Chapter 9: Marketing Information Systems (2023)

theme of the chapter
chapter structure
management functions
management functions
make a decision
Components of a marketing information system.
Chapter Summary
key terms
review questions
chapter references

To understand the proper role of information systems, you need to examine what managers do and what information they need to make decisions. We also need to understand how decisions are made and what types of decision problems can be supported by formal information systems. It can then be determined whether information systems will be valuable tools and how they should be designed.

theme of the chapter

This chapter is intended to lead the reader to:

·An understanding of the different roles managers play and how marketing information systems can assist them in those roles.

·An appreciation of the different types and levels of decision making in marketing.

·Knowledge of the most important components of a marketing information system.

·An awareness of the often underused internal sources of information available to companies.

·The ability to clearly distinguish between marketing research and marketing intelligence, and

·An understanding of the nature of analytical models within the marketing information system.

chapter structure

The chapter begins with a detailed discussion of managerial roles, the different types and levels of decisions marketing managers must make. This covers the first half of the chapter, while the second part deals with the major components of a marketing information system. Internal reporting systems, market research systems, marketing intelligence systems, and analytical model banks are discussed.

management functions

Obviously, information systems that are intended to support managers cannot be built without understanding what managers do and how they do it. The classic model of what managers do, championed in the 1920s by writers like Henry Fayol, while intuitively appealing in its own right, is of limited value as a tool for designing information systems. The classical model identifies the following 5 functions as parameters of what managers do:

1 planning
2 Organization
3 coordination
4 decide
5 controls

This model emphasizes what managers do, not how they do it or why. More recently, attention has been focused on the behavioral aspects of executive decision making. The behavior models are based on empirical evidence showing that managers are less systematic, less reflective, more reactive, and less organized than the classic project manager model. For example, behavior models describe 6 leadership characteristics:

·Working at high volume and speed
·Diversity, fragmentation, brevity.
·current spending preference,Therefore,Specific
·Complex network of interactions, contacts
·Strong preference for verbal means.

These behavior models emphasize that managers work at a relentless pace and with high intensity. This applies to managers working in developing countries as well as in developed countries. The nature of the charges can vary, but there is no evidence that they are less intense. The model also emphasizes that the role of the leader is characterized by diversity, fragmentation, and brevity. Managers simply don't have the time to intensively deal with a wide variety of topics. Managers' attention escalates quickly from topic to topic, with very little standard. A problem arises and all other matters must be dropped until it is resolved. Research suggests that a manager's day is characterized by a large number of tasks, with little time spent on each task.

Managers prefer speculation, rumors and gossip over brief, current, current but uncertain information. Historical, specific and routine information receives less attention. Managers want current, specific, andTherefore.

Managers are involved in a complex and diversethe netTogether they function as an information system. They talk to customers, competitors, co-workers, colleagues, secretaries, government officials, etc. In a sense, managers operate a network of contacts throughout the organization and environment.

Several studies have found that managers prefer verbal forms of communication to written forms. Verbal media are perceived as more flexible, requiring less effort and providing a faster response. Communication is the job of the manager and he or she uses all the tools available to be an effective communicator.

Despite overwork, countless deadlines, and a messy succession of crises, it's common to find that successful managers seem in control of their own affairs. To some extent, top managers are at the mercy of their subordinates, who alert them to crises and activities that need to be addressed immediately. However, successful managers are the ones who can control the activities that involve them on a daily basis. By developing their own long-term commitments, their own channels of information, and their own networks, leaders can control their personal agendas. Less successful managers tend to feel overwhelmed by the problems subordinates present to them.

management functions

Mintzberg proposes that managerial activities fall into three categories: interpersonal, information processing, and decision making. An important interpersonal role is that of the organization's figurehead. Second, a manager behaves like a leader and tries to motivate his subordinates. Finally, managers act as a link between the different levels of the organization and within each level between the levels of the management team.

A second group of leadership roles can be identified, called information roles. Managers act as the nerve center of the organization, taking the latest, most concrete, and most up-to-date information and distributing it to those who need it.

A more familiar group of management functions are the decision-making functions. Managers act as entrepreneurs, starting new types of activity; they deal with disruptions that occur in the organization; allocate resources where they are needed in the organization; and mediate between conflicting groups within the organization.

In the area of ​​interpersonal functions, information systems are extremely limited and make only indirect contributions that serve largely as communication aids in some of the newer communication-oriented and office automation applications. These systems make a much larger contribution to the field of information roles; Large MIS systems, office systems, and professional workstations that can enhance a manager's reporting. In the area of ​​decision making, decision support systems and microcomputer-based systems have only recently made important contributions.

Although information systems have made great contributions to organizations, until recently these contributions have been limited to narrow areas of transaction processing. Much remains to be done to expand the impact of systems in professional and managerial life.

make a decision

Decision making is often considered the core of what managers do, something that takes up the majority of a manager's time. It is one of the areas in which information systems have most tried to influence (with mixed success). Decision making can be divided into 3 types: strategic control, managerial and operational control.

Strategic decisions:This level of decision making deals with deciding on the goals, resources and policies of the organization. A major problem at this level of decision making is predicting the future of the organization and its environment and aligning the characteristics of the organization with the environment. This process usually involves a small group of senior managers dealing with very complex, non-routine problems.

A few years ago, for example, a medium-sized food manufacturer in an East African country was faced with strategic decisions regarding its pasta line. These products represented a significant part of the company's sales volume. However, the company suffered from recurring problems with the poor quality of durum wheat it could source, resulting in a final product that fell apart. In addition, unit costs have skyrocketed as a result of increasing breakdowns in aging equipment used in pasta production. The company was faced with the decision to make a very large investment in new machinery or to accept an offer from another pasta manufacturer in a neighboring country to supply the various pasta products and the local company has marked the packaging. The decision is strategic since it affects the resource base of the company, i. h its capitalization, workforce, technological base, etc. The impact of strategic decisions spans many years, typically 10-15 years.

Management Control Decisions:Such decisions relate to the efficiency and effectiveness with which resources are used and the performance of operating units. Management control involves close interaction with those who carry out the tasks of the organization; it takes place in the context of broad policies and goals set by strategic planners.

An example would be when a farm trucking company discovers that its profits are falling due to lower utilization of its two trucks. The manager (in this case the owner) must choose among several alternative courses of action, including: selling trucks, increasing promotional activities to sell excess capacity, increasing transportation cost per unit to cover shortages, or a switch to hauling products or for production at a higher unit value, so the return on transportation costs may be correspondingly higher. Management control decisions are more tactical than strategic.

Operational Control Decisions:This involves making decisions about the execution of "specific tasks defined by strategic planners and management. Determining which units or individuals in the organization will perform the task, setting criteria for completion and utilization of resources, evaluating results - all of these tasks include operational command decisions.

The focus here is how companies should react to daily changes in the business environment. This type of decision making is particularly about adjusting the marketing mix, e.g. How should the company respond to an increase in a competitor's sales force? Should the product line be expanded? Distributors selling below a certain sales volume must source through wholesalers rather than directly, and so on.

Within each of these levels, decision making can be classified as structured or unstructured. Unstructured decisions are those in which the decision maker must provide information about the definition of the problem. They are new, important, and non-routine, and there is no well-understood procedurethroughso that you. By contrast, structured decisions are repetitive, routine, and include a defined procedure for dealing with them, so they do not have to be treated as if they were new each time.

Structured and unstructured problem solving takes place at all levels of management. Historically, most of the success in most information systems has come from dealing with structured, operational, and managerial control decisions. More recently, however, interesting applications are emerging in the areas of management and strategic planning, where the problems are semi-structured or totally unstructured.

Decision making is not a single event, but a series of activities that take place over time. For example, suppose the manager of the National Milling Corporation is faced with the decision of whether or not to establish grain harvesting workshops in rural areas. It quickly becomes clear that decisions are likely to be made over a longer period of time, have multiple influences, use many sources of information, and have to go through several phases. It is worth considering how, if anything, information systems can help with such a decision. To arrive at an answer, it is useful to break decision making into its components.

The literature describes 4 steps in decision making:Intelligence, design, choice and implementation.That is, the problems must be perceived and understood; because the perceived solutions need to be designed; Once the solutions are designed, decisions must be made about a particular solution; finally the solution has to be implemented.

intelligenceit is about identifying the problems in the organization: why and where they occur with what impact. This wide range of information gathering activities is necessary to inform managers about how the organization is performing and where problems exist. Management information systems that provide a lot of detailed information can be useful, especially if they are designed to report exceptions. For example, consider a trading organization that markets a large number of different products and product variations. Management will want to know at regular intervals whether sales targets are being met. Ideally, the reporting system only reports those products/product variations that are significantly above or below target.

many designsPossible solutions to problems is the second phase of decision making. This stage may require more intelligence to decide if a particular solution is appropriate. Specific and more precisely targeted information activities and project-specific skills are required here.

To chooseamong alternative solutions is the third step in the decision-making process. Here a manager needs an information system that can evaluate the costs, opportunities and consequences of each alternative solution to the problem. The information system needed at this stage is likely to be quite complex and potentially quite large due to the detailed analytical models required to calculate the results of the various alternatives. Of course, humans are used to doing such calculations themselves, but without the help of a formal information system, we rely on generalizations and/or intuition.

implementIt is the last step in the decision-making process. Here managers can install a reporting system that will provide routine reports on the progress of a particular solution, some of the difficulties encountered, resource constraints, and possible corrective actions. Table 9.1 illustrates the stages of decision making and the general type of information needed at each stage.

Table 9.1 Steps in the decision-making process

In practice, the decision-making steps do not necessarily follow a linear path from intelligence to design, selection, and implementation. Consider again the problem of balancing the costs and benefits of establishing local outlets for the National Milling Corporation. At any point in the decision-making process, it may be necessary to go back to an earlier stage. For example, someone may have reached level 3 and almost decide that the government, after considering the alternatives of establishing non-local buying points, local buying points in all regions, districts or towns, decides to increase the amounts withheld in the strategic reserve increase grains This may cause the Parastatal to return to Stage 2 and re-evaluate the alternatives. Another scenario would be that after you implement a decision, you quickly get feedback that it's not working. Again, the decision maker may need to repeat the design and/or selection phase(s).

Therefore, it is clear that information system designers must consider the needs of managers at each stage of the decision-making process. Each phase has its own requirements.

Components of a marketing information system.

A marketing information system (MIS) aims to bring together different data elements into a coherent body of information. As we will see in a moment, an MIS is more than raw data or information suitable for decision making. An MIS also provides methods for interpreting the information that the MIS provides. Also as Kotler¹The definition states that an MIS is more than a data collection system or a set of information technologies:

“A marketing information system is a continuous, interactive structure of people, devices, and processes for collecting, classifying, analyzing, evaluating, and distributing relevant, timely, and accurate information for use by marketing decision makers to improve its marketing planning, implementation, and control".

Figure 9.1 illustrates the major components of an MIS, the environmental factors monitored by the system, and the types of marketing decisions the MIS is designed to support.

Figure 9.1 Marketing information systems and their subsystems

The explanation of this MIS model begins with a description of each of its four main components: the internal reporting systems, the market research system, the marketing intelligence system, and the marketing models. Although MIS vary in sophistication (many in developed countries are computerized and few in developing countries), a comprehensive MIS should include these components, the methods (and technologies) of collection, storage, independent retrieval, and processing of data.

Internal Messaging Systems:Any business that has been in business for some time has a wealth of information. However, this information is often underused because it is fragmented, whether in the form of a single business owner or within functional departments of larger companies. That is, the information is usually categorized by its type, such as financial, production, labor, marketing, warehouse, and logistics data. Often the business owner or various people working in the functional departments that own this data do not see how it can help decision makers in other functional areas. Similarly, decision makers may not see how information from other functional areas can help them and therefore may not request it.

Internal records of immediate value for marketing decisions are: orders received, inventory, and sales invoices. These are just a few of the internal records that marketing managers can use, but even this small set of records can yield a huge amount of information. Below is a list of certain information that can be derived from sales invoices.

·Product type, size and type of packaging by territory
·Product type, size and type of packaging by account type
·Product type, size and type of packaging by industry
·Type of product, size and type of packaging according to customer requirements
·Average value and/or sales volume by territory
·Average amount and/or volume of sales by type of account
·Average value and/or volume of sales by sector
·Average value and/or volume of sales per seller

By comparing incoming orders to invoices, a company can determine the extent to which it is providing acceptable customer service. Similarly, comparing inventory records with incoming orders helps a business verify that its inventories match current demand patterns.

Market Research Systems:The general subject of market research was the main theme of the textbook and only a little more needs to be added here. Market research is a proactive search for information. That is, the company commissioning these studies does so to solve a perceived marketing problem. In many cases, the data is collected specifically to address a well-defined problem (or a problem that can be defined and resolved as the study progresses). The other form of marketing research does not focus on a specific marketing problem, but rather is an attempt to continually monitor the marketing environment. These monitoring or tracking exercises are ongoing market research studies, often involving panels of farmers, consumers or traders from whom the same data is collected on a regular basis. weatherThereforeOngoing market study and research differ in focus, but both are proactive.

Marketing intelligence systems:While market research is focused, market intelligence is not. A marketing intelligence system is a set of techniques and data sources that marketing managers use to filter information from the environment that they can use in decision making. This analysis of the economic and business environment can be done in a number of ways, including²

Marketing intelligence is the domain of entrepreneurs and senior managers in an agribusiness. It deals with the digitization of specialized magazines in newspapers, magazines and annual reports, economic forecasts and other media. In addition, it involves management in discussions with producers, suppliers, and customers, as well as with competitors. However, it is a largely informal process of observation and discussion.

Some companies are taking a more conscious approach to collecting marketing information, training their salespeople, customer service representatives, and district/territory managers to be aware of competitor actions, customer complaints and inquiries, and channel partner issues. Forward-thinking companies will also encourage intermediaries such as collectors, retailers, dealers, and other intermediaries to proactively share market information with them.

Marketing models:Within the SIM there must be a means of interpreting the information to guide the decision. These models may or may not be computerized. Typical tools are:

·Sales modes for time series
·Rebranding Templates
·linear programming
·Elasticity models (price, income, demand, supply, etc.)
·regression and correlation models
·Analysis of variance models (ANOVA)
·sensitive analysis
·Cash flow
·Spreadsheet “What if the models

These and similar mathematical, statistical, econometric, and financial models are the analytical subsystem of the MIS. A relatively modest investment in a desktop computer is enough for a company to automate its data analysis. Some of the models used are stochastic models, that is, those that contain a probabilistic element, while others are deterministic models in which chance does not intervene. Brand switching models are stochastic because they express brand decisions in probabilities, while linear programming is deterministic because the relationships between variables are expressed in exact mathematical terms.

Chapter Summary

Marketing information systems are designed to support executive decision making. Management has five distinct roles, each requiring the support of an MIS. They are: planning, organization, coordination, decisions and control.

Information systems must be designed to fit the way managers work. Research suggests that a manager is constantly performing a variety of tasks and may spend relatively short periods of time on each task. Given the nature of the job, managers tend to rely on timely verbal information (because it can be assimilated quickly), even if it is less accurate than more formal and complex information systems.

Managers play at least three different roles: interpersonal, informational, and decision-making. MIS, in electronic or non-electronic form, can support these functions to varying degrees. In the manager's reporting role, the MIS has less to do than in the other two.

Three levels of decision-making can be distinguished: strategic, control (or tactical), and operational. Again, MIS must support each layer. Strategic decisions are often unique situations. Strategic decisions have an impact on changing the structure of an organization and therefore the MIS must provide accurate and accurate information. Control decisions are concerned with general policy issues and operational decisions are concerned with managing the organization's marketing mix.

A marketing information system consists of four components: the internal reporting system, the market research systems, the marketing intelligence system, and the marketing models. Built-in reports include orders received, inventory records, and sales invoices. Market research takes the form of targeted studies, eitherThereforeor continuously. On the other hand, marketing intelligence is less specific in its purposes, as it is mostly carried out informally and by managers themselves rather than professional marketing researchers.

key terms

deterministic models
internal reports
Market intelligence
model benches
operational decisions
stochastic models
strategic decisions
tactical plans

review questions

1. What are stochastic models?
2. Name the four components of an MIS.
3. What management roles did Henry Fayol identify?
4. To which leadership role does the book say MIS contributes the least?
5. What 3 levels of decision making are described in this chapter?
6. According to Kotler, what are the elements that contribute to a GIS? East
7. What elements of the marketing environment are mentioned in the chapter?
8. What are the differences between market research and marketing intelligence?

chapter references

1. Kotler, P., (1988)Marketing Management: AnalyzePlanning and Control, Prentice-Hall p. 102

2. Agnilar, F. (1967)analysis of the business environment,Macmillan, New York, S. 47.