1 LESSON 4 MARKETING INFORMATION SYSTEM (MIS) CONTENTS 4.0 Aims and Objectives 4.1 Introduction 4.2 MIS Database Interna Records Externa Sources 4.3 Computer Networks and Internet 4.4 Data Mining and Data Warehousing 4.5 Marketing Inteigence Systems 4.6 Marketing Research Process 4.7 Let us Sum up 4.8 Lesson -end Activity 4.9 Keywords 4.10 Questions for Discussion 4.11 Suggested Readings 4.0 AIMS AND OBJECTIVES In this esson we sha discuss about Marketing Information System (MIS). After going through this esson, you wi be abe to: (i) (ii) (iii) Understand computer networks and Internet. Discuss data mining and data warehousing. Define marketing inteigence systems and marketing research process. 4.1 INTRODUCTION Marketing Information System (MIS) assesses the information needs of different managers and deveops the required information from suppied data in time regarding competition, prices, advertising, saes, distribution and market inteigence etc. Most of today s information systems are computer appications in a sophisticated data-driven age. These enabe marketers to be more better informed about their customers, potentia customers and competitors. New appications are being deveoped at a faster pace. 46
2 4.2 MIS Marketing Information System (MIS) The term Marketing Information Systems refers to a programme for managing and organising information gathered by an organisation from various interna and externa sources. MIS assesses the information needs of different managers and deveops the required information from suppied data in time regarding competition, prices, advertising expenditures, saes, distribution and market inteigence, etc. Information sources for MIS incude a company s interna records regarding marketing performance in terms of saes, and effectiveness and efficiency of marketing actions, marketing databases, marketing inteigence systems, marketing research, and information suppied by independent information suppiers. Interna Sources Externa Sources Marketing Database Data Retrieva System Evauation of Information Needs Information for Marketing Decisions Figure Database A database refers to the coection of comprehensive information about customers and prospects such as demographic and psychographic profies, products and services they buy, and purchase voumes, etc., arranged in a manner that is avaiabe for easy access and retrieva. Databases aow marketers access to an abundance of information, often through a computer system such as saes reports, news artices, company news reeases, and economic reports from government and private agencies, etc., that can be usefu in making various marketing decisions Interna Records Modern technoogy is making information required for marketing decisions ever more accessibe. It is possibe to track customer buying behaviour and better anayse and understand what customers want. The integration of various modern technoogies is aowing companies to access vauabe information. Ever increasing numbers of market researchers and managers are having access to e-mai, voice mai, teeconferencing, video conferences, and faxes. Interna database is the most basic starting point in deveoping a strong MIS. Marketers, not just the growing numbers of arge retaiers in our country, need information about what is demanded more by customers and what is not. Interna record systems hep in tracking what is seing, how fast, in which ocations, to which customers, etc. Avaiabiity of a such information reies on reports avaiabe on orders received from saes peope, reseers, and customers, copies of saes invoices, prices, costs, inventories, receivabes, payabes, etc. Getting inputs and designing systems to provide right data to the right peope at the right time is critica for marketing decisions. Box 4.1 Tanniru R. Rao is a happy man. The president and CEO of Market Probe have enough reason. His market research firm is isted among the top 50 market research agencies in the word. Rao, however, beieves that market research, in India, is sti at a nascent stage. Contd... 47
3 48 You need more quaified peope to do the fied work and that is sti not happening here, he says. Estabished in 1976, the company speciaises in marketing research and customer oyaty studies with offices in Canada, Europe and the US. Recenty, it started operations in India with centres in Mumbai, Bangaore and Dehi. With biings of $15 miion for caendar year 1999, Market Probe is ooking to spread the importance of speciaised research in India. In our business, ong-term reations are essentia and we make it a point to continue the reationship with our cients since, typicay, our customer oyaty studies are continuous, says Rao. The timing is just perfect. Many Indian serviceoriented companies are ooking at customer retention and oyaty programmes to strengthen their brand and services. And what is Rao targeting? Automotive companies, banks and hotes, initiay. Then, it woud extend to other businesses as we, says Rao. But reiabiity is one issue that has aways raised eyebrows when one mentions research reports in India. How is he panning to get over it? We work with cients and offer tactica and strategic recommendations to satisfy their needs, as we as the needs of the customer with commitment from our end, expains Rao. The company aready has cients such as Arvind Mis, BPL, Hindustan Lever and Reckitt & Coeman among other big names. Our first attempt wi be to repicate our goba customer base to India and aso add new cients, adds Rao. With vast experience in customer satisfaction research, empoyee satisfaction research, new product deveopment, brand heath management and custom research toos to meet demands of cients, Market Probe is geared to face the chaenge with its diverse and unique research. Matured markets pose a probem as many peope are not wiing to speak. I guess India being sti new to such research techniques, the response wi be far better, expains Rao. Rao, an aumnus from Indian Statistica Institute (ISI) and his team have deveoped new quantitative appications of Kruska s Anaysis for derived attribute importance and LISREL modes for oyaty modeing and surviva anaysis for customer retention forecast. There are proprietary products too under the Market Probe stabe that incude Satisfaction Navigator (SATNAV) and Customer Retention Forecasting System (CRFS) based on company s experience and extensive cient ist. Not to be just eft with quantitative research techniques, the company is aso into quaitative research, wherein it has copyright toos and projective techniques such as Life maps, Auto Drive and Interactive Workshop Method to faciitate focused outputs for strategic management of brands. We aso pan to have research and training in India to faciitate spreading our research techniques in Asia and Pacific regions, adds Rao. With an internationa cient ist ike AT&T, Xerox Corp, Kodak, American Express and Genera Motors, among other Fortune 500 companies, Market Probe is a set to make a definite impact in the Indian research scenario. We are confident about our services and I fee that Market Probe wi have a very favourabe response from India, adds Rao. ( Source: Narain Krishnamurthy, Stats and Facts, A&M, Juy 2000 ). Accumuated data about customers in various interna records is an important source to buid database such as customer inquiries, existing customers and past purchasing histories of these customers. The key information in this regard consists of RFM (Recency, Frequency, and Money) variabes. Recency refers to the time of purchase, frequency refects the number of times the customer made a product purchase from the firm, and money denotes the quantity and monetary vaue of the purchase. RFM heps anayse and deveop a customer index that refects which customers are more profitabe for the business. USP Age, in its September 2004 issue has reported that BPCL has been compiing its database for the past four years and has a formidabe coection of more than 1.4 miion customers. Shopper s Stop has been compiing data of its reguar customers through its oyaty programme, First Citizen. Further, a company in India can obtain a database for as itte as 50 paise to Rs. 5 per contact. Companies invoved in Direct Marketing such as Cataogue Seing and Mai Order Marketing are heavy users of databases Externa Sources Census Bureau is one key source of information regarding various demographic variabes. Besides Census Bureau of India, other sources incude Newspapers, Trade Pubications, Technica Journas, Magazines, Directories, Baance Sheets of companies, Syndicated and pubished research reports. Various third party information suppiers offer a variety of information about customers as per marketer s requirements, for a price. For exampe, Reader s Digest markets a database covering 100 miion househods. It is one of the best databases to assess potentia markets for consumer products. It ets Reader s Digest
4 management know the ikes and disikes of many of its readers. Behaviour Scan is a singe source information service that monitors consumer househod teevisions and records the programmes and commercias watched. This source is an exampe that screens about 60,000 househods in 26 US markets. Many companies deveop their own databases. According to Laurence N. Goa, a singe source providing information about househod demographics, purchases, teevision viewership behaviour, and responses to promotions is caed a singe-source data. When consumers from these househods go shopping in stores equipped with scanner-instaed computers, they present their credit cards to biing cerks for payment. This permits each customer s identification to be eectronicay coded so that the marketer can track his or her purchases. Marketing Information System (MIS) Some Important Data Sources 1. The Thomas Register: It is the word s most important industria buying guide for industria products. Thomas Register of Indian Manufacturers is avaiabe in print, CD, and through Internet. It has 120,000 istings of 40,000 industria manufacturers and service providers covering 10,000 different product and service categories. 2. The Source Directory: Source Pubishers, Mumbai pubish this directory. Currenty Mumbai and Dehi editions are avaiabe. It provides contact information on ad agencies and reated services, marketing and saes promotion consutants, market research firms, music companies, teemarketing, and different media. 3. Yeow Pages: Tata Press and GETIT yeow pages are eaders. Currenty, yeow pages pubications are avaiabe for a cities and major towns of India. New Horizons is a joint venture between Living Media and Singapore Teecom and have been pubishing directories for specific businesses. 4. Internet: It is a source of extensive data on amost any subject. Different types of pubished data, research findings, statistics, and figures are avaiabe either free or on payment. 4.3 COMPUTER NETWORKS AND INTERNET Present day computer networks enabe marketers to access data sources and customers with immediate information about products and performance. Through such networks, marketers can exchange e-mais with empoyees, customers, and suppiers. Onine information services such as Compu Serve and America Onine typicay offer their subscribers access to e-mai, discussion groups, fies for downoading, chat rooms, and databases and other reated research materias. Marketers can subscribe to maiing ists that periodicay deiver eectronic newsetters to their computer screens. This heps increased communication with a marketer s customers, suppiers, and empoyees and boosts the capabiities of a company s marketing information system. Onine information services are avaiabe ony to subscribers. However, the Internet aows goba exchange of e-mais, discussion through newsgroups on amost any subject, downoading of fies, chat rooms, etc. A we-maintained database enabes a company to anayse customer needs, preferences, and behaviour. It aso heps in identifying right target customers for its direct marketing efforts. 4.4 DATA MINING AND DATA WAREHOUSING The term data mining refers to automated data anaysis of arge amount of data stored in a data warehouse. This is simiar to extracting vauabe metas from mountains of mined ore. The purpose is to unearth with the hep of modern computing power meaningfu patterns of information that might be missed or remain undiscovered. Data mining creates customer database, which is extremey important for a narrowy defined target-marketing efforts. Data mining aso eads to buid database on reseers, distribution channes, media, etc. Data warehousing refers to storing subject-based, integrated, nonvoatie, time variant data in support of manageria decisions. It can be viewed as a 49
5 centra coection of cean, consistent, and summarised information gathered from severa operationa systems. With increasing computing capabiities, organisations are coecting arge amounts of a variety of information or data possiby faster than they can use, and for this reason a the coected data or information needs to be sorted, cassified and warehoused, so that it can be retrieved when needed in a meaningfu manner. 4.5 MARKETING INTELLIGENCE SYSTEMS In the current fast-paced business cimate, keeping up with macro-environmenta changes, and competition is becoming increasingy difficut. Marketing inteigence system refers to systematic and ethica approach, procedures, and sources that marketing managers use to gather and anayse everyday information about various deveopments with regard to competitors and other business trends in the marketing environment. This inteigence is coected from various sources such as newspapers, trade pubications, business magazines, taking with suppiers, channe members, customers, other managers, and saes force peope. About competitive inteigence, the genera idea is that more than 80 per cent information is pubic knowedge. The most important sources from which to obtain competitive inteigence incude competitors annua and financia reports, speeches by company executives, government documents, trade organisations, onine databases, and other popuar and business press. The company can take certain steps to obtain quaity marketing inteigence. The company shoud take steps to train and motivate fied saes personne about the types of information to report reguary on any reevant deveopments in the marketpace. Besides saes force, the company can take steps to motivate channe members to pass aong important inteigence. The company can aso purchase competitors products, and attend trade fairs. Some important questions that managers shoud ask about competitive inteigence are: How fast does the competitive cimate in our industry change? How important is it to keep our knowedge about these changes current? What are the objectives of our company about competitive inteigence? Who are the important cients for competitive inteigence? To whom shoud the inteigence effort be reported? With rapid deveopments in the area of software appications that run on PCs, it is becoming increasingy possibe to keep track of cient ists and the various kinds of contacts that are made with each cient. Many such programmes keep track of cients names, addresses, phone and fax numbers, e-mai addresses, persona detais such as birthdays, ikes and disikes, product/brand usage, hobbies, cub memberships, etc. Most of today s information systems are computer appications in a sophisticated datadriven age. These enabe marketers to be better informed about their customers, potentia customers, and competitors. This heps marketers to be more productive and estabish and sustain competitive advantage. New appications are being deveoped at a faster pace. The utimate focus of most such systems is to enabe marketers to know enough about any given customer and the competitive context, to fine-tune their marketing efforts to better serve the target market so that customer s needs are met perfecty. This is the utimate dream for every marketer. 4.6 MARKETING RESEARCH PROCESS 50 Whie the Marketing Information System has its focus on managing the fow of reevant information to decision-makers in the marketing department, marketing research is concerned with the function of generating information for marketing decision-makers.
6 There are occasions when there are no easy answers for a variety of marketing situations that marketing managers face. Such situations may ca for conducting forma marketing studies of specific probems and opportunities. Marketing research is intended to address carefuy defined marketing probems or opportunities. It heps in identifying consumer needs and market segments, furnishes information necessary for deveoping new products and formuating marketing strategies, enabes managers to measure the effectiveness of marketing programmes and promotiona activities, deveops economic forecasting, heps in financia panning, and quaity contro. Research undertaken without precisey defining the probem and objectives usuay resuts in wasting time and money. For conducting marketing research, companies deveop systematic procedures for coecting, recording, and anaysing data from secondary and primary sources to hep managers in making decisions. Marketing research is different from market research, which is information coected about a particuar market or market segment. In the process of marketing research, companies coect a ot of different types of information. David G. Bakken is of the opinion that it is easy to think of a these in terms of three Rs of marketing: Recruiting New Customers. Retaining Current Customers. Regaining Lost Customers. To recruit new customers, the researchers study different market segments to deveop the right products and services consumers need and want. To retain customers, the marketer may conduct customer satisfaction studies. Marketers reaise that good reationship with customers is important for ong-term positive saes resuts. Regaining ost customers can be a formidabe probem. It needs innovative marketing and outstanding communications. The information coected with respect to the first and the second Rs heps regaining the ost customers. Marketing Information System (MIS) 1. Expain three R s of Marketing? 2. What is internet? Check Your Progress 4.7 LET US SUM UP A database refers to the coection of comprehensive information about customers and prospects such as demographic and psychographic profies, products and services they buy, and purchase voumes, etc., arranged in a manner that is avaiabe for easy access and retrieva. Interna database is the most basic starting point in deveoping a strong MIS. Census Bureau is one key source of information regarding various demographic variabes. Internet is a source of extensive data on amost any subject. Different types of pubished data, research findings, statistics, and figures are avaiabe either free or on payment. 4.8 LESSON-END ACTIVITY Deveop a questionnaire to find out what four important services a beauty parour shoud offer to femaes aged among midde-income groups. 51
7 4.9 KEYWORDS Database Interna Records Externa Records Data Mining Data Warehousing 4.10 QUESTIONS FOR DISCUSSION 1. What are the different approaches used by Internet marketers to accompish their objectives? 2. Discuss some important Data Sources. 3. Marketing Inteigence System pay an important roe in MIS. Justify the statement. 4. What are the important consideration that manager shoud keep in mind about competitive inteigence? 5. Expain three R s of marketing SUGGESTED READINGS Rajan Saxena,, Tata McGraw Hi, Ramasamy & Namakumari,, Macmian India, S. Jayachandran,, TMH, Rampha and Gupta, Case and Simuations in Marketing, Gagotia, Dehi. SHH Kazmi,, Exce Books, New Dehi. Saroj Dutta, Marketing Sense, Exce Books, New Dehi. 52