.
3.
Marketing Intelligence System play an important role in MIS. Justify the statement.
4.
What are the important consideration that manager should keep in mind about
competitive intelligence?
5.
Explain three R’s of marketing.
4.11 SUGGESTED READINGS
Rajan Saxena, Marketing Management, Tata McGraw Hill, 2002.
Ramasamy & Namakumari, Marketing Management, Macmilan India, 2002.
S. Jayachandran, Marketing Management, TMH, 2003.
Ramphal and Gupta, Case and Simulations in Marketing, Galgotia, Delhi.
SHH Kazmi, Marketing Management, Excel Books, New Delhi.
Saroj Dutta, Marketing Sense, Excel Books, New Delhi.
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