Chapter 18

Marketing Information Systems

 Introduction
u Marketing was the first functional area to exhibit
an interest in MIS
u The model structure consists of input subsystem
that gathers data from inside the firm and from its
environment, a database where the data is kept,
and the output subsystem that transforms the data
into information.
u The marketing information system has three
subsystems; the accounting information system,
marketing research, and marketing intelligence
 Functional Information Systems Represent
Functional Physical Systems
Functional information systems
Information
Marketing Manufacturing Finance Human resource resource
information information information information information
system system system system system

Marketing Manufacturing Finance Human Information

function function function resources Services
function function

Physical system of the firm

The Marketing Information
System (MKIS)
u Kotler's marketing nerve center to describe a new
unit within marketing to gather and process
marketing information.
u 3 information flows
– Internal: Information that is gathered within the firm
– Intelligence: Information that flows into the firm from
the environment
– Communications (to environment): Information that
flows from the firm outward to the environment.
 Kotler’s Information Flows

Marketing intelligence

Internal Environ-
Firm
marketing ment
information
Marketing communications
Marketing Information System
(MKIS) Definition

A computer-based system that works in

conjunction with other functional
information systems to support the firm's
management in solving problems that relate
to marketing the firm's products.
 An MKIS Model
u Output Subsystems
– Product: Provides information about the firm’s products.
– Place: Provides information about the firm’s distribution network
– Promotion: Provides information about the firm’s advertising and
personal selling activities.
– Price: Helps the manager’s making pricing decision
– Integrated mix: Fifth subsystem, which enables the manager to
develop strategies that considers the combined effects of the
ingredients. Example is sales forecasts
» Each of these subsystems consists of programs that enable
manager to obtain information in the form of periodic and
special reports.
 An MKIS Model
u Database: The data that is used by the
output subsystems come from the database.
Some of the data is unique to the marketing
function, but much is shared with other
functional areas.
 An MKIS Model
u Input Subsystems
– AIS: Gathers data describing the firm’s marketing
transaction.
– marketing research: Conducts special studies of
marketing operations.
– marketing intelligence: Gathers information from the
firm’s environment that has a bearing on marketing
operations.
Marketing Information System Model Data Information

Input Output subsystems

subsystems
Product
Accounting D subsystem
information
system A Place
subsystem
Internal sources T

Marketing A Promotion
research subsystem Users
subsystem B
A Price
Environmental sources
subsystem
Marketing
S
intelligence
subsystem
E Integrated-
mix
subsystem
Accounting Information System

u Marketing plays a role in the firm’s AIS by

providing sales order data which is a the input.
u AIS provides data for
– Periodic reports: An example of how marketing
information can be provided by the AIS is sales
analysis. Sales analysis is the study of the firm’s sales
activities in terms of which products are being sold,
which customers are buying the products, which sales
rep are selling them.
Accounting Information System

– Special reports: The vast majority of data that is

used to respond manager’s database queries
comes from data provided by AIS.
– Mathematical models and knowledge-based
models: Also provided by AIS like how firm’s
executives could use a pricing model to gauge
the effects of price changes on profit.
Marketing Research Subsystem
u Gathered from customers and prospects
 Primary versus Secondary Data
u Primary data are collected by the firm
u Examples of primary data
– Survey: involves asking a number of people the same
questions by personal interview, telephone, or mail.
Number of respondents may be very small or quite
large.
– In-depth interview: When questions are asked of a small
number of people.
– Observation: Either watching a certain behavior or
looking for evidence.
– Controlled experiment: College students often serve as
subjects in experiments designed to measure the effect
of a particular treatment.
Primary versus Secondary Data
(continued)

u Secondary data
– Mailing lists
– Retail sales statistics
u Some secondary must be bought and some
is free
 Marketing Research Software
u Large number and variety of marketing research
software packages available.
u Graphics packages: produce graphics of the
research findings which includes color maps to
display research data that relates to trade area
u CATI (computer-aided telephone interviewing)
where the computer displays the next question to
ask
u Statistical analysis
u The key is the expertise that is used to design
research projects and interpret the findings.
Marketing Intelligence Subsystem

u Marketing intelligence subsystem gathers

competitor data so it involves ethical
activities aimed at gathering information
about competitors
 Product Subsystem
u Product life cycle traces the sales of a
product from its introduction to its
withdrawal from the market
u Includes introduction, growth, maturity, and
decline
u Information answers 3 key questions:
1.Introduce?
2.Change strategy?
3.Delete?
 Product Subsystem
u Information answers 3 key questions:
1.Introduce?
2.Change strategy?
3.Delete?
u Whether to develop and market the product?
u Various strategies must be considered to keep sales
healthy.
u During the decline when product deletion is an alternative.
u A number of techniques have been developed to provide
the manager with the information needed for making
product oriented decisions.
– Following is the technique discussed to help managers whether to
introduce a product.
 New Product Evaluation Model

u New product committee: performs a

screening function by using a new product
evaluation model to compute scores for new
product candidates.
u Explicitly considers production as well as
marketing
u Lists decision criteria and their weight
 Place Subsystem
u Channel of distribution may be short or long
u Apart from product, suppliers, manufacturers,
wholesalers, retailers, consumers, Material,
money, and information flow through the
distribution channel
– Information that flows in the direction opposite to the
material flow is called feedback information.
– Feed-forward information: Flow of information
towards the customer including can include safety tips,
instructions for use etc.
u Channel system that permits information to flow
freely among many firms
 Place Subsystem
u Computer based information flow:
u Channel system that permits information to flow
freely among many firms provides an edge over
the competitors.
u EDI is excellent for achieving competitive
advantage.
Material, Money, and Information Flow

Money Money Money Money

Manu- Whole-
Supplier Material facturer Material saler Material Retailer Material Consumer

Two-way information flow

 Promotion Subsystem Includes:
Sales persons communication:
u Query the database to answer questions that
consumers asks about products, availability, price
shipping costs etc.
u Enter sales order data into the order entry system.
u Submit call reports that summarize each sales call
– The system can provide salesperson with
» Information about new prospects
» Information about existing costumers such as historical
patterns of previous purchases
» Information about the most profitable products to sell (with
more commissions rates, bonuses etc.)
 Pricing Subsystem
Two Basic Approaches

1. Cost based (AIS provides the basis):

u When the firm has a good AIS, the availability of
accurate cost data makes it an easy task for the
pricing subsystem to support cost based pricing.
 Pricing Subsystem
Two Basic Approaches

2. Demand-based (use what-if model)

u The key is to correctly estimating demand.
u Computer support can come in the form of a
mathematical model.
– This model enables the manager to play the what-if
games in locating the price level that maximizes profit.
 Integrated Mix Subsystems
u Supports the manager as the ingredients of the
marketing mix are combined to form a particular
strategy. This goal is accomplished by projecting
the possible outcomes of various mixes.