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SLM-Unit-04-MB0046

Oct 24, 2014

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Marketing Management

Unit 4

Unit 4

Understanding the Marketing Information Systems (MIS)

Structure: 4.1 Introduction Learning Objectives 4.2 Characteristics of MIS 4.3 Benefits of MIS 4.4 Types of Marketing Information 4.5 Components of MIS 4.6 Marketing Research 4.7 Features of Marketing Research 4.8 Objectives of Marketing Research 4.9 Marketing Research Process 4.10 Importance of Marketing Research 4.11 Advantages and Limitations of Marketing Research 4.12 Summary 4.13 Terminal Questions 4.14 Answers

4.1 IntroductionIn the earlier chapter, we saw how marketing environment is changing and presenting new opportunities and threats to an organization. The main responsibility for identifying significant changes in the market place falls on the marketing department. They are better placed and have advantages in undertaking this task because they are regularly interacting with customers and observing competition. The Marketing Departments need to develop Marketing Information Systems that provide them information about buyer wants, preferences, behavior and also about competition. They are able to do this by setting up systems and marketing related research methods to collect this valuable information which is ultimately used to make marketing decisions.

Sikkim Manipal University

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A Marketing Information System is a set of procedures to collect, analyze and distribute accurate, prompt and appropriate information to different levels of marketing decision makers. Learning Objectives After studying this unit, you will be able to: Understand the concept of Marketing Information System, as well as its characteristics & benefits. Outline different components of a Marketing Information system and classify different types of Marketing Information that are being used. Understand the role and scope of Marketing Research in making Marketing decisions. Frame the objectives of a typical marketing research study, Work out the steps involved in Marketing Research process and arrive at the findings and observations

4.2 Characteristics of MISPhilip Kotler defines MIS as a system that consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers. Its characteristics are as follows: 1. It is a planned system developed to facilitate smooth and continuous flow of information. 2. It provides pertinent information, collected from sources both internal and external to the company, for use as the basis of marketing decision making. 3. It provides right information at the right time to the right person. A well designed MIS serves as a companys nerve centre, continuously monitoring the market environment both inside and outside the organization. In the process, it collects lot of data and stores in the form of a database which is maintained in an organized manner. Marketers classify and analyze this data from the database as needed. With the advent of Computer Technology, MIS has taken a step further to provide managers direct access to the databases. This system called Marketing Decision Support System (MDSS) links a decision maker toSikkim Manipal University Page No. 60

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relevant databases and analysis tools, thereby allowing him to gain deep insights into needs and trends of customers with the help of sophisticated statistical analysis. Today companies organize the information in databases such as customer database, product database, and field sales database and combine them to be stored in a huge database called Data Warehouse. The process of searching through information in data warehouse to identify meaningful patterns that guide decision making is called Data Mining.

4.3 Benefits of MISVarious benefits of having a MIS and resultant flow of marketing information are given below: 1. It allows marketing managers to carry out their analysis, planning implementation and control responsibilities more effectively. 2. It ensures effective tapping of marketing opportunities and enables the company to develop effective safeguard against emerging marketing threats. 3. It provides marketing intelligence to the firm and helps in early spotting of changing trends. 4. It helps the firm adapt its products and services to the needs and tastes of the customers. 5. By providing quality marketing information to the decision maker, MIS helps in improving the quality of decision making.

4.4 Types of Marketing InformationA Marketing Information System supplies three types of information. 1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly, or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of companys brands, advertising campaigns and similar data on close competitors can also be provided.

Sikkim Manipal University

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2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. Data about competitors can also be part of this category. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources. 3. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager. Primary Data or Secondary Data (or both) are collected through survey Research in response to specific need. For example, if the company has developed a new product, the marketing manager may want to find out the opinion of the target customers before launching the product in the market. Such data is generated by conducting a market research study with adequate sample size, and the findings obtained are used to help decide whether the product is accepted and can be launched.

4.5 Components of MISThe following diagram shows a typical Marketing Information System with its components. Which are? 1. Internal Records System 2. Marketing Intelligence System 3. Marketing Research System 4. Analytical Marketing System

Sikkim Manipal University

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The Marketing Information System

Marketing decisions and Communications Figure 4.1 Source: Philip Kotler, Marketing Management: Analysis, Planning and Control, 5 ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1984), p. 189th

Internal Records System This includes information on (i) Order to payment cycle and (ii) sales information systems. Order to payment cycle has a system which records, the timing and size of orders placed by consumers, the payment cycle followed by consumers and the time taken to fulfill the orders, in the shortest possible time. Customers place order through sales people and companies dispatch the goods and receive payments directly or through bank. A proper record systemSikkim Manipal University Page No. 63

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pertaining to order to payment cycle management helps mangers to decide on production and dispatch schedule, inventory and accounts receivable schedule and also logistics and distribution management schedules, Sales Information Systems records everything in the sales department, starting from Sales Call Reports to prospects history to Sales territory and quota information for better sales planning and forecasting purpose. Marketing Intelligence System This is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. This system supplies happenings data unlike Internal Records System which supplies resultsdata. Marketing managers collect data from publishedsources like books, magazines and journals; by talking to customers, intermediaries and sales personnel. Some companies appoint specialists to gather consumer and competitor information, who does mystery shopping to monitor the performance of their own or competitors dealers. Competitor information can also be obtained by buying their product, attending their press conferences, trade shows and reading their annual reports. Companies purchase commercial information from outside suppliers and market research agencies like IMRB, ORG MARG to obtain competitive data on their sales, advertising expenditures etc., besides their own. Marketing Research System This is the third component of MIS. Marketing Research provides information to marketing manager when he/she encounters marketing problems. This may involve conducting Marketing Research survey by collecting primary data. These surveys may be conducted by the marketing department itself or it can hire services of an external marketing research agency. Analytical Marketing Systems Also known as Marketing Decision Support systems (MDSS), this is a coordinate collection of data, systems, tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. All the data which is generated through the other threeSikkim Manipal University Page No. 64

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systems described above are stored in a data base. The storage and retrieval capability of decision support system allows the collection and use of a wide variety of data throughout the company. Senior managers can access the data base and continually an