Chapter 17 Marketing Information Systems MANAGEMENT INFORMATION SYSTEMS 8/E Raymond McLeod, Jr. and George Schell Copyright 2001 Prentice-Hall, Inc. 17-1

Introduction n Marketing was the first functional area to exhibit an interest in MIS n The marketing information system has three subsystems; the accounting information system (AIS), marketing research, and marketing intelligence n Functional information systems: the conceptual systems should be "mirror images" of the physical systems 17-2

Functional information systems Marketing information system Manufacturing information system Finance information system Human resource information system Marketing function Manufacturing function Finance function Human resources function Physical system of the firm Functional Information Systems Represent Functional Physical Systems Functional Physical Systems Information resource information system Information Services function 17-3

Marketing Principles n Marketing mix –Product –Promotion –Place –Price 17-4

The Marketing Information System (MKIS) n Kotler's marketing nerve center n 3 information flows –Internal »Gathered in firm –Intelligence »From environment –Communications »To environment 17-5

Firm Environ- ment Marketing intelligence Marketing communications Internal marketing information Kotler’s Information Flows 17-6

Marketing Information System (MKIS) Definition A computer-based system that works in conjunction with other functional information systems to support the firm's management in solving problems that relate to marketing the firm's products. 17-7

An MKIS Model n Output –Product –Place –Promotion –Price –Integrated mix n Database n Input –AIS –Marketing research –Marketing intelligence 17-8

Input subsystems Output subsystems DATABASE Accounting information system Marketing research subsystem Marketing intelligence subsystem Internal sources Environmental sources Product subsystem Place subsystem Promotion subsystem Price subsystem Integrated- mix subsystem Users DataInformation MKIS Model 17-9

Accounting Information System n Sales order data is input. n AIS provides data for –Periodic reports –Special reports –Mathematical models and knowledge-based models 17-10

Marketing Research Subsystem n Managers use marketing research to gather information –Gathered from customers and prospects –Purchased or procured from other organizations n Processed using marketing research subsystem 17-11

Primary and Secondary Data n Used by marketing research subsystem n Primary data are collected by the firm n Examples of primary data –Survey –In-depth interview –Observation –Controlled experiment 17-12

Primary and Secondary Data [cont.] n Secondary data –Mailing lists –Retail sales statistics –Video retrieval systems n Some secondary must be bought and some is free 17-13

Marketing Research Software n Graphics packages (print maps) n Makes market research a reality for all firms n Statistical analysis n Expertise to interpret software outputs is the key to successful use of these tools 17-14

Marketing Intelligence Subsystem n Ethical activities aimed at gathering information about competitors n Not to be confused with industrial espionage n Each functional information system has an intelligence responsibility 17-15

Product Subsystem n Product life cycle supported through: 1) Introduction 2) Growth 3) Maturity 4) Decline n Information answers 3 key questions: 1) Introduce? 2) Change strategy? 3) Delete? 17-16

SalesVolume STAGES Introduction Growth MaturityDecline Should the product be introduced Should the product strategy be changed Should the product be deleted The Product Life Cycle and Related Decisions 17-17

New Product Evaluation Model n Another part of the product subsystem n New product committee n Explicitly considers production as well as marketing n Lists decision criteria and their weight 17-18

Place Subsystem n Channel of distribution may be short or long n Material, money, and information flow through the distribution channel –Resource flows –Feedback »Flows in direction opposite to the material flow –Feedforward information »Flow of information to customer –EDI 17-19

Material, Money, and Information Flow Two-way information flow Supplier Manu-facturer Whole- saler RetailerConsumerMaterial MoneyMoneyMoneyMoney 17-20

Promotion Subsystem Includes: (1) advertising (2) personal selling (3) sales promotion 17-21

Difficult Area to Computerize Successful examples 1. Sales promotion --OCR scanning of barcodes on coupons 2. Personal selling --laptops A. Order entry B. Customer call reports 17-22

Pricing Subsystem Two Basic Approaches 1. Cost based (AIS provides the basis) 2. Demand-based (use what-if model) 17-23

Integrated-Mix Subsystem n BRANDAID Model –Solid arrows: influences –Dashed arrows: responses n Environmental and retailer influence on the consumer –Individual influences –Combined influences n Unexpected influences 17-24

Product Product Price Price Advertising Advertising Promotion Promotion Price-off coupons Price-off coupons Premiums Premiums Samplings Samplings Package: Package: Graphics & Graphics & function function Assortment Assortment Sales Sales Availability Availability Price Price Promotion Promotion Advertising Advertising Product Product Price Price Advertising Advertising Promotion Promotion Price-off coupons Price-off coupons Premiums Premiums Sampling Sampling Package: Package: Graphics & Graphics & function function Assortment Assortment Seasonaltrend Manufacturer Retailer Competitor Environment Consumer BRANDAID Sales Distribution Price Trade promotion Salespersons Package assortment Price Trade promotion Salespersons Package assortment Sales Distribution 17-25

SALES Influence of Four Variables, Taken Together 17-26

Sales Months New Package Model Actual A Model Cannot Cope with Unexpected Events 17-27

The MKIS in Fortune 500 Firms n Preprocessed information 71% of 1990 firms n Mathematical modeling –Generally down –Reason is unknown –Except for production deletion and advertising media selection n Model use is becoming more balanced Studies conducted by Li, McLeod, and Rogers 17-28

The MKIS in Fortune 500 Firms [cont.] n Support for management levels –Models –Overall n Support for management functions n Support for the marketing mix 17-29

N.A. Purposes of Computer Usage Retrieving Data Storing Data Processing Data 17-30

Strategic planning level.17 Strategic planning level.30 Management control level.70 Management control level.54 Operational control level.13 Operational control level.16 Note: The percentages are based on the number of respondents ranking the particular management levels first. Model Use Is Becoming More Balanced 17-31

Overall Support from the Marketing Information System Is Becoming More Balanced Strategic planning level.25 Management control level.57 Operational control level.17 Strategic planning level.28 Management control level.40 Operational Control level.31 Note: The percentages are based on the number of respondents ranking the particular management levels first

The 1990 Managers Placed More Emphasis on Planning and Less on Directing Than Did Their 1980 Counterparts Planning.37 Organizing.03 Directing.25 Controlling.34 Planning.51 Organizing.06 Directing.07 Controlling.36 Staffing

Note: The percentages are based on the number of respondents ranking the particular mix functions first. Marketing Managers Are Using the Computer More for Making the Difficult Price and Promotion Decisions Product.49 Price.27 Place.16 Promotion.08 Product.32 Price.39 Place.15 Promotion

How Managers Use the MKIS Integrated Product Place Promotion Price Mix VP of marketingXXX X X Other executivesXXX X X Brand managersXXX X X Sales managerX X Advertising managerX X Manager mktg resrch XXX X X Manager of product planningX Manager of physical distributionX Other managersXXX X X Subsystem 17-35

MKIS Use by Managers n Industry giants are using the computer as a marketing tool –To learn about consumer needs and wants –To formulate the marketing mix –To follow-up on how well mix is received by the consumers n MKIS information output used across the firm 17-36

Summary n MKIS –Input subsystems »AIS, Marketing Research, Marketing Intelligence –Output subsystems »Product, Place, Promotion, Price, Integrated Mix n Operational MKISs consider management and marketing concepts –Planning is the key 17-37