Mapping marketing information systems -the need for an holistic view of information systems (IS) in marketing

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1 Mapping marketing systems -the need for an holistic view of systems (IS) in marketing Malcolm McDonald Emeritus Professor at Cranfield School of Management It is easy to forget that the use of systems (IS) in business is still only fifty-odd years old. As a result of its relative youth, the diffusion of it into every area of an organisation still has some way to go. Early application by the technology (IT) industry of IS in back-office operational functions like finance, payroll and stock control has reached maturity, becoming a replacement market for all but the smallest of businesses. Used to early adopter rates of growth, the burgeoning IT industry has, as a result, turned its attention elsewhere. The industry is widening its focus to include tasks previously considered too unstructured or creative to be compatible with the application of IS, like idea generation or strategy formulation. Over the last decade the industry has looked for much of its growth from the front office that is to say sales, marketing and customer service. More recently, as Internet technology has lowered the cost of electronic data interchange, the industry has looked to the extended enterprise of supply chain management for growth. As IS develops, we need to take a more holistic view of its use in marketing, not only to make the diffusion of it within an organisation easier, but also to enable its proper use in support of the marketing function. Objective To achieve this, a study was developed to create a high-level process map of the marketing domain, the intention being to use

2 this process as the basis of developing a map of marketing IS. Methods The first phase of the study was to develop the process map of the marketing domain. The starting point was to define marketing, for the purposes of this study, as a exchange with customers. It was therefore qualified as a process for defining markets. This involves quantifying the by the different customer groups (segments) within these markets; communicating this to everyone in the organisation responsible for delivering it; communicating this to customers; and measuring the actually delivered. Building on this definition, a hypothesised map of the marketing domain was generated, referring to relevant marketing literature as. Figure 1. Overview of marketing map Effectiveness delivered Define markets & understand Define Evaluate market/segment attractiveness Understand Understand competitor positioning Analysis Determine Choose Define objectives received How delivered/co mmunicated Deliver Define price/ Define marketing strategies Customer Deliver product/service R&D Inbound Exchange Communicate Operations Information Outbound Design/implement marketing communication programmes Design program Negotiate/ tailor Initiate dialogue Commit Exchange Exchange Service marcom programmes Estimate expected results (s)

3 Once the map was created, it was used to understand how IS could be deployed to support marketing. This was done by interviewing a number of at seven organisations that had previously been studied. The unit of analysis was a specific marketing IS within each organisation. Staff from both the marketing and IS groups were interviewed. A separate IS overlay on the marketing map was developed for each of the seven marketing systems considered. These were then brought together and combined with examples drawn from current, relevant literature to generate an illustration of the full set of systems that can be used to support marketing. The resulting map is shown as Figure 2. Figure 2 IT Support for received Customer Effectiveness delivered How delivered/ communicated vs Deliver Define markets & understand Define Evaluate market/segment attractiveness Deliver product/service R&D Operational EIS ERP Inbound Understand Size/share Revenue/Profit Retention CLV Operations Understand competitor positioning Data Warehouse Customer interface Market research aggregation/ analysis Causal models CRM System Purchase propensity Outbound Channel choice Market mapping Segmentation SWOT Compet. Analysis Portfolio analysis Forecasting Allocation of customers to segments Operational implications Program monitoring Service Analysis ning support tools Choose NPD ning Define objectives Define price/ Define marketing strategies Create Estimate expected results Exchange R&D support Data analysis Project management Communicate Design/implement marketing communication programmes Design program Negotiate/ tailor Initiate dialogue Commit Exchange Exchange marcom programmes (s)

4 Conclusions By producing both a high-level process map of the marketing domain and using this to develop a map of marketing systems, we have been able to better understand the dramatic effects that trends in IT are having on marketing practices. The first impact is the coming of age of database technology. The realisation is dawning that the most fundamental benefits of IT lie at the customer interface. Through interactive exchange of with the customer, tailored, -enhanced products are being offered to global niches or even markets of one. Databases that allow the gathering of intelligence about the customer using integrated data drawn from diverse sources, provide the wheel that can turn this concept of -based tailoring. This trend towards the sophistication and utility of customer databases has been influenced considerably by relationship marketing theory. Ever since the influential study by Reichheld and Sasser which showed the significant impact of small increases in customer retention rates on profitability, the marketing community has been more conscious of the need to manage customer relationships both in the long term, as well as prior to the first sale. This argument has been further strengthened by data on the low cost of better retention compared with better acquisition, and the increasing profitability of customers the longer the relationship lasts. In all but the smallest businesses, managing a relationship necessitates sharing knowledge of customers amongst all those who deal with them, and hence leans heavily on IT. The second major IT trend provides the road network, as it were, to enable the mobility of the new -tailored products. Mobility is essential to accessing a large enough market to allow tailored specialisation without the cost disadvantages that, for example, caused the demise of the made-tomeasure suit and, more recently, the hand-built motor car. Computer networks have existed for decades but rapidly decreasing telecommunication costs and gradual standardisation have increased their prominence through the Internet in particular. Marketers, therefore, ignore the interface between marketing and IT at their peril. Although they have been historically placed in two separate departments, both have aspirations to lie at the heart of the organisation, a concept which dates back as early as the 1930s as Professor Kit Grindley of London Business School explains: I went to a talk shortly after the war where the chief executive of Hotpoint was speaking. He said that marketing was now the central function. He said, We got here by making a good iron, which gets us into the white goods

5 business. Now it doesn t matter what we produce, or even if we produce it, as our skill is marketing. This was not the fashion in the 30s: everything was on the product, making it cheaply and well. Now there is no reason why one should not redraw his circle where he put marketing in the centre of the organisation, and put IT there. There is nowhere that IT does not dominate your strategy today. It used to be the airlines and the banks, where all the programmers wanted to work because they got some kudos there. Now it is key to get the IT strategy right in any sector. Is that too confrontational for marketing people? The truth is that neither function can achieve its aim of driving business strategy without the other. It is the new offering of tailored products to customers, through the medium of a location-independent marketplace (as well as the physical marketplace), that is transforming virtually every industry and placing IT-enabled marketing at the heart of every organisation - whether it knows it or not. Appropriate marketing processes will not of themselves ensure the innovative thinking that is needed there will always exist barriers to innovation such as culture and politics. However, if processes allow for communications which are market driving rather than simply market driven (Kumar et al.,2000), then at least they will not become part of the problem. Further research to verify and refine the proposed maps would help practitioners to build their IT-enabled marketing projects on much more solid ground. Professor Malcolm McDonald Emeritus Professor at Cranfield School of Management The full reference for this study: Elizabeth Daniel, Hugh Wilson, Malcolm McDonald, (2003),"Towards a map of marketing systems: an inductive study", European Journal of, Vol. 37 Iss: 5 pp