Unit 4 Understanding the Marketing Information System

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Book Code - MB0046Dr. Smita Choudhary

Unit 4

Understanding the Marketing Information

System

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Contents Introduction

Characteristics of MIS

Benefits of MIS

Types of marketing information

Components of MIS

Marketing research

Features of marketing research

Objectives of marketing research

Marketing research process

Importance of marketing research

Advantages and limitations of marketing research

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Introduction The marketing environment is changing and presenting new

opportunities and threats to an organization.

The marketing department is responsible for finding the changesthat take place in the market. They can perform this taskbetter because they regularly interact with customers.

The marketing department must develop Marketing InformationSystem that provides them information about needs of thebuyer, preferences, behavior and competition.

A marketing information system is a set of procedures tocollect, analyze and distribute accurate, prompt and appropriateinformation to different levels of marketing decision makers.

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Learning ObjectivesAfter studying this unit, you will be able to

Understand the concept of marketing information system, aswell as its characteristics and benefits.

Outline different components of a marketing informationsystem and classify different types of marketing information

that are being used. Understand role and scope of marketing research in making

marketing decisions.

Define the objectives of a typical marketing research study.

Outline and explain the steps involved in marketing research

process. Understand the importance of marketing research.

Explain the advantages and limitations of the marketingresearch function.

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Characteristics of MISy MIS is a system that consists of people, equipment and

procedures to gather, sort, analyze, evaluate and distributeneeded, timely and accurate information to marketingdecision makers

---- Philip Kotler

y

The characteristics of MIS arey It i s a planned system developed to help in smooth and

continuous flow of information.

y It provides relevant information collected from internal andexternal sources to the company. This information is used as abasis of marketing decision making.

y It provides right information to the right person at the righttime.

y The Marketing Decision Support System (MDSS) links adecision maker to relevant databases and analysis tools,which helps him to know the needs and trends of customerswith the help of statistical analysis.

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Benefits of MIS

The benefits of MIS arey It helps marketing managers to carry out their analysis, planning,

implementation and control responsibilities more effectively.

y It helps to exploit marketing opportunities and enables the company

to develop effective protection against emerging marketing threats.y It provides marketing intelligence to the firm and helps to identify

changing trends very early.

y It helps the firm to change its products and services according to the

needs and tastes of the customers.

y MIS provides high quality marketing information to the decision maker

and hence helps in improving the quality of decision making.

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Types of Marketing InformationAmarketing information system supplies three types of information

y Recurrent information It is the data that MIS supplies periodically at

weekly, monthly, quarterly or annual interval. It includes data such as sales,

market share, sales call reports, inventory levels, receivables and payables, etc.

y

Monitoring inform

ation

It is the data obtained from regular scanning ofcertain sources such as trade journals and other publications. Here, data from

external environment is collected to keep a watch on changes and trends

related to marketing situation.

y Problem related or customized information It is developed in

response to some particular requirement related to a marketing problem or any

particular data requested by a manager. Primary data or secondary data are

collected through survey research to meet a particular need.

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Components of MIS

The components of a marketing information system are

1. Internal records system

2. Marketing intelligence system

3. Marketing research system4. Analytical marketing system

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1. Internal RecordsSystem -Thisincludesinformationon

Ordertopaymentcycle

y It has a system which records the timing and size of orders placed by

consumers, payment cycle followed by consumers and the time taken

to fulfill the orders.

y A proper record system for order to payment cycle management helps

managers in deciding on production and dispatch schedule, inventoryand accounts receivable schedule and logistics and distribution

management schedule.

Salesinformationsystems

y It records everything in the sales department, i.e., from sales callsreports to prospects history to sales territory and quota information

for better sales planning and forecasting function.

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2.Marketing intelligence system

y It is a set of procedures and sources used by managers to get everyday

information about development in the marketing department.

y It provides happenings data whereas the internal records system

provides theresults data.

y Marketing managers collect data from published sources like books,

magazines and journals and also by talking to customers,intermediaries and sales personnel.

3.Marketing research system

y Marketing research provides information to marketing managers when

he/she faces some marketing problems.y In this, marketing research survey is conducted to collect primary

data. The marketing department can itself conduct the survey or may

take the services of an external marketing research agency.

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4.Analytical marketing systems

y It is also known as the Marketing Decision Support System (MDSS).

y It is a collection of data, systems, tools and techniques with hardware

and software support which help an organization to collect and

interpret information from business and environment and use it for

taking marketing action.

y The data collected through the other three systems are stored in adatabase.

y The decision support system helps in collection and use of a wide

variety of data in the company.

y Senior managers can use the database and keep a watch on sales,markets, performance of the sales people and other marketing systems

also.

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Marketing Researchy Marketers must have a good understanding of their own markets to

monitor the changing environment.

y They need information to evaluate their own past performance and toprepare future marketing plans.

y

For this, they require accurate information about their consumers andcompetitors.

y Marketing research helps in collecting, recording and analyzingrelevant data.

y Marketing research is defined as the systematic design, collection,

analysis and reporting of data findings relevant to a specific marketingsituation facing the company.

---- Philip Kotler

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Features of Marketing Researchy It is a systematic process It has to be conducted step by step

and systematically with proper planning and clear objective.

y It should be objective The methods used and the

interpretation should be un biased. The research should not be

done to form an opinion and it should not produce predetermined

results.

y It is multi-disciplinary Marketing research takes its concepts

from other fields like statistics for getting reliable data and from

economics, psychology and sociology to understand the buyersbetter.

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Objectives of Marketing ResearchAccording to the use ofmarketing research, its objectives

are

y To understand why customers buy a product.

y To predict future sales or expected market share.

y To evaluate competitive strengths and strategies.

y To evaluate the effectiveness of marketing action already taken.

y To assess customer satisfaction for companys products and

services.

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Develop the problem and research objectives

Develop the research plan and design

Collect the information

Analyze the information

Present the findings

Marketing Research Process

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Step 1 Define the problem and research objectives

y First it is important to identify the problem correctly because a

problem well - defined is a problem half solved.

y A problem well defined will provide useful and relevant results.

y The research project should have one or more objectives. These

objectives provide the outline about how the research has to be

conducted.

y An error in problem definition may make the entire study wrong and

provide incorrect and error prone results.

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Step II - Develop the research plan and design

y A research plan is an outline within which collection and analysis of data is done.

y Here, decision is taken regarding data sources, research approaches, research

instruments, sampling plan and contact methods.1. Data sources

y The researcher has to decide which data source to use secondary data or primarydata or both.

y Secondary data are data collected for some other purpose or for commercial purpose

of selling.y Primary data are collected for a particular purpose or a particular research project.

y Researchers first see whether the problem can be partially or fully solved usingsecondary data, without collecting primary data.

y Secondary data should be used after checking it for reliability, accuracy and relevanceto situation.

y If secondary data fulfills the above conditions then it is a better option as it is cheaperand immediately available, otherwise primary data has to be collected.

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2. Research approaches

Primary data can be collected using the following approaches:

1.Observational research

Fresh data can be collected by observing thesituation and the people in the situation.

2. Focus group research In this method, a group of 8-12 people are involved in

a group discussion in presence of a moderator to discuss a product, service, a firm,

or any activity. The discussion is observed and recorded on videotape and analyzed

later.

3. Survey research In this method, survey is conducted with the help of a

questionnaire know more about peoples knowledge, beliefs and preferences.

4. Behavioral research In this approach, customers actual behavior during

actual purchases explain their preferences better and are reliable as compared to

responses provided in survey.

5. Experimental research It is the most scientific method of research in which

cause and affect relationships are studied. Experiments are conducted on groups

and different treatments are given to groups. The extraneous variables (external

variables that affect the research process) are controlled and then the responses of

the two groups are observed.

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3. Research instruments

The research instruments are of two types questionnaires and

mechanical devices.

i. Questionnaire It is a set of questions suitably arranged and

presented to the respondent to answer. It is most commonly used

because it is flexible. It should be pre-tested before using it for

actual data collection.ii. Mechanical devices Mechanical devices like galvanometer are

used to measure the interest or emotions generated when the

respondent is watching an advertisement. Eye cameras study the eye

movement of the respondents to find which part of the ad attractedthe attention first and how long they watch a single item. Such data

is more accurate than data collected by human observation.

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4. Sampling plan

Sampling plan means outlining who should be surveyed (sampling unit), how many

should be surveyed (Sample size) and how they should be selected for survey (samplingprocedure).

i. Sampling unit Researchers first decide from whom the information shall be

collected.

ii. Sample size Then it is decided from how many people the information has to

be collected. This is known as the sample size. Large samples provides morereliable result than small samples. The sample size is decided on the basis ofnature

of study and variance in population, level of accuracy desired and money available

for research.

iii. Sampling procedure It is the method of selecting the sample. There are two

methods for selecting the sample

probability sampling and non-probabilitysampling.

y Probability sampling : In this method, each element of the population has an equal chance of being

selected.

y Non-probability sampling: In this method, the respondents are selected on the basis of researchers

judgment or convenience. The commonly used methods ofnon-probability sampling are convenience

sampling,judgment sampling and quota sampling.20


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5. Contact methods

Now the researcher has to decide what methods are to be used to contact the

respondents.The methods available arei. Mail questionnaire It is a good way to contact people who may not give

personal interview. Such questionnaire should be simple and words should be very

clear so that the respondent does not require any help. The response rate is low

and responses come slowly.

ii. Telephone interview It is a quick way of collecting information. The methodis interactive and any doubt can be cleared. It should be short.

iii. Personal interview It is the flexible method which can be used for any kind

of research. It involves face to face interaction, hence researcher can make

personal observation. It is expensive and time consuming. Interviews conducted at

shopping malls are known as mall intercept method.iv. Online interviews Information can be collected through the internet also. A

company can put a questionnaire on its web site and give incentive to people who

answer the questionnaire. This method is very inexpensive and fast. It has limited

reach and the results can be biased.

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Step III Collect the information

y After deciding which research instrument to use, the researcher contacts the

respondents and collects information. The research must maintain quality of data by

making sure that the answers are accurate and unbiased. Data collectors should be

well trained and motivated.

Step IVAnalyze the information

y The researcher collects the data and encodes it. The coded data is tabulated to get

frequency distribution and then it is analyzed. Statistical techniques are used to

obtain important findings of the research. These findings are used for decision

making.

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StepV Present the findings

y Now, the researcher presents the findings of the study to the decision maker or users

of information.y The findings are presented in the form of a report, the format of which is as follows:

General format of a report

1. Introduction An introduction to the general background of the marketing

problem and the firm.

2. Statement of purpose Objectives of study and the hypotheses are stated.

3. Research methodology Method of data collection, tools used, sampling

procedure used, sample size and limitations of the study, if any are stated.

4. Analysis of data Consists of tables or graphs, statistical analysis used and data

interpretation.

5. Findings and conclusions Major findings and conclusions

6. Recommendations Suggestions for action to be taken.

7. Appendix and bibliography.

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Importance of Marketing Researchy With increase in customer orientation, it has become necessary to

collect information on the needs, preferences and opinions of

customers.

y It helps the marketers to make suitable changes in the marketing

mix.

y Marketing research improves the decision making power of the

marketer.

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Advantages of Marketing Research1. It is a scientific approach that helps in designing the problem and

finding solutions with the help of statistical and mathematicaltechniques.

2. It helps in better decision making as they are based on reliableinformation and not on judgment or guess work.

3. It helps to know whether the marketing actions have been effectiveor not and helps to find problem areas.

4. It helps in determining the reputation of the firm and its products.

5. It helps a firm to know the marketing and pricing strategies of its

competitors.6. It helps a firm in making sales forecasts for its products and helps

maintain a balance between demand and supply.

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Limitations of Marketing Research1. Not an exact science Marketing research uses scientific methods but it is not an

exact science. It deals with human behavior and many controllable and uncontrollablefactors.

2. It is not a panacea Marketing research provides accurate information formarketers to use in decision making, but it does not provide solutions.

3. Human tendencies Marketing research is carried out on consumers, dealers,wholesalers, etc. Human beings behave artificially when they are asked for informationfor research.This negatively affects the quality of marketing research data.

4. Inexperienced research staff Research requires well trained and experiencedpeople otherwise the quality of data is poor.

5. Involves high cost Research requires heavy expenditure, hence in India it is

considered a luxury or a wasteful activity.6. Limitations of tools and techniques The validity of marketing research is

limited due to limitations of tools and techniques involved.

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Unit 4 Understanding the Marketing Information System

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