Marketing information system
Chapter One
1.0 Foundation concepts of information system
1.1 Introduction
An understanding of the effective and responsible use and management of information systems is
important for managers and other business knowledge workers in today’s global information
society. Information systems and technologies have become a vital component of successful
businesses and organizations. Information systems constitute an essential field of study in
business administration and management, as they are considered a major functional area in
business operations. It encompasses a variety of topics including system analysis and design,
computer networking, information security, database management and decision support systems.
An information system is any organized system for the collection, organization, storage and
communication of information. Information systems also can be defined as a collection of
hardware, software, data, people and procedures that work together to produce quality information.
In a broad scope, the term Information Systems is a scientific field of study that addresses the range
of strategic, managerial, and operational activities involved in the gathering, processing, storing,
distributing, and use of information and its associated technologies in society and
organizations.The term information systems is also used to describe an organizational function
that applies IS knowledge in industry, government agencies, and not-for-profit organizations.
Information Systems often refers to the interaction between algorithmic processes and technology.
This interaction can occur within or across organizational boundaries.
1.2 Marketing Information System (MkIS)
A marketing information system (MkIS) as Jobber (2007) defines it as a "system in which
marketing data is formally gathered, stored, analyzed and distributed to managers in accordance
with their informational needs on a regular basis." In addition, the online business dictionary
defines Marketing Information System (MkIS) as “a system that analyzes and assesses marketing
information, gathered continuously from sources inside and outside an organization or a store.
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”Furthermore, “an overall Marketing Information System can be defined as a set structure of
procedures and methods for the regular, planned collection, analysis and presentation of
information for use in making marketing decisions.”
(Kotler, at al, 2006) Developing a MkIS system is becoming extremely important as the strength
of economies rely on services and to better understand the specific needs of customers. it more
broadly as "people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute
needed, timely, and accurate information to marketing decision makers.”
The main benefit of MkIS systems is to integrate market-monitoring systems with strategy
development and the strategic implementation of policies and processes that help capture and act
on customer management applications with marketing decision support systems.
The six components that must come together in order to produce information systems are:
An information system (IS) can be any organized combination of people, hardware, software,
communications networks, data resources, and policies and procedures that stores, retrieves,
transforms, and disseminates information in an organization. People rely on modern information
systems to communicate with one another using a variety of physical devices (hardware) ,
informationprocessing instructions and procedures (software) , communications
channels (networks) , and stored data (data resources) . Although today’s information systems are
typically thought of as having something to do with computers, we have been using information
systems since the dawn of civilization. Even today we make regular use of information systems
that have nothing to do with a computer.
1. Hardware: The term hardware refers to machinery. This category includes the computer
itself, which is often referred to as the central processing unit (CPU), and all of its support
equipments. Among the support equipments are input and output devices, storage devices
and communications devices.
2. Software: The term software refers to computer programs and the manuals (if any) that
support them. Computer programs are machine-readable instructions that direct the
circuitry within the hardware parts of the system to function in ways that produce useful
information from data. Programs are generally stored on some input / output medium,
often a disk or tape.
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3. Data: Data are facts that are used by programs to produce useful information. Like
programs, data are generally stored in machine-readable form on disk or tape until the
computer needs them.
4. Procedures: Procedures are the policies that govern the operation of a computer system.
"Procedures are to people what software is to hardware" is a common analogy that is used
to illustrate the role of procedures in a system.
5. People: Every system needs people if it is to be useful. Often the most over-looked element
of the systems are the people, probably the component that most influence the success or
failure of information systems.
6. Feedback: it is another component of the IS, that defines that an IS may be provided with
a feedback (Although this component isn't necessary to function).
1.2.1 Advantages of Marketing Information System
If you are a marketing manager or business owner, finding effective ways to market your business
is vital. Marketing information becomes even more important if you are part of a crowded market
with many competitors or you have a product that isn't well known. If you don't have good
information, such as the data found in sales reports, you may end up wasting a lot of time and
money on ineffective marketing activities. An investment in an MkIS system is an effective way
to help you organize and prepare your marketing campaigns.One of the key benefits of an MkIS
system is the insight it can provide about what your customers want and their perceptions of your
products. Its main advantages are:
1. Organized data collection and a broad perspective
2. The storage of important data and an avoidance of crises
3. Coordinated marketing plans.
4. Speed in obtaining sufficient information to make decisions.
5. Data amassed and kept over several time periods.
6. The ability to do a cost-benefit analysis.
The disadvantages of a Marketing information system are high initial time and labor costs and
the complexity of setting up an information system. Marketers often complain that they lack
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enough marketing information or the right kind, or have too much of the wrong kind. The
solution is an effective marketing information system.
1.2.2 The Reasons for the Need of Marketing Information System
The reasons for the need of marketing information system can be summarized in the following
points: -
Competitive pressures: they require the Organizations to have the ability to compete, to produce,
and to market developed products more quickly than before. The steady increase in consumer
expectations and what they expect of products, in terms of its ability to satisfy their needs, and
the consequences of less serious or inaccurate decision taking due to the lack or inaccuracy of the
information upon which the decision will be built, and its impact on the organization's success
and sustainability.
The emergence of large markets: the widespread production and distribution contributed to the
emergence of large markets, and their requirements of a large number of intermediaries between
producers and final consumers, these intermediaries become a barrier to the flow of data that can
guide the development of marketing decisions related to the consumers needs and desires, as a
result the widening gap between producers and final consumers reinforce the importance of
marketing information system in bridging this gap.
The information revolution: Each organization has more than one source of information, but the
problem lies in how to use and manage this information, with the development of computers and
other operating data equipment, it has become quick and inexpensive for management to run and
analyze vast amounts of marketing data and provide information necessary for effective
decisions.
1.3. Data and information
There is a subtle difference between data and information. Data are the facts or details from
which information is derived. Individual pieces of data are rarely useful alone. For data to
become information, data needs to be put into context.
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Comparison chart
Data versus Information comparison chart
Data Information
Meaning Data is raw, unorganized facts that When data is processed, organized, structured or
need to be processed. Data can be presented in a given context so as to make it
something simple and seemingly useful, it is called information.
random and useless until it is
organized.
Example Each student's test score is one piece The average score of a class or of the entire
of data. school is information that can be derived from
the given data.
Etymology "Data" comes from a singular Latin "Information" is an older word that dates back
word, datum, which originally meant to the 1300s and has Old French and Middle
"something given." Its early usage English origins. It has always referred to "the
dates back to the 1600s. Over time act of informing, " usually in regard to
"data" has become the plural of education, instruction, or other knowledge
datum. communication.
Information: is considered as valuable component of an organization. Information is data that is processed
and is presented in a form which assists decision maker.
Data: are raw facts or observations, typically about physical phenomena or business transactions.
For example, a spacecraft launch or the sale of an automobile would generate a lot of data
describing those events. More specifically, data are objective measurements of the attributes (the
characteristics) of entities (e.g., people, places, things, events).
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1.4 System concepts
System: A system is defined as a set of elements which are joined together to achieve a common objective.
The elements are interrelated and interdependent. Thus every system is said to be composed of subsystems.
A system has one or multiple inputs, these inputs are processed through a transformation process.A system
is a group of interrelatedcomponents, with a clearly defined boundary, workingtoward the
attainment of a common goal by acceptinginputs and producing outputs in an organized
transformationprocess.
Systems have three basic functions:
• Input involves capturing and assembling elements that enter the system to beprocessed. For
example, raw materials, energy, data, and human effort must besecured and organized for
processing.
• Processing involves transformation processes that convert input into output. Examplesare
manufacturing processes, the human breathing process, or mathematicalcalculations.
• Output involves transferring elements that have been produced by a transformationprocess to
their ultimate destination. For example, finished products, humanservices, and management
information must be transmitted to their human users.
TYPES OF INFORMATION SYSTEMS
Information Systems perform important operational and managerial support roles in businesses
and other organizations. Therefore, several types of information systems can be classified
conceptually as either:
Operations Support Systems or Management Support Systems
A. Operations Support Systems
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Information systems are needed to process data generated by and used in
business operations. They produce a variety of information products for internal and external
use. However, they do not emphasize producing the specific information products that can best
be used by managers. Further processing by management information systems is usually
required. The role of a business firm’s operation support systems are:
✓ Effectively process business transactions
✓ Control industrial processes
✓ Support enterprise communications and collaboration
✓ Update corporate databases
I. Transaction Processing Systems (TPS): Focus on processing the data generated by
business transactions and operations. They record and process data resulting from
business transactions (sales, purchases, inventory changes). TPS also produce a variety of
information products for internal or external use (customer statements, employee
paychecks, sales receipts etc.). TPS process transactions in two basic ways:
Batch Processing: Transaction’s data is accumulated over a period of time and processed
periodically.
Real-time (or online) processing: Data is processed immediately after a transaction occurs.
II. Process Control Systems (PCS): are systems, which make use of computers to control
ongoing physical processes. These computers are designed to automatically make
decisions, which adjust the physical production process. Examples include petroleum
refineries and the assembly lines of automated factories.
III. Enterprise Collaboration Systems: Enterprise collaboration systems are
information systems that use a variety of information technologies to help people work
together. Enterprise collaboration systems help us to co-ordinate our cooperative work
efforts as members of the many formal and informal process and project teams. The goal
of enterprise collaboration systems is to use information technology to enhance the
productivity and creativity of teams and workgroups in the modern business enterprise.
B. Management Support Systems (MSS)
Focus on providing information and support for effective decision making by managers. They
support the decision-making needs of strategic (top) management, tactical (middle) management,
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and operating (supervisory) management. Conceptually, several major types of information
systems support a variety of decision-making responsibilities:
I. Management information systems: are the most common form of management support
systems. They provide managerial end users with information products that support much of
their day-to-day decision-making needs. MIS provide a variety of prespecified information
(reports) and displays to management that can be used to help them make more effective,
structured types of day-to-day decisions. Information products provided to managers include
displays and reports that can be furnished:
II. Decision support systems: provide managerial end users with information in an interactive
session on an ad hoc (as needed) basis. Managers generate the information they need for
more unstructured types of decisions in an interactive, computer-based information system
that uses decision models and specialized databases to assist the decision-making processes
of managerial end users.
III. Executive information systems: provide top and middle management with immediate and
easy access to selective information about key factors that are critical to accomplishing
a firm’s strategic objectives. EIS are easy to operate and understand.
Generally, types of information systems can be put in the following diagram
Fig 1.1: types of information system
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Other Classifications of Information Systems:
Several other categories of information systems that support either operations or management
applications include: Expert Systems, Knowledge Management Systems, Functional Business,
Information Systems, Strategic Information Systems and Cross-functional Information Systems
Top 4 Components of Marketing Information System
A marketing information system (MIS) is intended to bring together disparate items of data into a
coherent body of information. An MIS is, as will shortly be seen, more than raw data or information
suitable for the purposes of decision making. An MIS also provides methods for interpreting the
information the MIS provides. Moreover, as Kotler's1 definition says, an MIS is more than a
system of data collection or a set of information technologies:
"A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate
information for use by marketing decision makers to improve their marketing planning,
implementation, and control".
Figure 1.1 illustrates the major components of an MIS, the environmental factors monitored by the
system and the types of marketing decision which the MIS seeks to underpin
MkIS Models
Kotler (2012) defines the Marketing Information Systems as ―an interacting structure of people,
equipment and procedures to gather sort, analyze, evaluate and distribute, timely and accurate
information for use by marketing decision makers to improve their marketing planning,
implementation, and control".
Figure (2.2): Shows Kotler model for MkIS
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1. Internal Records: The first component of MIS is ‘Internal Record’. The foundation of any
marketing system is the company’s knowledge of itself. The more you know about your company’s
operations, the better you will be able to suggest strategies for improving performance.
Marketing managers get lots of information from the internal-records of the company. These
records provide current information about sales, costs, inventories, cash flows and account
receivable and payable. Many companies maintain their computerized internal records. Inside
records help marketing managers to gain faster access to reliable information.
2. Marketing intelligence: A marketing intelligence system is a set of procedures and sources
used by managers to obtain everyday information about developments in the marketing
environment.It collects information from external sources. It provides information about current
marketing-environment and changing conditions in the market. This information can be easily
gathered from external sources like; magazines, trade journals, commercial press, so on.The
information which is collected from the external sources must be first evaluated and arranged in a
proper order.
3. Marketing Research (MR): Marketing Research is the systematic design, collection, analysis
and reporting of data and findings relevant to a specific marketing situation facing the company.
MR is conducted to solve specific marketing problems of the company. It is useful for studying
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and solving different marketing problems hence, it provides alternative solutions to deal with a
specific problem.
4.Marketing decision support system: it is the fourth component of MKIS. It is the tool which
helps the marketing managers to analyze data and to take better marketing decisions. They include
hardware, i.e. computer and software programs. Computer helps the marketing manager to analyze
the marketing information. It also helps them to take better decisions. In fact, today marketing
managers cannot work without computers. There are many software programs, which help the
marketing manager to do market segmentation, price fixing, advertising budgets, etc.
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