Marketing Information Systems (MIS)

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Setting up a business does not end with producing and distributing goods/services to their customers but also involves generating continuous demand for their goods and/or services. An existing or a new business requires a marketing system that ensures continuous and new demand for their goods/services in existing and different markets thus leading the business to sustain in the long-run. Accordingly, a business needs an organized system that allows continuous flow of information about their goods/services. This system can enable a business to develop certain strategies and make decisions for assuring continuity in demand and expansion of their business in the long-run. This system is referred to as the Marketing Intelligence System (MIS), which consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely, accurate information to marketing decision makers[1].

The System?

Any business is exposed to data that may be relevant or irrelevant. This data is related to the business environment in which a business operates and comprises different set of conditions and circumstances that can be economic factors, social factors, political factors, legal factors, technological factors, demographic factors, natural factors, competition, market channels, etc. A business needs to select only relevant information from the above mentioned factors that could directly and indirectly affect the business in the long-run. This information can be further utilized for certain business decisions. An MIS assists a business to determine specific information from the business environment that enables business decisions, which could be strategic decisions, control decisions and operational decisions. Strategic decisions of a business are related to the overall environment in which a business operates and control decisions are related to necessary decisions pertaining to specific managerial aspects of a business whereas operational decisions are related to planning production and sales of a business.

Components of MIS

Components of MIS

MIS can be developed from three basic components – (A) Internal Company Records; (B) Marketing Intelligence Activities and; (C) Marketing Research – and these are explained as follows:

(A) Internal Company Records:

Internal company records are internal reports derived mainly from the accounting system of a business. These broadly include information related to a business’ current and potential clients, sales proceeds and relevant databases maintained by a business as summarized below:

Order-to-payment Cycle

Orders for a business’ products/services are placed to a business through either sales representatives, dealers or other customers (other customers lead new customers to a business’ product/service through word of mouth). The process involved from placing orders to actual translation into a payment transaction should be reported in the internal records in a computerized system. These records are mostly studied to understand factors that influence customers’ willingness to make formal purchases of goods/services from the business. Some of these factors include timely delivery of goods/services, prompt invoices prepared by billing departments, efficient processes developed for placing orders easily and so on. The factors can assist marketing managers to realize an effective and faster approach that translates order placing into complete purchases through payment transactions.

Sales Information Systems

Marketing managers need timely and accurate reports on current sales of a business’ goods and services from internal records. This information enables managers to evaluate the trends in sales across different markets and customers. Based on this information, marketing managers can also forecast future sales growth across different markets and customers.

Databases

Businesses should organize their information into databases such as customers’ databases, products databases, salesperson databases, etc. and then combine the data with different databases. For example, customer databases will contain customer names, address, past transactions, demographics, etc. The database will assist in understanding the characteristics of customers and factors that influence past, current and future sales.

(B) Marketing Intelligence

Marketing intelligence is a set of procedures and sources marketing managers can use to obtain everyday information about the developments in the marketing environment. Marketing managers collect marketing intelligence by

  • Reading books, newspapers and trade publications
  • Talking to customers, suppliers and distributors
  • Meeting with other company managers
  • Obtaining socio-economic and financial data from government databases like Census India 2001 and 2011, Central Statistical Organization (CSO), etc.
  • Purchasing information on consumers of various products/services from independent research firms
  • Obtaining customer feedback

The intelligence gathered by the managers can be utilized for the following:

  1. To train and motivate and sales representatives to gather additional information that they may have missed while selling a business’ goods/services. For example, sales representatives of Hindustan Unilever’s (HUL) “Fair & Lovely” creams meant for fairness among women found out that men also purchased these creams to look fair (This was before the launch of Emami’s “Fair & Handsome”). This implied that HUL’s product was multipurpose and served men as well who also looked into products that enhanced their looks thus requiring the need for producing beauty products for men.
  2. To motivate distributors and retailers and other intermediaries to pass along intelligence. For example, Liv52 medicinal syrup meant to improve immunity and increase appetite among children was introduced in Indian market by training chemists owning chemist shops to market the product across the country. Chemists had more reach towards masses for distributing and promoting the products to the masses.
  3. To set up a customer advisory panel. For example, colleges and educational institutes in India seek good testimonials about quality of education and 100% placement from alumni or past students to attract new or prospective students to their institutes

(C) Marketing Research

Steps for Marketing Research

To validate and confirm information sought from internal records and marketing intelligence businesses should also consider conducting a market research on their goods/services. Marketing research is a systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation that a business faces. Accordingly, the process involved in conducting marketing research is as follows:

  1. Define a problem – Marketing managers should define the problem or issues faced by the business for which the research needs to be conducted. For example, “find out whether business ABC can sell almond cookies at Rs 4 in rural areas”. The problem was identified because business ABC produces various food products for urban areas and has a strong but competitive presence. Competitors of business ABC have a strong presence in urban as well as rural areas and based on their preliminary intelligence reports business ABC believes that the basic requirement for entry in rural markets is to reduce prices by Rs. 1 and sell their cookies at Rs. 4 while the competition sells them at Rs. 5. The problem statement for business ABC also leads to supporting research questions such as who are the prospective consumers of almond cookies of business ABC’s competitors in rural areas? Which rural areas have the competition’s presence? What are their distribution channels? Whether there are other flavors of cookies sold in rural areas? How has the response to competitors’ cookies in rural areas? Based on these questions, the marketing management proceeds to the next step.
  2. Develop the research plan – Marketing managers prepares a research plan based on the marketing intelligence reports which are also known a secondary data. Secondary data is data that already exists however it is incomplete because it does not provide specific information with regards to price /product preferences of current / prospective consumers in a specific rural region. Marketing managers can also consider primary data, which is freshly gathered information directly from the consumers from a research project. Approaches to collect primary data can include – focus groups, surveys, observational and experimental data. The market research team monitors and questions an individual or groups of individuals in different locations and regions through the above mentioned approaches. The team prepares questionnaires or set of questions to ask the individuals considered for collecting primary data. These questionnaires can have questions for which answers can be descriptive or can have multiple choices from which the select individuals choose answers. The number of individuals considered for the research project is identified by statistical method called sampling that selects the number and groups of individuals to be considered for collecting primary data. Once the marketing team has selected the approach, questionnaires and sampling plan, they proceed to the following step
  3. Collect the information – Information is collected by a business directly by employing their human resources in market research (this is a specialized qualification) to go on field and collect primary data or employ a market research agency like IMRB or AC Nielsen who have past experiences in conducting surveys and focus groups in urban and rural areas. Businesses incur costs on conducting primary research that include costs of human resource, print outs of questionnaires, travel and food costs
  4. Analyses of information – Following collection of data, marketing managers utilize statistical and analytical methods to analyze and determine the significance of data. For example, determining the average number of consumers preferring almond cookies at Rs 4 in rural area X is more than the average number of consumers preferring almond cookies at Rs 5 in rural areas Y.
  5. Presenting the findings – The information analyzed using statistical analysis is presented to the marketing team and business management to make relevant marketing decisions
  6. Decision making – Based on the findings of the marketing team, collective feedback from other departments is taken to make relevant changes for marketing the goods/services in a specific market. For example, if business ABC realizes the importance of selling almond cookies at Rs 4 then they could identify certain aspects in the production department where production costs could be reduced or suppliers’ costs could be reduced or build strong networks across direct or indirect stakeholders without affecting the quality and profit margins of the business. Thus, based on marketing research projects, business can undertake relevant strategic, control or operational decisions for marketing their products /services as studied in the previously. Decision making would require collective information and analyses of internal records, marketing intelligence reports and market research

Characteristics of MIS

  1. Continuous process – MIS is a system that requires a continuous flow of information. The internal records and marketing intelligences are continuously updated that provides updated information on the sales and performance of product/service in the representative industry and sector. Marketing research is mostly not conducted on regular basis (except FMCG companies like HUL and ITC for whom it is a requirement) though the findings of the marketing research are regularly monitored based on information in the internal records and marketing intelligence
  2. Centralized system – MIS is a centralized system that entails marketing information stored and maintained from different components of MIS. This information should be readily accessible to all departments within a business
  3. Modern technology – MIS requires and utilizes computers and Internet services that enables continuous flow of information
  4. Efficient operations – The use of technological equipment and services leads to speed and accuracy in information that flows through the MIS
  5. Collective set-up – MIS requires cooperation from various departments to allow easy and accurate flow of information. For example, MIS requires accounting information for their internal records, production and sales departments for marketing intelligence, etc
  6. Feedback provider – MIS can utilize its centralized system to also provide feedback on the performance of the product/service and relevant departments that contributed to the overall performance of the company
  7. Economical – The expenditure on MIS is generally minimal because it is not directly productive. The costs of maintaining an MIS should feasible for the business but not at the cost of quality and reliability of information
  8. Future-oriented – MIS should be future-oriented that is aligned to the main goals and objectives of the business’ management. MIS should aim at forecasting the future performance of a business’ product/service based on the past and current information.


[1] Marketing Management by Philip Kotler and Kevin Lane Keller