Market Information System (MIS) | Components of Market Information System
- Marketing Information System (MIS)
- Characteristics/Features of Marketing Information System (MIS)
- Importance of Marketing Information System (MIS)
- Components of Marketing Information System
An MIS has four components:
a) an internal records system, which includes customer-related records, sales-related records, and other reports.
b) a marketing intelligence system, a set of procedures and sources used by managers to obtain everyday information about pertinent developments in the marketing environment.
c) a marketing research system that allows for the systematic design, collecting, analysis, and reporting of data and findings relevant to a specific marketing situation; and
d) a marketing decision support system that helps managers interpret relevant information and turn it into a basis for marketing action. They are explained below:
Fig.:- Components of Marketing Information System
1. Internal record system
The internal record system is an important component of MkIS, which provides information that is related to the organization internally. Inside records help marketing managers to gain faster access to reliable information. Marketing managers get lots of information from the internal records of the company. The organization regularly receives reports on sales, inventory, customer orders, cash flows, accounts receivable, payable and complaints, etc. which contains valuable market information on the problems and possible solutions. The major records used by the MkIS are as follow:
a. Customer-related records:
It includes customers’ orders, invoices, and customer complaints. The customers’ orders provide information on the demand for the organization’s product in the market and the sales potential of a particular brand in a specific market segment. Meanwhile, customers’ complaint contains information on the problem and possible solution relating to product quality, packaging, distribution, price, and promotion. Similarly, invoices provide valuable information like the strength and weaknesses of sale territories, identify the products giving profit and losses, and identify the customer groups who order in large quantities.
b. Sales-related records:
Report submitted by salesforce provides information about the performance of brands, sales trends, problems, and prospects of each product item sold by the organization in every market segment. The effect of modification in the marketing mix can be evaluated based on the sales report.
c. Other reports:
Internal records consist of reports such as financial statements, audit reports, annual reports, and inventory level records. They are important sources of information. This report shows the condition of the organization in the market. It provides the detailed strength and weaknesses of the organization.
2. Marketing intelligence system
A marketing intelligence system is also known as environmental scanning. It is a set of procedures and sources used by marketing decision-makers to obtain day-to-day information about competitors, developments in the marketplace, and changing marketing environment. It generates information on day-to-day market activities that occur inside and outside the organization. A marketing intelligence system is established with the motive to track the competitors’ actions. It also predicts opportunities and threats in the market to improve strategic decision-making.
A marketing intelligence system is executed through formal as well as informal methods.
a. Formal environment scanning involves the following activities:
- Training and motivating the sales force to spot and report back any new development in the marketplace.
- Motivating distributors/dealers, wholesalers, retailers, and other marketing intermediaries to pass on vital market information to the company.
- Purchasing market information from external agencies.
b. Internal Marketing Information Center, which secretly places its staff in competitors’ organizations to collect vital information about competitors’ policies, strategies, and actions.
- Interacting with qualified people and employees from other organizations via job openings and interviews.
c. Informal environment scanning involves the following activities:
- Interaction with customers, suppliers, channel members, and other stakeholders on pros and cons, their preferences, and attitude towards the product.
- Information from newspapers, magazines, and trade journals about changes in the environment.
- Informal talk with managers and personnel of the organization and several departments.
3. Marketing research system
A marketing research system is a systematic design, collection analysis, and reporting of information to a specific marketing situation faced by an organization. Market research is conducted to solve specific marketing problems of the company. It collects data ab0Ut the problem. This data is tabulated, analyzed and conclusions are drawn, Then the recommendations are given for solving the problem.
It is a mechanism established to conduct a systematic investigation to solve special market-related problems. It is used in every phase of the company’s market program. However, this information is specific. It can be used only for a particular purpose. It is basically problem-oriented and based on systematic and careful planning and implementation.
The purpose of marketing research:
- To provide reliable and sufficient information that helps the business executive to take appropriate action,
- To provide important customer feedback to the firm and to understand the dynamics of the marketplace.
4. Decision support system
A decision support system is a procedure that allows a manager to interact with data and methods of analysis to gather, analyze and interpret information. This system does not collect information. This system just stores analyzes and synthesizes the collected and stored information. This system designs a decision model by applying statistical, mathematical, and managerial tools to the information gathered by the internal record system, marketing intelligence system, and market research system. It is also known as an analytical system since it analyzes the problems. This is the tool that helps marketing managers to analyze data and to make better marketing decisions. There are many software programs, which help the marketing manager with segmentation, price-fixing, advertising budgets, etc.
This system has three components:
a. Data Bank:
It stores and secures the data and information collected by internal record systems, marketing intelligence systems, and market research systems by using several tools such as record management, filing, modern technological tools, etc. The data is stored in a systematic manner that facilitates easy and smooth access to the data.
b. Method banks (statistical bank:
It analyzes the data stored in the data bank. It consists of various statistical analysis tools that help to classify and simplify the raw data for effective analysis. The general tools used in the decision support system are averages, percentages, measures of dispersion, cross-tabulations, regression, factor analysis, cluster analysis, conjoint analysis, etc.
c. Model Bank:
Model banks provide the pre-visual of any problems. It helps to understand, predict and control the problems. The model bank consists of models that facilitate the analysis and synthesis of data. Models define the interrelationship between different variables that help the decision-makers to understand, predict, and control the marketing problems and provide appropriate solutions.
Statistical Tools
1. Multiple regression:
A statistical technique for estimating a ‘best fitting” equation showing how the value of a dependent variable varies with changing values in several independent variables. Example: A company can estimate how unit sales are influenced by changes in the level of company advertising expenditures, sales force size, and price.
2, Discriminant analysis:
A statistical technique for classifying an object or person into two or more categories. Example: A large retail chain store can determine the variables that discriminate between successful and unsuccessful store locations.
3. Factor analysis:
A statistical technique is used to determine the few underlying dimensions Of a larger set of infer-correlated variables. Example: A broadcast network can reduce a large set of TV programs down to a small set of basic program types.
4. Cluster analysis:
A technique Of statistics uses for separating objects into the specified number of mutually exclusive groups such that the groups are relatively homogeneous. Example: A marketing researcher might want to classify a set of cities into four distinct groups.
5. Conjoint analysis:
A technique of statistics whereby respondents’ ranked preferences for different offers is decomposed to determine the person’s inferred utility function for each attribute and the relative importance of each attribute. For example, an airline can determine the total utility delivered by different combinations of passenger services.
6. Multidimensional scaling:
A variety of techniques for producing perceptual maps of competitive products or brands. Objects are represented as points in a multidimensional space of attributes where their distance from one another is a measure of dissimilarity. Example: A computer manufacturer wants to see where its brand is positioned among competitive brands.
Models
1. Markov-process model:
This model shows the probability of moving from a current state to any future state. Example: A branded packaged-goods manufacturer can determine the period-to-period switching and staying rates for their brand and, if the probabilities are stable, the brand’s ultimate brand share.
2. Queuing model:
This model shows the waiting times and queue lengths that can be expected in any system, given the arrival and service times and the number of service channels. Example: A supermarket can use the model to predict queue lengths at different times of the day given the number of service channels and service speed.
3. New-product pretest model:
This model involves estimating functional relations between buyer states of awareness, trial, and repurchase based on consumer preferences and actions in a pretest situation of the marketing offer and campaign. Among the well-known models are ASSESSOR, COMP, DEMON, NEWS, and PRINTER.
4. Sales-response model:
This is a set of models that estimate functional relations between one or more marketing variables- such as sales force size, advertising expenditure, sales promotion expenditure, and so forth – and the resulting demand level.
Optimization Routines
1. Differential calculus:
This technique allows finding the maximum or minimum value along with a well-behaved function.
2. Mathematical programming:
This technique allows finding the vales that would optimize some objective function that is subject to a set of constraints.
3. Statistical decision theory:
This technique allows determining the course of action that produces the maximum expected value.
4. Game theory:
This technique allows determining the course of action that will minimize the decision maker’s maximum loss in the face of the uncertain behavior of one or more competitors.
5. Heuristics:
This involves using a set of rules of thumb that shorten the time or work required to find a reasonably good solution in a complex system.