Chapter 17Marketing Information SystemsMarketing Information Systems

MANAGEMENT INFORMATION SYSTEMS 8/ERaymond McLeod, Jr. and George Schell

Copyright 2001 Prentice-Hall, Inc.17-1

IntroductionIntroduction

Marketing was the first functional area to exhibit Marketing was the first functional area to exhibit an interest in MISan interest in MIS

The marketing information system has three The marketing information system has three subsystems; the accounting information system subsystems; the accounting information system (AIS), marketing research, and marketing (AIS), marketing research, and marketing intelligenceintelligence

Functional information systems: the conceptual Functional information systems: the conceptual systems should be "mirror images" of the systems should be "mirror images" of the physical systemsphysical systems

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Functional information systemsFunctional information systems

Marketinginformation

system

Manufacturinginformation

system

Financeinformation

system

Human resourceinformation

system

Marketingfunction

Manufacturingfunction

Financefunction

Humanresourcesfunction

Physical system of the firmPhysical system of the firm

Functional Information Systems Functional Information Systems RepresentRepresent

Functional Physical SystemsFunctional Physical SystemsInformation

resourceinformation

system

Information Servicesfunction

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Marketing PrinciplesMarketing Principles

Marketing mixMarketing mix– ProductProduct– PromotionPromotion– PlacePlace– PricePrice

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The Marketing Information The Marketing Information System (MKIS)System (MKIS)

Kotler's marketing nerve centerKotler's marketing nerve center 3 information flows3 information flows

– InternalInternal» Gathered in firmGathered in firm

– Intelligence Intelligence » From environmentFrom environment

– Communications Communications » To environmentTo environment

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FirmEnviron-ment

Marketing intelligence

Marketing communications

Internalmarketinginformation

Kotler’s Information FlowsKotler’s Information Flows

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Marketing Information Marketing Information System (MKIS) DefinitionSystem (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.

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An MKIS ModelAn MKIS Model OutputOutput

– ProductProduct

– PlacePlace

– PromotionPromotion

– PricePrice

– Integrated mixIntegrated mix

DatabaseDatabase InputInput

– AISAIS

– Marketing researchMarketing research

– Marketing intelligenceMarketing intelligence

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Input subsystems

Output subsystems

DD

AA

TT

AA

BB

AA

SS

EE

Accounting information

system

Marketing research

subsystem

Marketing intelligence subsystem

Internal sources

Environmental sources

Product subsystem

Place subsystem

Promotion subsystem

Price subsystem

Integrated-mix

subsystem

Users

DataData InformationInformationMKIS ModelMKIS Model

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Accounting Information Accounting Information SystemSystem

Sales order data is input.Sales order data is input. AIS provides data for AIS provides data for

– Periodic reportsPeriodic reports– Special reportsSpecial reports– Mathematical models and knowledge-based Mathematical models and knowledge-based

modelsmodels

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Marketing Research Marketing Research SubsystemSubsystem

Managers use marketing research to gather Managers use marketing research to gather informationinformation– Gathered from customers and prospectsGathered from customers and prospects– Purchased or procured from other organizationsPurchased or procured from other organizations

Processed using marketing research Processed using marketing research subsystemsubsystem

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Primary and Secondary DataPrimary and Secondary Data

Used by marketing research subsystem Used by marketing research subsystem Primary data are collected by the firmPrimary data are collected by the firm Examples of primary dataExamples of primary data

– SurveySurvey– In-depth interviewIn-depth interview– ObservationObservation– Controlled experimentControlled experiment

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Primary and Secondary Primary and Secondary Data Data [cont.][cont.]

Secondary dataSecondary data– Mailing listsMailing lists– Retail sales statisticsRetail sales statistics– Video retrieval systemsVideo retrieval systems

Some secondary must be bought and some Some secondary must be bought and some is freeis free

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Marketing Research SoftwareMarketing Research Software

Graphics packages (print maps)Graphics packages (print maps) Makes market research a reality for all Makes market research a reality for all

firmsfirms Statistical analysisStatistical analysis Expertise to interpret software outputs is Expertise to interpret software outputs is

the key to successful use of these toolsthe key to successful use of these tools

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Marketing Intelligence Marketing Intelligence SubsystemSubsystem

Ethical activities aimed at gathering Ethical activities aimed at gathering information about competitorsinformation about competitors

Not to be confused with industrial Not to be confused with industrial espionageespionage

Each functional information system has an Each functional information system has an intelligence responsibilityintelligence responsibility

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Product SubsystemProduct Subsystem Product life cycle supported through:Product life cycle supported through:

1) Introduction1) Introduction

2) Growth2) Growth

3) Maturity3) Maturity

4) Decline4) Decline Information answers 3 key questions:Information answers 3 key questions:

1) Introduce?1) Introduce?

2) Change strategy?2) Change strategy?

3) Delete?3) Delete?

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SalesSalesVolumeVolume

STAGES

Introduction Growth Maturity Decline

Should theproduct beintroduced

Should the product strategy be changed

Should theproduct be

deleted

The Product Life Cycle and Related The Product Life Cycle and Related DecisionsDecisions

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New Product Evaluation New Product Evaluation ModelModel

Another part of the product subsystemAnother part of the product subsystem New product committeeNew product committee Explicitly considers production as well as Explicitly considers production as well as

marketingmarketing Lists decision criteria and their weightLists decision criteria and their weight

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Place SubsystemPlace Subsystem

Channel of distribution may be short or longChannel of distribution may be short or long Material, money, and information flow through Material, money, and information flow through

the distribution channelthe distribution channel– Resource flowsResource flows

– FeedbackFeedback» Flows in direction opposite to the material flowFlows in direction opposite to the material flow

– Feedforward informationFeedforward information» Flow of information to customerFlow of information to customer

– EDIEDI

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Material, Money, and Material, Money, and Information FlowInformation Flow

Two-way information flow

SupplierSupplierManu-Manu-

facturerfacturerWhole-Whole-salersaler RetailerRetailer ConsumerConsumerMaterial MaterialMaterialMaterial

MoneyMoney MoneyMoneyMoneyMoneyMoneyMoney

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Promotion Subsystem Promotion Subsystem Includes:Includes:

(1) advertising(1) advertising

(2) personal selling(2) personal selling

(3) sales promotion(3) sales promotion

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Difficult Area to Difficult Area to ComputerizeComputerize

Successful examplesSuccessful examples1. Sales promotion --OCR scanning of barcodes 1. Sales promotion --OCR scanning of barcodes

on couponson coupons

2. Personal selling --laptops2. Personal selling --laptopsA. Order entryA. Order entry

B. Customer call reportsB. Customer call reports

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Pricing Subsystem Pricing Subsystem Two Basic ApproachesTwo Basic Approaches

1. Cost based (AIS provides the basis)1. Cost based (AIS provides the basis)

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

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Integrated-Mix SubsystemIntegrated-Mix Subsystem

BRANDAID ModelBRANDAID Model– Solid arrows: influencesSolid arrows: influences– Dashed arrows: responsesDashed arrows: responses

Environmental and retailer influence on the Environmental and retailer influence on the consumerconsumer– Individual influencesIndividual influences– Combined influencesCombined influences

Unexpected influencesUnexpected influences

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ProductProduct PricePrice AdvertisingAdvertising PromotionPromotion Price-off coupons Price-off coupons

PremiumsPremiums SamplingsSamplings Package:Package: Graphics & Graphics &

functionfunction AssortmentAssortment

SalesSales

AvailabilityAvailability Price Price PromotionPromotion AdvertisingAdvertising

ProductProduct PricePrice AdvertisingAdvertising PromotionPromotion Price-off couponsPrice-off coupons

PremiumsPremiums SamplingSampling Package:Package: Graphics &Graphics &

functionfunction Assortment Assortment

SeasonalSeasonaltrendtrend

ManufacturerManufacturer

RetailerRetailer

CompetitorCompetitor EnvironmentEnvironment

ConsumerConsumer

BRANDAID BRANDAID

Sales Sales DistributionDistribution

PricePriceTrade promotionTrade promotion

SalespersonsSalespersonsPackage assortmentPackage assortment

PricePriceTrade promotionTrade promotion

SalespersonsSalespersonsPackage assortmentPackage assortment

Sales Sales DistributionDistribution

17-25

-20

-15

-10

-5

0

5

10

15

20

25

30

Actual Model

0 12 24

Months

Months

SSAALLEESS

Influence of Four Variables, Taken Influence of Four Variables, Taken TogetherTogether

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SalesSales

MonthsMonths

New PackageNew Package

Model

Actual

A Model Cannot Cope with Unexpected A Model Cannot Cope with Unexpected EventsEvents

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The MKIS in Fortune 500 The MKIS in Fortune 500 FirmsFirms

Preprocessed information 71% of 1990 Preprocessed information 71% of 1990 firmsfirms

Mathematical modelingMathematical modeling– Generally downGenerally down– Reason is unknownReason is unknown– Except for production deletion and advertising Except for production deletion and advertising

media selectionmedia selection Model use is becoming more balancedModel use is becoming more balanced

Studies conducted by Li, McLeod, and Rogers17-28

The MKIS in Fortune The MKIS in Fortune 500 Firms 500 Firms [cont.][cont.]

Support for management levelsSupport for management levels– ModelsModels– OverallOverall

Support for management functionsSupport for management functions Support for the marketing mixSupport for the marketing mix

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75 75

6156

51

40

92

54

77

64

30

14

57

48

41

0

20

40

60

80

100

Retrieving data Storing data Processing data

Perc

en

t o

f co

mp

ute

r u

sers

1980

1990

N.A. N.A. N.A.

Purposes of Computer UsagePurposes of Computer Usage

19801980

19901990

Retrieving DataRetrieving Data Storing DataStoring Data Processing DataProcessing Data

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1980 1990

Strategic planninglevel .17

Strategic planninglevel .30

Management control

level.70

Management control

level.54

Operational controllevel .13

Operational controllevel .16

Note: The percentages are based on the number of respondentsranking the particular management levels first.

Model Use Is Becoming More BalancedModel Use Is Becoming More Balanced

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Overall Support from the Marketing Overall Support from the Marketing Information System Is Becoming More Information System Is Becoming More

BalancedBalanced

Strategic planninglevel.25

Management controllevel.57

Operational controllevel .17

Strategic planninglevel.28

Management controllevel.40

Operational Controllevel .31

Note: The percentages are based on the number of respondents ranking the particular management levels first.

1980 1990

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The 1990 Managers Placed More Emphasis The 1990 Managers Placed More Emphasis on Planning and Less on Directing Than on Planning and Less on Directing Than

Did Did Their 1980 CounterpartsTheir 1980 Counterparts

19801980 19901990

Planning .37

Organizing .03

Directing .25

Controlling .34

Planning .51

Organizing .06

Directing .07

Controlling .36

Staffing .01

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Note: The percentages are based on the number of Note: The percentages are based on the number of respondents ranking the particular mix functions first.respondents ranking the particular mix functions first.

Marketing Managers Are Using the Computer Marketing Managers Are Using the Computer MoreMore

for Making the Difficult Price and Promotion for Making the Difficult Price and Promotion DecisionsDecisions

19801980 19901990

Product .49

Price .27

Place .16

Promotion .08

Product .32

Price .39

Place .15

Promotion .13

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How Managers Use the MKISHow Managers Use the MKIS

IntegratedProduct Place Promotion Price Mix

VP of marketing X X X X XOther executives X X X X XBrand managers X X X X XSales manager X XAdvertising manager X XManager mktg resrch X X X X XManager of product planning XManager of physical distribution XOther managers X X X X X

Subsystem

Subsystem

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MKIS Use by ManagersMKIS Use by Managers

Industry giants are using the computer as a Industry giants are using the computer as a marketing toolmarketing tool– To learn about consumer needs and wantsTo learn about consumer needs and wants– To formulate the marketing mixTo formulate the marketing mix– To follow-up on how well mix is received by To follow-up on how well mix is received by

the consumersthe consumers MKIS information output used across the MKIS information output used across the

firmfirm

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SummarySummary

MKIS MKIS – Input subsystemsInput subsystems

» AIS, Marketing Research, Marketing IntelligenceAIS, Marketing Research, Marketing Intelligence

– Output subsystemsOutput subsystems» Product, Place, Promotion, Price, Integrated MixProduct, Place, Promotion, Price, Integrated Mix

Operational MKISs consider management Operational MKISs consider management and marketing conceptsand marketing concepts– Planning is the keyPlanning is the key

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