Components of Marketing Information System
A Marketing Information System is a system in which marketing data is formally gathered from both the internal and external sources, stored, analyzed and distributed to managers in accordance with their informational needs on a regular basis for taking marketing decisions.
Marketing Information is made of subsystems which are called the components. According to Philip Kotler, a market information system consists of four interrelated and interdependent components- Internal Reports (Records) System, Marketing Research System, Marketing Intelligence System, and Marketing Decision Support System (MDSS).
1. Internal Records System:
Internal Records System is an easily accessible source of information which contains all the records of marketing information within the organization. This system is related with collecting, analyzing and disseminating the required information from the various records of the company to the managers for their ready use.
The main sources include the sales and purchase records, the pending orders, the delivery schedule, the record of pending complaints, the debtors’ list, the inventory levels, marketing staff costs and other reports the company has.
The company maintains Customer Database where all information about the customers viz: names, addresses, contact numbers, history of purchase and financial condition are recorded. It also maintains the Product Database where the product attributes, variants, model numbers, product properties chart and and product prices are recorded. Data from such data banks can be retrieved anytime, processed by the statistical executives using software and other techniques and converted into meaningful reports.
2. Marketing Intelligence System
A Marketing Intelligence System supplies information from outside the company. It deals with the external environment like changing market scenario, developments at the competitors’ end, competitors’ strategies, changing customer tastes and trends, change in the government rules and regulations and the resulting effects on the company or the industry etc.
Marketing intelligence system consists of various methods.
Managers can get information through newspapers, journals, trade bulletins and other publications, or through TV, radio, internet or by talking to customers, distributors, dealers and other relevant parties or by speaking to other managers and employees of their company as well as of other companies, maintaining contacts with other officials and agencies like GST, buying useful information from professional sources or assigning marketing intelligence work to professional agencies. This can help the decision makers to take immediate proper action or nip any problem in the bud.
In order to have an efficient marketing Information System, the companies should work aggressively to improve the marketing intelligence system by:
- getting more and more information about the competitive scenario. This can be done by purchasing the competitors’ products, attending trade shows, going through the competitors’ articles published in magazines and also by reading their financial reports.
- motivating the channel partners viz. Dealer, Distributors, and Retailers who are in the market place to provide necessary information related to the customers and the competitors.
- including some loyal customers in the customer advisory panel who can share their experiences and give advice and hence motivate potential customers.
- making use of the government data related to the population trends, demographic characteristics, industrial production that could help a company to plan its marketing strategies accordingly.
3. Marketing Research System:
Managers, in certain cases, need detailed information about specific problems or specific areas. Marketing Research is a formal study and resolution of such specific problems or situations.
According to Philip Kotler : “Marketing Research is the systematic design for collection, analysis, and reporting of data and findings relevant to specific marketing situations facing the company.”
Marketing research comprises collecting either primary data ( first-hand data) or the secondary data (second-hand data, available in books, magazines, research reports, trade journals, etc.). Primary data is collected from various respondents using various research tools like questionnaires, personal interviews, surveys, seminars, etc. for a certain period of time. Primary and secondary data is then analyzed using the appropriate statistical tools and the findings presented in the form of a report. It is conducted by internal experts or by hired professionals.
Marketing research has a major contribution in the marketing information system as it provides factual data that has been well researched and tested several times by the market researchers before the report is prepared and presented.
4. Marketing Decision Support System (MDSS):
This component was earlier known as Analytical Marketing System. While the former three components are concerned with data, the marketing decision support system concerns more with processing or analyzing available data. This component improves the efficiency of the whole marketing information system.
MDSS is thus a coordinated collection of data, systems, tools, techniques with supporting software and hardware by which the company processes and analyzes data in order to enable marketers to take decisions. Thus its main purpose is data collection, data analysis, interpreting results and supporting decision making.
The MDSS comprises two sub-components :
i)The Statistical Bank:
It consists of quantitative tools used in marketing decision-making and is known as Operations Research (OR). These statistical tools that are used for data analysis include mean, median, mode, standard deviation, discriminant analysis, cluster analysis, multiple regression analysis, conjoint analysis etc.
ii)The Model Bank:
This is a collection of models and software that help managers take better marketing decisions. The model is a series of variables and their interrelationships, and programmes to simulate real systems. For different purposes, different models are used. Some widely used models include the queuing model, sales response model, statistical decision theory, game theory , the Markov process analysis etc.