Marketing

Information Systems
Applications &
Theory
 ABSTRACT

This study provides an overview of the marketing information

systems that exist in most of the organizations. It outlines what
actually marketing systems are, what is the purpose behind
having an information system in an organization, what type of
marketing information system must exist in an organization, why
organizations need marketing in formation systems, what type of
general purpose softwares can be used to enhance the effectiveness
of marketing information system and what types of costs are
associated with using the information systems in an
organization. This study will be a valuable contribution to the
future study contributions in this field.
 CHAPTER 1
INTRODUCTION
The latest blend of internet resources and traditional business activities has a major
impact on all industrial sectors in business and the basic theme of business evolution
has changed dramatically. All the businesses are required to change their basic
infrastructures and strategically change the way they work and respond to their
customer needs. Information systems and technologies have become a vital
component of successful businesses. Information technology has become a basic tool
for using technology in a meaningful and effective way. Majority of organizations
have been transformed into brick and click companies hence, serving their customers
from all fronts. So, top management and executives must learn how to apply
information systems and technologies to their business situations. There are three
fundamental reasons for which businesses need information systems (Schultheis &
Sumner, 1995):

1. To support their business processes and operations

2. To support decision making process
3. To support its strategies for competitive advantages

A Marketing Information System (MIS) has traditionally been proposed to provide

marketing managers a thorough process of intelligence gathering. Since this
information remains continuous, the manager is able to analyze, evaluate, sort and
distribute important, accurate and timely data required to make effective decisions for
organization to get more profit. Due to the interactive nature of this information, the
marketing manager is capable of better planning, control and implementation of
marketing efforts (Kotler, 1988). The information provided by Marketing IS helps
managers in planning and managing customer loyalty, acquisition and retention
programs. Moreover Marketing IS provides information about customer profiles,
suggesting which ones are more profitable for the organisation. Marketing IS
particularly becomes of importance in the area of Internet marketing. Companies
continue to improve their websites, as they rely more and more on electronic
interactions with their customers to facilitate their marketing, sales and customer
service activities. One of the most widely used tools supporting Marketing IS Porter’s
(1980) framework that models an industry as being influenced by five forces. This
model looks at five key areas namely the threat of entry, the threat of substitutes, the
power of buyers, the power of suppliers and competitive rivalry. Strategic managers
can use this model to understand the industry context in which the firm operates. The
five forces model helps the marketer to contrast a competitive environment. Overall,
an effective Marketing IS largely contributes to sustained business growth and
provides organizations opportunities to get greater profit margins.

Problem Specifications
Making the best out of the Marketing IS can make effective and efficient decision
making for organisation. A good Marketing IS helps create a competitive advantage; it
can even substitute for expensive assets. More than ever in the Internet age,
Marketing IS has become especially important to better performance of companies.
How organizations handle their Marketing IS largely depends on the capabilities of
the chosen Marketing IS that the company has bought, tested and deployed more than
the capabilities of the personnel at hand. Nowadays available Marketing IS can
intuitively understand the business requirements and can adapt to the changing trade
scenarios and markets.

Research Question
The questions that the proposed research wishes to answer are: How do organizations
make the best out of their Marketing IS? What are the factors that affect the
implementation of Marketing IS? How should Marketing IS be implemented
effectively?

Aim
The aim of the proposed research is to provide deeper understanding about the nature
of Marketing IS. It also aims to come up with recommendations as to how companies
should deal with factors affecting Marketing IS.
 Objectives
This research will work on the following objectives. (1) To examine the nature of
Internet marketing or e-marketing. (2) To examine how Marketing IS is utilized in
Internet marketing. (3) To examine the difficulties faced by companies in
implementing Marketing IS.

TYPES OF INFORMATION SYSTEM

Following are some of the types of information systems used for better performance
in business operations.

1. Transformation processing system

2. Marketing information system
3. Process control system (PCS)
4. Decision support system (DSS)
5. Work flow management system
6. Enterprise collaboration system
7. Human resource information system
8. Management information system
9. executive information system

These information systems can not exist in isolation, they have to share information
with each other. These systems must be differentiated from each other because the use
and objective of these systems are different and they need to groom differently.

WHAT MARKETING IS?

"The management process responsible for identifying, anticipating and satisfying
customer requirements profitably (marketing glossary, 2007)

The basic process of marketing starts in the market place when the needs and wants of
the customers are identified by businesses in the market place. According to these
needs and wants the process of satisfying these needs and wants starts, which provides
businesses with the basic purpose of their existence in the market place. In efforts to
satisfy the customer needs businesses promote, sell and supply satisfaction through
 their products and services. Foremost functions of marketing are the collection of
marketing information and research, planning for product, advertising, promotion and
sales of the products and finally the distribution of the products.

INFORMATION SYSTEM

"A system, whether automated or manual, that comprises people, machines, and/or
methods organized to collect, process, transmit, and disseminate data that represent
user information” (Telecom glossary 2k, 2001).

“A system which provides information support for decision making in the

organization” (Jawadekar, 2007)

“An integrated system of man and machine for providing the information to support
the operations, the management and the decision making function in the organization”
(Jawadekar, 2007)

An information system is a system of interconnected computers or some other related

equipment which is used in "acquisition, storage, manipulation, management,
movement, control, display, switching, interchange, transmission, or reception of
voice and/or data". This information system includes hardware, software and
firmware.

MARKETING INFORMATION SYSTEM

"An organizational section or entity whose purpose is to gather, organize, store,

retrieve and analyze data relevant to a firm's past, present and future operations on an
on-going basis in order to provide support for management's marketing decisions.
(Marketing glossary, 2007)"

Marketing information system is ongoing, organized procedures to generate, analyze,

disseminate, store and retrieve information for use in marketing decisions.

Its four major components are:

1. Internal marketing information repository
2. External Marketing intelligence repository
3. Statistical techniques and mathematical models
4. Ad hoc research repository for non recurring problems

An ideal marketing information system of a company includes;

1. Includes real time data
2. Generates regular reports and recurring studies as needed
3. Analyzes the data using statistical analysis and mathematical models that
represent the real world
4. Integrates old and new data to provide information updates and identify trends

MKTIS
Requests for information systems & procedure
Marketing ].quote text box
Manager Regular & customized reports collection
analyses
storage
retrieval
&
Dissemination of data

Figure 1: (Schultheis & Sumner, 1995); requests from marketing managers are
sent to the MKTIS for real time marketing department and MKTIS provides
processed, refined and customized data to provide information updates.

Nowadays companies are spending huge amounts of money on use and deployment of
different systems and tools through which gaps between companies and its customers
can be reduced. This can be done through use of efficient and smart systems. The
business function of marketing is concerned with planning, promotion and sales of
existing products in existing markets and development of the new products for new
markets to better server present and potential customers. So, marketing is a key
function in a business environment. Despite the importance of this function in
business marketing decision making is often considered beyond the help of any
information system. However, this attitude is changing nowadays. Organization which
are concerned about developing and maintaining competitive advantage understand
that information systems can be an important tool in achieving that advantage by
decreasing costs, improving customer services, improving sales personnel
productivity, decreasing risk in product planning and forecasting more accurate sales
forecasts.

MKIS is a type of Information System that helps the firm to achieve following
:objectives

• Identification of customers for firm‘s products and services.

• Development of those products and services to meet customers’ needs
• Promotion of the products and services, and
• Provision of after sale customer support.

Types of Marketing Information

Every information system is designed to capture some sort of information.

Information requirements need to be defined before the systems are made. While
designing marketing information system, following types of information should be
.designed

•Marketing Intelligence – information flowing from external environment into the

internal environment
•Internal Information – gathered within the firm
•Marketing Communication – Information flowing from firm to external environment

An MKIS help in proper management and dissemination of all three kinds of

.information

EVOLUTION OF MARKETING INFORMATION SYSTEM

As computers became common in 1960’s, firms were able to collect, store, and
manipulate larger amounts of data to aid marketing decision makers. Out of his
capability developed the marketing information system. Management information
systems came into trend in the 1970s (McCann, 2007). The earlier data processing
systems only operated in the sequential, batch mode, which meant that only one
program or "job" could be processed at one time on priority basis. Time-sharing
systems allowed multiple jobs to run at once, thus permitting many people to use the
same computer at the same time enabling them to place marketing data in a file or
database and to then allow different users to gain access to the data in the same time
frame. A brand manager could work at a computer terminal and request a brand
report, at the same time that a sales planning analyst was using another terminal to
produce an account review report (McCann, 2007).

Such information systems opened a new door for marketing managers because it
allowed them to get the information when they needed it in the form that they needed.
These systems tended to allow the managers to produce and print a limited number of
standard reports. Such systems were the dominant ones in use by marketing managers
in the mid-1980s (McCann, 2007).

The latter part of the 1980s saw an evolution in the power and ease of use of
management information systems. Ease of use was dramatically improved from
earlier systems. These systems allow marketing managers to start using the system
after a short training period, and provide a large degree of freedom in the types of
reports that can be generated. It is common for firms to identify more than 100 report
types that they can generate as needed (McCann, 2007).

By the early 1990s, almost all consumer packaged goods firms have acquired and
made use of these systems. Most brand groups could and would utilize these systems
to produce standard reports as needed, and to do periodic ad hoc analyses.

Figure2: John M. McCann, 2007, The evolution of marketing systems; A

traditional Information system involving Human conceptual and cognitive skills

These reports are communicated to others via memos, letters, reports, and/or
presentations. Thus we can view the manager's job as both generating insights from
information, and then sharing these insights via communications. They use their
computing skills to convert data into information, use their cognitive skills to convert
the information into insights, use their composition and persuasion skills to produce
an effective communication, and then use their diplomatic skills to persuade others.
The IS approach worked because it reduced the stacks of printouts and provided
managers with a tool they could use to extract the information to accomplish their
tasks. This worked because the data were not voluminous, and in some instances the
data were actually scarce. However, the days of scarce data are over for many sales
and marketing organizations. As the of scare data are over but this situation has
caused one manager of marketing data and systems to coin the phrase “information
ecology”, "more information than the organization can process is a form of pollution;
it is possible to have too much information." Upon this characterization of the
situation another marketing information term was being invented yet another
descriptive phrase: “infocarcinoma”, "cancer of the information system; advanced
stages lead to analysis paralysis.” These organizations were using the traditional IS
model to marketing and sales data, and they have found that this approach runs into a
major barrier: the size of the databases and the inherent limitations of managers using
information systems to generate insights from rows and columns of information,
along with simple graphs. Individuals simply cannot devote the necessary time to
generating all of the insights that are buried in the data. The human motor skills and
information processing mechanisms cannot keep up with any where near the 10
million new numbers that can arrive every Monday morning. To solve this problem
knowledge based systems were being invented.

A knowledge-based system is used to capture the manager's and analyst's expertise

and then let the knowledge-based system interact with the information system. It runs
the reports, analyzes the rows and columns of numbers, and sends the results to the
manager (McCann, 2007).

A knowledge-based system replaces the human in the use of the information system to
generate insights.
Figure 3: John M. McCann, 2007, The evolution of marketing systems; A
knowledge based system eliminating human element

The knowledge-based system substitutes for the marketing manager; it absorbs rows
and columns numbers from the MIS and uses them to produce documents such as
memos, reports, or sales presentations.

The goal of the knowledge-based system is the generation of insights from the
information which is produced by the information system from the data stored in the
database management system.
 CHAPTER 2

COMPONENTS OF MARKETING
INFORMATION SYSTEMS

Managerial decision making and planning comprises three basic levels in continuum
of complexity (Schultheis & Sumner, 1995);
1. Strategic planning
2. Tactical planning
3. Operational planning

Decisions become more and more complex as they move towards the top in the
continuum i-e towards strategic planning at the top managerial levels. The
information used at the operational level is used at the tactical level and tactical level
information is used at strategic planning level to aid the decision making processes.

Strategic
Planning C
O
M
P
Tactical L
Planning E
X
I
Operational T
Planning Y

Figure 4: stages of planning and decision making

1. OPERATIONAL MKTIS (Schultheis & Sumner, 1995)
Marketing information systems at the operational levels resemble the financial
operating systems which produce regular, recurring, eloquent, anticipated and
purposeful data which describe the past marketing activities. The information
produced by this part of MKTIS is comprehensive, highly ordered, precise, derived
from internal sources. This operational MKTIS is further divided into different
categories which are explained as under:

1.1 Sales information system

Sales are the bread and butter of the business. The major activities of the sales are
identification of the potential customers, making contacts with the customers, closing
sales and follow up on sales. The information systems support these sales activities
for sales person. The supporting information systems for sales information systems
are:

• Contact IS

It provides information about the customer contacts, their products or service

preferences, history of the sales calls made and information of visits by the customer.
• Prospect IS

This system can include the list of prospect / future probable customers by location,
by gross revenue, by product or by any other classification as per sales person.
• Telemarketing systems

It allows sales people to initiate contacts, offer products and services or follow up on
sales.
• Direct mail advertising system

Through direct mailing services sales documents can be easily distributed to the
customers. These systems not only record the information about the mailings to the
customers but also record the responses of the customers. This information is used to
calculate the future sales probabilities.
 • Inquiry information systems

This information system provides details about the customer inquiries about existing
or potential products. Information about the time, date, type of inquiry is stored to
help marketing managers analyze customer requests to identify opportunities for new
products for new products, improvements in existing products, and new improved
customer support services.
• Computer kiosks

Computer kiosks are a form of electronic marketing systems. Kiosks are small, round
or octagonal structures on sidewalk or other public places in Europe where news and
advertisements can be placed. They contain a multimedia computer microcomputer
system with a touch screen. Some businesses provide on-line catalogues from which
customers can select different products using a touch screen and purchase them with
accredit card. It is evident that technology is making the lives of the people changed
dramatically.

1.2 Distribution information systems

Any manufacturing business can have either public or private distribution channel for
the distribution of its products and services. Regardless of the type of distribution
channel the delivery of the products and services must be monitored properly by the
business. This is important to identify and correct any bottle necks in the system or
service. The speed of delivery of products and services is important for a business.

1.3 Supporting operational level financial accounting systems

The operational level financial information systems provide information about the
financial aspects which support the operational activities of the business.

• Sales order processing systems

Sales order processing system or order entry system provides information about
orders sorted by time period, salesperson, product and territory.
 • Point of sale systems

Point of sale systems are another form of sales order processing systems. POS are
found in fast food chain stores, department stores and grocery chain stores. This POS
provide input to the financial information systems, which ultimately provide
information to the marketing information system. Information provided by POS can
help build customer databases and shifting the focus from who is purchasing to what
is being purchased.

• Inventory information system

This information system provides information about inventory levels, stock-out

conditions, stock receipts, stock issues, stock damage, and the location and
distribution of stock within the organization. This type of information can help
salespeople to locate the low supply of products to its customers and can offer a
different or same product to the customer. The information and data provided by these
systems is also very useful in making strategic and tactical level decisions.

• Credit information systems

This information system provides the sales person with the information of how much
credit can be granted to a customer. This information is ordinarily integrated with the
order entry system of the financial information system.

2. TACTICAL MARKETING INFORMATION SYSTEM

(Schultheis & Sumner, 1995)

Tactical marketing information systems are different from operational marketing

information systems. Tactical marketing information systems produce detailed
reports, expected as well as unexpected outputs, descriptive as well as comprehensive
information, provides summary reports instead of detailed information, includes both
external and internal information, and produce subjective as well as subjective data.
Data produced by operational marketing information system is used by tactical
information system. Tactical decisions are made mostly by the managers when they
prepare and plan marketing plans through which they hope to reach the top
management's sales and profit goals.
2.1 Sales management information systems

The major objective of the sales managers is to reach the targets that have been set by
the top management. To achieve these business and marketing goals sales managers
must make tactical decisions. For these decisions information about sales territories,
sales force allocation, products and the services offered in a particular area, customers
served, pay and reward system of the sales people and which market segments to
serve is needed. On the basis of this information tactical decisions are changed over a
period of time.

For tactical decision the information needed is provided by these sales management
information systems. These systems produce reports analyzing sales activities that
help managers make decisions about sales people, territories, products and customers.
In addition sales managers need information to control current sales campaigns.
Information about these campaigns can be received by the manager on daily, weekly
or monthly basis. On the basis of these reports they can calculate the sales averages
and can forecast the next quarter or yearly sales. Similarly the rewards can be
designated to the sales people according to the ratio of sales made and territories can
be designed or re-designed on the basis of effectiveness of the sales campaigns.

Managers can compare and contrast sales, products, customers, and territory
information from one department against external benchmarks of success. They can
view the amount of money spent in the department on the salespeople versus support
staff in the organization or to the industry as a whole. They can estimate annual sales
budgets given a set of goals from top management.

The marketing manager must bring to the table not only historical data, trends, and
probabilities but also considerable knowledge of the current environment. Marketing
information systems do not make the decisions for marketing managers, they provide
information to support those managers in the decision making process.
2.2 Advertising and promotion information systems

Advertising and promotional tactics are also being developed by the marketing
managers so as to implement strategic sales goals set by top management. For the
purpose to market the products and services they have to decide which advertising
media and promotional devices to use; what type of market must be targeted and what
mix of products & services would be suitable. Advertising and promotion information
systems provide help managers in these tasks.

The reports based on the order entry system provide inputs for this information
system. These reports can be used to decide which area of products and services needs
help and requires more advertising and promotions. If marketing department receives
these reports at the right time than they can timely identify which products need
attention and which ones need to be pushed or pulled from the market for
effectiveness. They can close the gaps between actual and projected sales.

The data input from order entry system provides managers with the information about
effectiveness of any advertising and promotional campaigns, so that timely
corrections can be made in case of any bottlenecks in the system.

The decisions about the use of marketing tactics need input of information like market
segment history, the results of the previous advertising and promotional efforts and
sales history by market segment.

2.3 Product pricing information system

Product pricing information systems provide information to managers that helps them
set prices for their products and services provided. These information systems are
important because the price of a product and service is a crucial factor associated, and
affects the sales volume and profitability of the organization. Determination of the
price of a product is a critical process. Usually a marketing manager suggests a price
that can cover the production costs easily. The external factors that act in this regard
are the competitor's prices for similar products and services in the market. So, a
marketing manager must know the demand for the similar or alternative types of
products, the desired profit margin, and the costs of the production and prices of the
competing products.

The cost of products can be cost-plus pricing, which includes adding a markup to the
cost to provide desired profits. It can be demand-pricing, which includes pricing the
products on the basis of customer's perceived value of the product. Greater is the
perceived value, higher the prices that can be charged from the customers (Schultheis
& Sumner, 1995).

Prices can also depend on the objectives of the other organizations. A company can
decide to lower its prices as compared to its competitors for the same product and
penetrate in the market more aggressively. Once the company has developed its
customer base and has built up customer loyalty, they can charge higher prices for the
same products and services provided earlier. Such type of pricing strategy is known as
penetration pricing (Schultheis & Sumner, 1995).

For the products which are innovative and have no direct or indirect competitors or
alternatives in the market can be priced above their costs and above their usual
markups. The organization presenting the product may wish to earn maximum profit
from the product before any other competitor presents same or any alternative
product. This type of pricing strategy is called market-skimming pricing (Schultheis &
Sumner, 1995).

These pricing decisions also include what type of discounts can be allowed to
different types of customers, what promotional activities can be used such as
financing options and rebates.

For pricing of the products and services some companies provide their managers
which specific pricing models through which they can price their products and
services by entering relevant statistics and data. The type of data required can include
expected competitive prices, expected consumer pricing index, expected consumer
disposable income, volume of the products produced, costs of labor, cost of raw
material and value of expected advertising expenditures. These systems then use
arithmetic algorithms that help to represent the interrelationships of these factors.
2.4 Distribution channel decision support system

Another important tactical decision is how to market the products and services of the
organization. They have to decide whether they wish to sell al or part of their
products, directly or indirectly to customers and what channel to adopt for the
delivery and distribution of the products and services of the organization. To support
the marketing manager in these decisions marketing information system must provide
a distribution channel decision support system. This system must provide information
about the cots of using different distribution channels, reliability of various channels
in distributing different products and services, and market segment saturation
provided by the channels. It should also track the demand and inventory at all levels
of the distribution channels so the manager must anticipate the excess or shortfall of
the inventory levels.

3. STRATEGIC MARKETING INFORMATION SYSTEM

(Schultheis & Sumner, 1995)

To develop an overall marketing plan an organization may engage in variety of

strategic and tactical decisions. Strategic decisions may include segmenting the
market into target groups of potential customers based on common characteristics or
needs and wants or selecting those market segments which organization wishes to
reach, planning products and services to meet those needs, and forecasting sales for
the market segments and products.

3.1 Sales forecasting information systems

Sales forecasting information systems usually include several varieties of forecasted

reports. Forecast of the sales for the industry as a whole, for organization, for each
product and service and forecasts for the new products and services is produced by
sales forecasting information system. The results of these sales forecasts are further
divided into different categories by sales territory and sales division. Forecasting is
not only just mere projection of past trends. They may be based on assumptions about
the activities of the competition, governmental actions, shifting customer demand,
demographic trends, and a variety of other pertinent factors which can even include
weather.
Development of the sales forecasting reports is an important aspect for a business.
Those forecasting reports provide an important input for the tactical decisions. Errors
in the sales forecasting reports can affect nearly all facets of business functions.
Attempting to predict the future is a very difficult task. It is even more difficult for the
new products and services for which no previous data is present. Sales are projected
on the basis of knowledge about the fate of similar kinds of products in the market.

3.2 Product planning and development information systems

Product planning and development information system provide information about

consumer preferences obtained from the marketing research system and the customer
inquiry system available for the development of the products. The primary output of
planning and development activities is a set of product specifications. In a
manufacturing organization these specifications would be given to the engineering
department which will design and produce a product to meet those specifications.

When new product specifications are developed it is necessary to carry out all the
legal concerns. The product development system must provide appropriate
organizational personnel with sufficient information to ensure that they accurately and
completely address patent and copyright concerns, consumer product safety concerns,
and a host of legal issues pertaining to the new product.

4. TACTICAL AND STRATEGIC INFORMATION SYSTEM

(Schultheis & Sumner, 1995)
There are two important information systems that provide support both tactical and
strategic information system and they are marketing research information system and
competitive tracking information system.

4.1Marketing research information system

In larger organizations conduct market research. In smaller companies, market
research is completed by consultants hired from outside the company. The results of
this market research provide input to the tactical and strategic decision making. Inputs
to the market research are based on the information about customers, potential
customers, census and demographic data, industry or trade data, economic data, social
trend data, environmental data and scientific and technological data. This data can be
obtained by direct mail customer surveys, personal and telephone interviews, library
searches of governmental and industry reports, searches of external databases and
reports filed by sales personnel.

The typical activities performed by a marketing research information system are;

• Conducting trend analysis of industry sales of products and services and

comparison with the company data to identify products and services that are
on ascent or descent.
• Analyzing population and target group characteristics, especially for trends in
data that could affect the organization.
• Analyzing and identifying consumer preferences, including testing products
and services.
• Determining and analyzing consumer satisfaction with the organization’s
existing products or services
• Estimating market share for all or each product or service offered.

4.2 Competitive tracking information system

To be competitive in the market with the right marketing mix the organization must
keep itself abreast of the information of major competitors and their marketing
activities. This results in an organization which is far ahead of others in fulfilling the
needs and wants of their customers in particular market segments. The competitor
information includes information about competitor prices, products, sales, advertising
and promotional information. This information must be gathered if the organization
wants to be ahead of its competitors and wants to avoid lagging behind in the eyes of
its competitors. This information gathering task is performed by competitive tracking
information system.

Information about competitors is easily available in journals, newspapers and in other

published materials. These publications provide information about the new products
which are under development, prices of the products, new competitor schemes about
the products and services or about any new activity in the competitor circle. This
information helps to make changes in the marketing strategy according to the market
trends.

Information about competitor may also be gathered by paying visits on the competitor
outlets and meeting with their sales people or by conducting online searches over the
internet.

The above mentioned two information systems provide useful information for tactical
and strategic marketing information system which later on helps in the decision
making process by having an insight into the internal and external marketing activities
of the organizations.

DATABASES, DATA WAREHOUSES, AND DATA MINING

A marketing information system uses data from variety of sources both within the
organization and from outside suppliers. Typically these data are organized, stored
and updated in a computer. The assembled data pertinent to particular topic __
customers, market segments, competitors or industry trends, for example __ is called
a data base.

Research probe databases with specific questions to uncover useful relationships and
developments. For example, the managers of a retail supermarket chain might want to
know which items are purchased most frequently in each of its stores. By having the
computer sort through the electronic records of all completed transactions, this
information can be compiled quickly. The resulting tallies can be used to customize
each store’s layout and improve customer convenience. Databases are not new. For
years managers have been monitoring their customers and the environment.
Computers, with their speed and capacity, have simply made the process more
manageable, efficient and accurate.

Analyzing databases has enabled marketers to better understand marketplace behavior

and, as a result, address their customers’ needs more specifically. Some believe that
through the management of data, marketers will eventually reach the ultimate level of
personalized marketing __ targeting individuals. A move in that direction, called
transactional segmentation, is being used by some banks to retain customers. By
comparing an individual customer’s transaction patterns to a database of all
customers’ transactions, a bank can often anticipate needs. With the information in
hand, the bank can design individually tailored programs.

Some organizations move beyond databases to create large and complex repositories.
Acknowledging that they are more than simply a “base” of data, these collections are
called data warehouses. A data warehouse is an enormous collection of data, from a
variety of internal and external sources, compiled by a firm that is conducting
transactions with millions of customers.

Data warehouses can be analyzed in the same way as databases, searching for
predetermined patterns in the data. However, because of their size it would be a slow
and cumbersome process. Fortunately, more advanced statistical and artificial
intelligence techniques are now being applied to data warehouses. These techniques
are called Data Mining. These techniques have a capability to identify patterns and
meaningful relationships in masses of data that would be overlooked or
unrecognizable to researchers.

Major data sources

The data used by researchers and managers in databases and data warehouses are
gathered from many sources. Internally, data can come from the sales force,
marketing, manufacturing and accounting. Externally, information is available from
hundreds of research suppliers.

Some sources provide a continuous flow __ as when all transaction data for a retailer
are fed into the system __ whereas others are occasional or periodic providers’ __ as
when new demographic information on the population is released by the government.

Probably the most important data sources for databases are retail scanners, the
electronic devices at retail checkouts that tread the bar code on each item purchased.
Scanners were originally intended to speed up check out and reduce errors in
supermarkets. By matching an item’s unique code with price information stored in a
computer, the scanner eliminated the need for clerks to memorize prices and reduced
mistakes from hitting the wrong cash register key. However, retailers quickly
discovered scanners could also produce information on purchases that could be used
to improve decisions about how much of a product to keep in inventory and the
appropriate amount of shelf space to allocate to each product.

Many retailers have taken scanning to a next step by adding the customer’s identity to
the record of their purchases in what are called frequent shopper programs.
Participants in the stores’ frequent shopper programs are given special discounts if
they permit the cashier to run their membership card through a reader when they
check out. This allows the store to combine data stored on the card about house hold
demographics and life-style with the shopper’s scanned purchases. The store is then
able to relate product choices to household characteristics and adjust the product
assortment and store layout to make it more appealing.

Linking household information to product purchases is even more valuable if you

know what advertising the purchasers have been exposed to and the coupons they
have used. Information resource, Inc. (IRI), a marketing research firm, has created a
database to provide this information. The firm maintains a sample of cooperating
households for which it:

• Maintains an extensive demographic profile

• Monitors television viewing electronically
• Tracks the use of coupons
• Records grocery purchases

The result is that household demographics can be correlated to television advertising

exposure, coupon usage, and product purchases. The output is called single-source
data because all the information can be traced to individual households, providing a
single source for the data.
 CHAPTER 3

APPLICATION OF MANAGEMENT IN
FORMATION SYSYTEM IN
MARKETING MANAGEMENT
The marketing management function deals with satisfying customers. The scope of
the function starts from identifying the need for customers, evolving product concept,
designing the product, positioning the product in the marketing and selling at
appropriate price. In the process of performing the marketing function, activities such
as market research, consumer survey, advertising, sales promotion campaign, stocking
of products, developing dealer distributor network from the major tasks.

The function has a very strong interface with the production and finance department.
It relies heavily on production for uninterrupted supply of goods, appropriate stock
replenishments and inventory at various locations. The major source of finance in the
organization is sales, and marketing has a responsibility to obtain the orders from
customers and fulfill them.

The control of sales from the point of view of sales income is a major task of
marketing management. Forecasting of sales, evolving marketing strategies, pricing,
product designing and launching are some of the key responsibilities of marketing
management. Retaining market share, penetrating into new markets, assessing
consumer responses to a new market, launch are the challenging tasks of the
marketing management. In a competitive environment, the function assumes key role
in the organization. The major responsibility of the function then remains to evolve
competitive strategies in all the branches of marketing management.

Input transaction documents

The most important transaction documents used in the marketing management

function include (Jawadekar, 2007):
 • Customer order
• Order acceptance
• Delivery note
• Invoice, credit note, debit note

As a support to these transactions data is borrowed from company literature such as

price lists, product literature, etc. marketing function needs a host of other information
which is not transaction based. It draws heavily from sources such as product
journals, industry association publications, for industry data.

These transactions may take place at various locations but their assimilations has to
take place to conclude the marketing result. The number and nature of transactions
would vary depending upon the product, marketing organization, and infrastructure of
production and warehouses.

APPLICATIONS

ACCOUNTING

There are several highly process-oriented accounting applications of marketing

management. The main accounting entity is sales in terms of quantity and value. The
detailed entities are as follows(Jawadekar, 2007):
1. Product sale
2. Product family
3. Sales value
4. Sales tax
5. Dealer
6. Distributor
7. Customer
8. Excise duty
9. Zone
10. Area
11. Inventory
 12. Receivables
13. Market segment
14. Exports market
15. Returns
16. Complaints

Accounting applications build a lot of basic data for the organization, which meets the
needs of statutory compliance and operations update.

Query

The queries in marketing management are on customers, product, price, stock, sale,
and certain cumulative statistics pertaining to sales. The query may be on order
pending position followed by whether stock exists for allocation to the order. If the
customer order is to be fulfilled by manufacturing, then whether manufacturing order
is issued and if so, what is its status?

The query could be on assessment of sales performance on single dimension or multi-

dimensions by comparison between two product groups, customer groups, zones and
areas. The query could be on the performance of overall sales in relations to the
budget.

In marketing function, a lot of importance is given to the handling of customer

complaints. The queries are raised on its satisfactory disposal. Many times, queries
are on basic data such as product specifications, price and discounts, quality, names,
and address of customer, dealers, and distributors.

Decision analysis

In day to day functioning, the decisions required to be taken are on pricing, allocation
of stocks to orders, acceptance of order, discounts and commission, deciding sales
terms and so on. In most of these decision areas, decisions are rule based and can be
supported by decision support system.
The complex decisions are price increase or decrease, deciding on a new product,
packaging, distribution channels, product positioning. These decisions have far
reaching effects on the marketing performance. They fall in the category of strategic
and tactical decisions.

Applications are developed to support these decision building models such as break
even model, risk analysis model, distribution mode, network model, product launch
model etc. they form the basis for analyzing the decision alternatives and their impact
on marketing performance, prospects and growth.

The organization in consumer industry have applications which are designed to

collect consumer information on preference, behavior, response to advertising
campaigns etc. this data is collected on a routine basis to build up independent
database on consumer profiles, product rating and buying decision. Some
organizations collect this data from the point of sale, dealers and distributors. The
database then is used for various top management and middle management decisions
in planning and execution.

Control

In marketing management, there are a number of factors, which need to be controlled

for achieving business goals. These factors are sales vs. budget, marketing cost vs.
budgeted cost, product sale vs. target fixed for market segments _ distributor, dealer,
branch and marketing persons, planned sales programme vs. actual sales vs.
competitor’s sales.

The applications are developed to report on these comparisons. However, a selection

routine is added in each application to bring out abnormal variations between actual
versus expected. This helps to take specific decisions and action in the area of
shortcoming or failure.

Some control applications help to correct ongoing operational performance. Some

applications help to reset the direction or trend in the development towards desired
goals or objectives. Some application help to take decisions on strategic subjects such
as product positioning, pricing, choice of market segment, design and so on.

The control applications in marketing are designed with a very narrow focus for
pinpointed attention, decision and action. It requires considerable understanding of
behavior of the consumer, market, product and competition. Many times corrective
action is required in the areas other than marketing. Marketing decisions take long
time to respond and their implications are difficult to judge in short durations. The
control applications required by the top and the middle management in marketing are
non-standard, industry specific and are linked to business philosophy, policy and
strategy.

Reports
Statutory compliance
In marketing management, statutory compliance is mainly related to taxes and duties
and filing the returns to appropriate government authorities. The main reports are
sales tax register and returns and excise duty returns. In some industries like alcohol,
tobacco, gold etc., the organization is required to keep the information in a format
prescribed by the government and file the returns in that format. These documents are
to be kept up-to-date and are subject to surprise checks by government auditors and
inspectors.

Information update
These reports are based on summaries of various entities such as orders, value, sales,
stocks, budgets with reference to the past, current and future projections. They are
produced regularly at equal intervals with classification on various accounts and are
distributed to the concerned agencies.

The information update reports are as under (Jawadekar, 2007):

1. Product sales ledger
2. Sales summaries
3. Accounts receivables
4. Orders received and accepted
5. Sales analysis
 6. Aging of receivables
7. Contribution analysis
8. Market analysis
9. Competition analysis

Most of these reports are generated as functional information and they are not related
to an individual’s needs. It is expected that these reports will be used by all concerned
by picking up relevant information suited to them. These reports have a fixed general
format and they are produced in a summarized fashion in line with organization
structure, i-e., the reports will be made by branch, Zone and Area.

There are eleven factors, viz., customer, class of customer, market segment, product,
product family, sales representatives, branch area and zone, dealer and distributor,
which are used for classification and summaries in these reports. Such factorial
analysis gives valuable information and builds marketing knowledge helping to
evolve the strategies in marketing.

Operations update

These reports inform the details of the marketing operations ranging from orders
received, processed, accepted, executed, dispatched, billed and money recovered.
These reports are processed by way of daily transaction processing and making
statistical summaries for quick update. They are not analysis reports but reports
informing facts on day to day operations. These are made for junior management
personnel in marketing and related functional areas such as store and accounts.

A typical report will indicate daily order received and orders invoiced. Some more
typical reports are as follows (Jawadekar, 2007):
1. Order book
2. Dispatch report
3. Inventory
4. Invoice
5. Customer complaints
6. Complaints disposed
These reports are produced with reference to a date and cumulative since beginning of
the year. No high order data processing is involved. Transactions during a day are
processed in document sequence and grand summaries are taken on a daily basis, such
as daily sales, dispatches, inventory and invoice. These reports provide guidance to
the operating personnel as to how they are performing. No external information is
connected and processed along with this statistical data.

Decision analysis

Decision analysis reports convey whether the desired / expected results are realized or
not. These reports tie up the specific decision to its results. For example, a decision is
taken to launch an advertising campaign in two segments to test the efficiency of the
campaign. A report analysis pre- and post-sales of the campaign will indicate a good
advertisement.

In marketing function, a number of such decision situations are present, where

analysis or sales is necessary, to confirm whether the choice of alternative is correct or
not. The analysis may be with reference to price, choice of market, packaging, design
and so on. Market research analysis reports fall in this category. These reports are
unstructured and are decision specific.

There is another class of reports, which are generated using models, for example risk
analysis model throws light on market share, given the probable conditions of the
company and its competitor in price, market, design, and so on. New product
introduction, break even analysis, product market mix, marketing expense and
marketing mix are the examples of decision analysis models helping the marketing
management to take a correct decision.

Action update

The action update reports will lead to such decisions as price reduction, withdrawal of
product from the market, changing the product position, allocating more budgets for
expenses, inventory and personnel resources. Some of the action update reports
are(Jawadekar, 2007):
• Sale versus budget
• Expense versus sales
• Sales growth versus sale objectives
• Sales versus market segment versus budget
• Stock versus budgeted stock levels
• Complaints versus number of complaints serviced
 CHAPTER 5
APPLICATION OF INFORMATION
SYSTEMS IN E- BUSINESS

With the emergence of internet, business organizations have undergone structural,

cultural and qualitative changes, and a new organization has emerged known as E-
business enterprise. E-business enterprise enables employees, professionals, teams,
groups, vendors, customers to perform business operations through electronic
exchange of data and information anywhere at anytime.

Internet has given E-business enterprise a cutting edge capability advantage to

increase the business value. It has opened new channels for businesses as buying and
selling can be done on internet. It enables top reach new markets across the world
anywhere due to communication capabilities. It has empowered customers and
vendors / suppliers through secured access to information to act, wherever necessary.

Internet is creating a universal bench or platform for buying and selling of goods,
commodities and services. It enables integration of information, facilitate
communication, and provide access to everybody from anywhere. Software solutions
make them faster and self reliant as they can analyze data information, interpret and
use rules and guidelines for decision making. The basic capabilities of internet have
given rise to number of business models.
Virtual store
Amazon.com, rediff.com, ebay.com
Information store
Yahoo.com, msn.com, rediff.com
Transaction process
Icici.com, billjunction.com, seekandsource.com
Online marketing
Education.com, seekandsource.com
Content selling
Timesofindia.com, gartner.co, Aberdeen.com
Online services
Railway, restaurants, airlines booking, online maintenance service, online
examination
Virtual communities
Linux group
E-learning
sifyelearning.com

The business process of serving the customers to offer goods, products or services is
made of following components(Jawadekar, 2007):;
• Enquiry processing
• Order preparation
• Order placement
• Order confirmation
• Order planning
• Order scheduling
• Order manufacturing
• Order status monitoring
• Order dispatching
• Order billing
• Order receivable accounting
• Order payment processing

IT, the backbone of E-enterprise, enables more precise target marketing towards
intended audience. Organizations use websites and portals to store and share
information, use networks to communicate, coordinate, and collaborate amongst
structured teams and virtual teams. In marketing system, IT helps to reach customer
directly, and is in the position to understand customer behavior, customer behavior,
customer’s demographic / psychographic profile; it then helps to segment market by
customer for advertising, promotion and contact.
The architecture of these processes enables to receive inputs from other functional
systems like marketing, manufacturing, and HR and process the same to account and
analyze the impact on the business performance, be it cost, profit or productivity. An
integrated E-business system is capable of forecasting resources requirement,
managing resources, budgeting capital, sales, and manpower and measuring financial
performance.

E-commerce

E-business essentially deals with buying and selling of goods. With the advent of
internet and web technology, E-commerce today covers an entire commercial scope
online including design and developing, marketing, selling, delivering, servicing, and
paying for goods. Some e-commerce applications add order tracking as a feature for
customer to know the delivery status of the order.

Marketing, Customer interactions,

Customer Advertising, Negotiations,
Product information, Payment,
Configuration guidelines Ordering and processing
Servicing, Delivery processing,
Problem solving, Dispatching,
Customer
Support Customer acceptance

Figure: (Jawadekar, 2007):E-commerce process model

The entire model successfully works on web platform and uses internet technology. E-
commerce process has two participants, namely buyer and seller, like in traditional
business model. And unique and typical to E-commerce is one more participant
known as ‘Merchant Server’. Merchant server role in E-commerce ensure secure
payment to seller by authorization and authentication of commercial transaction.

E-commerce process model can be viewed in four ways and categories.

B2C: Business organization to customer
B2B: Business organization to business
C2B: Customer to business organization
C2C: customer to customer

In B2C model, business organization uses websites or portals to offer information

about products, through multimedia clippings, catalogs, product configuration
guidelines, customer histories and so on. A new customer interacts with the site and
uses interactive order processing system for order placement. On placement of order,
secured payment systems comes into operations to authorize and authenticate
payment to seller. The delivery system then takes over to execute the delivery to
customer

In B2B model, buyer and seller are business organizations. They exchange technical
and commercial information through websites and portals. Then model works on
similar line like B2C. More advanced B2B model uses Extranet and conducts
business transactions based on the information status displayed on the buyers’
application server. Auto component industry uses this model for supplying parts and
components to auto manufacturer based on the inventory levels and production
programme.

In C2B model, customer initiates actions after logging on to seller’s website or tpo
server. On the server of the selling organization, E-commerce applications are present
for the use of customer. The entire banking process works on C2B model where
account holder of the bank transacts number of requirements such as seeking account
balance, payment, money transfer and so on.

In C2C model, customer participates in the process of selling and buying through the
auction website. In this model, website is used for personal advertising of products or
services. E-newspaper website is an example of advertising and selling of goods to the
consumer.

In all models there are two channels: one channel deals with information delivery and
sharing and other channel deals with the commercial aspects of buying and selling.
These two channels are built on back-end systems, which collect data and process it to
create information databases. The users of these databases could be organizations or
individuals in the capacity of buyer or seller. The participants have an authorized
access to information and have rights to read, write or use it in any of the application.
But to perform these activities certain intermediaries are required to handle the
communication traffic between the two parties in B2b, B2C, C2B and C2C. the
intermediaries are:

Hardware suppliers: servers, clients, routers and network card providers

(Jawadekar, 2007):

• Network access providers (ISP)

• Information access providers (internet browsers such as Netscape, adobe,
internet explorer)
• Payment processors (Master card, Visa)
• Website design providers (Consultants and web developing companies)
• Web directory providers (Yahoo, Alta vista, and Lycos)

People involved in E-Business model other than users of the models are
(Jawadekar, 2007)::

• Webmasters
• Web designers
• Web developers / programmer
• Content provider
• Content designer
• Web administrator
 MD

CHIEF
INFORMA-
-TION
OFFICER

INFORMAT-
ORGANIZA- ORGANZI--
I-ON
-TION FOR
BACKENED
TECHNOLO ATION
GY FOR WEB
SYSTEM
PROVIDERS

WEB
/ERP DATA
ACQUISITIO SYSTEM DESIGNER
WEB
SCM/ N&
PROCESSING
DBA ADMINIS S,
PROGRAM MASTER
TRATOR
CRM SYSTEMS
ERS

NETWOR
SYSTEM
K WEB
DESIGNE
RS
ENGINEE AUTHOR
RS

CONTENT
PROGR PROVIDERS
AMERS AND
DESIGNERS

Figure: E-business organization structure

 CHAPTER 6
BENEFITS OF MARKETING
INFORMATION SYSTEM

MKIS helps organizations in efficient channel management. Following can be

.identified as some of the benefits of MKIS

1. Customer profiles need to be maintained focusing on their habits and spending

patterns. MKIS helps in maintaining these profiles.
2. Information on what competitors have been up to is also critical marketing
information. This should not be taken as espionage on competitors.
3. Forecasts of demand are also a critical part of marketing analysis. MKIS helps
in achieving this as well.
4. Field sales can also be monitored where sales agents are used to market
products.
5. Customers can be quickly updated based on their information kept in MKIS.
6. Dealers involved in sale of product can also be monitored to help enhance
revenues

NEW DIMENSIONS IN MKIS

Through extensive use of computers in marketing field, newer concepts are emerging
.in marketing field, which are revolutionising the way customers were dealt with
• Customer Relationship management (CRM)
• Sales Force Automation (SFA)
• Call Centres

Customer Relationship Management

•Businesses increasingly talk about fostering relationships with their customers. This
is important because some modern businesses have literally millions of customers.
Hence keeping personal touch with every individual customer is getting difficult to
achieve.

•Companies are clearly eager to nurture relationships with their customers. Businesses
need to understand the extent to which consumers want to engage with their brands.
For some businesses there is
–Either a strong natural need – banks
–An emotional attachment – Fashion retailer, car manufacturer

Benefits of CRM

•Maintains and enhances customer base

•Encourages customer loyalty
•Gaining more customers’ wallet-share
•The more effective a company's customer retention and defection management
strategy, the less they need to plug the gap with new customers, who are expensive to
recruit.
•CRM help in establishing communication to encourage customers to share
information about their
–Habits,
–Tastes and preferences
–Interests in Co’s brand extension initiatives
•CRM is a business strategy that goes beyond increasing transaction volume.
•Its objectives are to increase profitability, revenue, and customer satisfaction.
•To achieve CRM, a company wide set of tools, technologies, and procedures
promote the relationship with the customer to increase sales.
•Thus, CRM is primarily a strategic business and process issue rather than a technical
issue.

Reasons for adopting CRM

•Customers now prefer to execute transaction in an electronic environment through

online-trading. Also the establishment of customer services centers has also removed
the inconvenience to access vendor’s physical locations.
•Due to absence of physical contact, companies are curious to keep a soft touch in an
efficient manner. This requires keeping a customer-wise online track of past
correspondence and transactions.
•CRM reduces cost of sales and distribution by
–Targeting advertising to customers to increase the probability that an offer is
accepted
–Using web applications to decrease the number of direct sales people and
distribution channels needed
–Managing customer relationships rather than manage products (a change in
marketing)
•CRM minimize customer support costs by
–Making information available to customer service representatives so they can
answer any query
–Automating the call centre so that representatives have direct access to
customer history and preferences and therefore can cross-sell

Key CRM Tasks

•Customer Identification -- Identifying customer through

•Marketing channels,
•Transactions, and
•Interactions overtime
•Customer Differentiation – Segregating customers, with respect to.
•Their lifestyles
•Attitudes
•Perception about Co.’s products
•Customer Interaction – Efforts made to retain customers for long-term profitability
and relationship.
•Customization / Personalization
Treat each customer uniquely” is the motto of the entire CRM process. Through“
.the personalization process, the company can increase customer loyalty
CRM Issues
•Customer Privacy
Customer privacy is an important issue in CRM. CRM deals with large amounts
of customer data through various touch points and communication channels. The
individual firm is thus caught in an ethical dilemma – collecting as much
.information as possible but still respecting limits for personal privacy

•Software Issues
There are little standardized technologies and protocols for CRM implementation
in the market. Vendors publish new versions of CRM software as frequently as
they can thus adding to client’s expenses. CRM software requires highly
.integrated environment for high productivity, which is rarely available

Sales Force Automation

It automates some of the company's critical sales and sales force management
,functions, for example
•Customer account management,
•Forecasting sales,
•Sales administration,
•Keeping track of customer preferences,
•Sales staff performance.
SFA empowers the sales force to close deals at the customer’s office and to configure
marketing strategies at home. SFA is providing tools for very highly evolved sales
.organizations, organizations that are basically marketing machines

CALL CENTER
Due to its direct contact with customers, call center is widely gaining popularity. It
refers to a department within a company or a third-party organization that handles
telephone sales and/or service. Call centers use automatic call distributors (ACD’s) to
route calls to the appropriate agent. In addition to a call centre, collective handling of
letters, faxes, and e-mails at one location is known as a contact centre. As computers
gain more and more involvement in marketing field, presence of a highly efficient and
integrated call center has become inevitable. Call centers should have direct access to
every customer’s track record so as to help them handle queries in an efficient
manner. Modern day call centers, record the telephonic conversation with the
customers, extract a summary of it, and display it every time the customer calls so as
.to help attendant review entire record

Call Center-Challenges

Call centre agents are challenged daily to navigate disparate, non-integrated

applications as they attempt to resolve customer service requests. The call centre
should offer an integrative solution so that customers can be responded efficiently.
Call centre should help cut long processing times which add to customer frustration
.and dissatisfaction with the company
 CHAPTER 7

FOR BETTER OR FOR WORSE?

ETHICAL ISSUES IN MARKETING
RESEARCH
As the desire for better data collection increases and the techniques and technology
for gathering data improves, marketers are faced with an increasing variety of ethical
issues related too the collection and use of research information. Typical ethical issues
concerned with the marketing research are:

Privacy in data collection

It is possible to observe people with hidden cameras, identify an individual’s purchase

behavior by combining scanner data and credit card or check-cashing records, and
track internet activity with cookies. Here an important question arises that at what
point does data collection became an invasion of privacy? Several cases have been
observed where online surveys were conducted claiming that the responses will be
kept anonymous when in fact the company was retaining the names and addresses of
the respondents. Although the company claimed that respondents’ identities were not
used in any way, it’s clear that responses were not anonymous.

Privacy in data usage

In the routine process of business, firms often gather a considerable amount of

information about their customers. This information if linked to an individual’s name
and address could be highly valuable to other businesses. For example, airlines have
information about travel behavior that a travel magazine publisher would find useful.
The question is does the airline has any right to sell that information to a magazine?

Intrusiveness

All marketers want information. The problem is that gathering that information can be
annoying and inconvenient for the respondent. Telephone surveys conducted around
dinner time, extraneous data collected at the time of purchase, and questionnaires sent
to people t work can all be intrusive. The issue here is at what point does requesting
information become excessively intrusive?

Deceptive implementation

On occasion, researchers use trickery to gather data. For example, phoning a business
and fallaciously representing oneself as a potential customer in order to collect data,
or intentionally misleading respondents about the sponsor or objective of research are
deceptions. Some researchers intentionally don’t disclose to respondents that they are
research subjects participating in a study. For example, a researcher in a grocery store
pretending to be a shopper and asking fellow shoppers their opinions of products or
brands is nondisclosure. In most cases, these deceptions are harmless and are actually
viewed by researchers as essential to gathering candid responses. However, at what
point is extracting information from a person under false or misleading sham badly
chosen?

False representation

Practices called “sugging” (selling under the guise of research) and “frugging” (fund
raising under the guise of research) are unfortunately so common that they are
negatively affecting the ability of legitimate researchers to gain respondents’
cooperation. Practitioners of these techniques use the ruse that they are researchers
conducting a survey. After securing the cooperation of unsuspecting consumer and
posing few questions, they attempt a sale or ask for a donation. Some argue that
research and selling or fund raising should never be combined in the same
presentation. Others contend that the issue is whether the consumer is misled, not
what is presented.

SECURITY OF INFORMATION SYSTEM

The information systems are vulnerable to modification, intrusion or malfunctioning.
Hence they need to be secured from all these threats be devising a sound security
system.

“Information assets are secure when the expected losses that will occur from threats
eventuating over sometime are at an acceptable level.”
Some losses will inevitably occur in all environments. So eliminating all possible
losses is either impossible or too costly. Level of losses should be specified. The level
of losses decided should be linked with a time period in which the occurrence would
be tolerated. The definition mentions threats, which can be either

• Physical, (e.g. Theft, rain, earthquake, disasters, fire) or

• Logical (e.g intrusion, virus, etc)

Examples of intrusion
The security might be required to stop unauthorized access to the financial system of a
bank from executing fraudulent transactions. The purpose of intrusion may not only
be to damage the database of the company but may be limited to stealing customer list
for personal use transferring money illegally. An employee before leaving the
company may have to be stopped from data manipulation, though he is having
authorized access to the system.

Management’s responsibility
Executive management has a responsibility to ensure that the organization provides
all users with a secure information systems environment. Importance for security
should be sponsored by the senior management. This would make employees/users of
IS, feel the importance of secure environment in which the IS works and operates un-
tampered.

Importance of Security
Sound security is fundamental to achieving this assurance. Furthermore, there is a
need for organizations to protect themselves against the risks inherent with the use of
information systems while simultaneously recognizing the benefits that can accrue
from having secure information systems. Thus, as dependence on information systems
increases, security is universally recognized as a pervasive, critically needed, quality.
 Security Objective
Organization for Economic Cooperation & Development, (OECD) in 1992 issued
“Guidelines for the Security of Information Systems”. These guidelines stated the
security objective as
“The protection of the interests of those relying on information, and the information
systems and communications that delivers the information, from harm resulting from
failures of availability, confidentiality, and integrity.”
The security objective uses three terms

• Availability – information systems are available and usable when required;

• Confidentiality – data and information are disclosed only to those who have a
right to know it; and

• Integrity – data and information are protected against unauthorized

modification (integrity).
The relative priority and significance of availability, confidentiality, and integrity vary
according to the data within the information system and the business context in which
it is used.

Scope of Security
The concept of security applies to all information. Security relates to the protection of
valuable assets against loss, disclosure, or damage. Valuable assets are the data or
information recorded, processed, stored, shared, transmitted, or retrieved from an
electronic medium. The data or information must be protected against harm from
threats that will lead to its loss, inaccessibility, alteration or wrongful disclosure.

Types of Information Assets

The question is what needs to be protected in an Information systems environment? In
a manual environment, usually the records kept in hard form are the main information
assets to be safeguarded against various threats. In a computerized environments the
sensitivity of the record being kept is enhanced.
 Security Policy
The organization that is concerned with protecting its information assets and
information system should devise a security policy to be communicated formally to
all concerned in an organization. The security policy should support and complement
existing organizational policies. The thrust of the policy statement must be to
recognize the underlying value of, and dependence on, the information within an
organization.

Contents of Security Policy

Security policy is a critical document which should be designed to include almost all
aspects of security issues.
• The importance of information security to the organization;
• A statement from the chief executive officer in support of the goals and
principles of effective information security;
Specific statements indicating minimum standards and compliance requirements for
specific areas:
•Assets classification;

•Data security;

•Personnel security;

•Physical, logical, and environmental security;

•Communications security;

•Legal, regulatory, and contractual requirements;

•System development and maintenance life cycle requirements;

•Business continuity planning;

•Security awareness, training, and education;

•Security breach detection and reporting requirements; and

•Violation enforcement provisions

•Definitions of responsibilities and accountabilities for information security, with

appropriate separation of duties

•Particular information system or issue specific areas; and

•Reporting responsibilities and procedures

Now the question that arises is how a security policy is to be devised. The
organizations interested in raising the security levels of their information system
undergo what is commonly termed as “Security Program” or “Security Review”. This
can be seen as a first attempt to devise a formal security policy for the organization.
Security Program
A security program is a series of ongoing regular periodic reviews conducted to
ensure that assets associated with the information systems function are safeguarded
adequately.”
The first security review conducted is often a major exercise

Conducting Security Program

There are certain steps which need to be undertaken for conducting a security
program.

Preparation of Project Plan

In this phase the review objectives of the security program are specified. The scope of
the work to be done needs to be defined at the outset. Since there are possibilities of
getting bogged down into the unnecessary details? This would help avoid too much of
unnecessary work which may be undertaken with little benefit ahead.

Major components of the project plan

•Objectives of the review: There has to be a definite set of objectives for a security
review e.g. to improve physical security over computer hardware in a particular
division, to examine the adequacy of controls in the light of new threat to logical
security that has emerged, etc.
•Scope of the review: if the information system is an organization wide activity, what
needs to be covered has to be defined, e.g. scope will determine the location and name
of computers to be covered in the security review, etc.
•Tasks to be accomplished – In this component, specific tasks under the overall tasks
are defined e.g. compiling the inventory of hardware and software may be one of
many specific tasks to be undertaken for security review.
•Organization of the project team – A team is organized based on the needs of the
security review.
•Resources budget – What resources are required for conducting security review.
•Schedule for task completion – Dates by which the tasks should be completed along
with the objectives to be achieved.
 Identification of Assets
Identifying assets is the primary step in determining what needs to be protected. The
classification of information assets is already stated above. Unless the assets are
defined, the related risks cannot be determined that easily.

Ranking of Assets
The assets identified earlier should be given a rank according to the importance they
have. Following are the critical issues

• Who values the asset? – Various interested groups (end user, programmer, etc)
may be asked to rank the assets in accordance with the criticality of usage and
importance to them and to the organization e.g
o a scale between 0 to 10 can be used for this purpose.
o Degrees of importance may be defined as very critical, critical, less
critical, etc.
•How the asset is lost? – a customer master file might be accidentally damaged but the
impact of being stolen would be higher.
•Period of obsolescence – within what time the asset becomes of no use without being
used. As time passes by, assets keep losing value which also affects the security
review.

Threat Identification
“A threat is some action or event that can lead to a loss.”During this phase, various
types of threats that can eventuate and result in information assets being exposed,
removed either temporarily or permanently lost damaged destroyed or used for un-
authorized purposes are identified.
 CHAPTER 6
CASE STUDIES
TESCO WINNING THE CUSTOMER
LOYALTY AT BEST

Companies start loyalty programs to encourage additional purchases, but a the brains
behind one of the world's most successful loyalty programs believe that that assertion
is the first step toward failure. According to Clive Humby and Terry Hunt what
companies really need to do is to establish loyalty programs that thank customers for
previous purchases rather than encourage them to buy more. That approach is
instantly understandable to anyone who has a wallet full of cards just needing a stamp
or two to qualify for a “free” sandwich or cup of coffee. Recently the people, of
whom club card is brain child, Humby and Hunt, assisted by Tim Phillips, wrote a
book named Scoring Points: How Tesco Is Winning Customer Loyalty. This book has
a detailed insight into how Tesco how club card idea was perceived, used its Club
card loyalty card to become the largest supermarket chain in the UK, and the largest
grocery e-tailer in the world. The club card also laid a foundation for a profitable
Tesco-branded bank. It has also fueled substantial overseas expansion and, most
importantly, improved profitability of the company to larger extents. This program
was started in 1995 and since then the club card has brought in to accounts of the
company more than £1 billion in the form of profits. Tesco required the program to
pay for itself within years of its initiation and tested rigorously to make quite sure that
it did. A student card, the Clubcard Plus payment card and a number of incipient clubs
along the lines of the Wine Club and the Baby Club fell by the wayside because they
didn't meet the financial performance criteria of an ever hardheaded retailer. Clubcard
swiftly evolved from being a way to boost short term sales to becoming a fundamental
tool for determining ranging and pricing. It led the way for Tesco to enter whole new
sectors including financial services, home delivery and latterly telecommunications.
Above all, Clubcard is a mechanism which fulfils the promise of the Tesco brand
every little helps. The range of the programme has become colossal. What is
fascinating is the accounts of the problem solving at each stage.

The scope and capabilities of Club card are astounding. Right at the start the data
planner recognized that the current computing power wouldn't allow them to analyze
more than a small proportion of customers and to capture a small proportion of the
data available. Each transaction captured 20 numbers and they analysis only 10% of
the base. The planners had to derive lifestyle segmentations based purely on the
analysis of shopping baskets. Tesco collects data on each head of lettuce, can of peas,
bottle of wine or other item purchased by more than 10 million Club card members. It
analyzes this tsunami of data to send a magazine with segment-specific content and
six highly targeted coupons to each member four times a year.

Tesco provides four coupons for products the customer already buys in routine
manner, and two are for products that the customer has never bought before but there
is some potential for the buyer to buy. As of 1999, Tesco was sending out 145,000
combinations of magazines and coupons. These figures are much higher today.

Numbers of companies do excessive promotions which genuinely just rob future sales
instead of giving them a boost; Tesco has an advantage of performing a thorough
analysis which enables it to generate more than £100 million in incremental sales each
year. Another benefit of this analysis is that they can accurately calculate the return on
investment. “By monitoring short-term coupon redemption rates and then tracking the
ongoing transactional activity of the members across all store departments, Tesco
could calculate precisely the return on investment.”

Three Dimensional Cubes

Tesco has categorized its customers in a three dimensional cube. The three dimensions
defined for the customers are;

1. Contribution to profitability
2. Commitment of the customers
3. Championing the brand
Some imminent results from “placing” customers inside a three-dimensional cube are:
1. The first axis is called “contribution”. It examines current customer
profitability. Interestingly, Club card focuses on improving loyalty from all
customers, including the unprofitable customers.
2. The second axis is “commitment”. It measures future customer profitability.
This contains two elements. The first is a measure of how likely the customer
will remain a customer, and the second is “headroom.” Headroom is essentially
share-of-wallet, or the potential to increase value in the future.
3. The third axis is “championing”. Championing is the potential to become a
brand ambassador or, at a higher level, a “brand mentor,” like those mothers
who sign pregnant daughters up for Tesco's Baby Club.

Key Principles of Club Card Program

These are key principles of the Club card program:

• Be self-funding: The program must pay for itself. Tesco limits its marketing
budget to 1% of gross sales and drops any activity that does not produce a
sustainable sales uplift.

• Be creative: In the beginning, technology and budget constraints prevented Tesco

from analyzing more than a small portion of the data flooding in. So it reframed
questions, made astute extrapolations and did frequent tests. It also showed a
refreshing ability to experiment for a large company, even throwing out a
decades-old program to start Club card.

• Establish a loyalty contract: “Open a Club card account with Tesco, and the
more you shop with us, the more benefit you will accrue.” This benefit consists of
money back based on purchases and precisely targeted coupons that are both
useful and desired. That is the promise of many loyalty programs, but most
companies just use these programs to sell what the companies have on hand, not
what customers require as value. The contract also includes simplicity. No
customer wants to jump through hoops for a benefit after having given a company
his business.
Company’s segmentation strategy is also very good. Few companies do segmentation
well. Technically, there were 1.2 million potential segments for Tesco customers
based on the attitudes and beliefs driving behavior. The question is how do you put
each customer into the right segment?

The solution was the “Rolling Ball.” “Adventurous” customers bought products like
extra virgin olive oil or Malaysian curries. The baskets of these shoppers were
examined to see what products they bought. Products, like bananas, that everyone
bought were discarded to find the products that indicated an “adventurous” customer.
A similar process, combined with sophisticated mathematics, could then identify
customers who were more interested in “fresh” than “adventurous.”

It is also interesting to discuss that how loyalty program could guide intelligent
pricing. In the marketplace, Asda, a competitive supermarket, was seen as the price
leader because it did not have the expense of loyalty costs. To compete on price, most
companies just look at competitor prices, make theirs lower and crown themselves the
price leader. That is how destructive price wars started.

Tesco's first step was to use the data to look at price-sensitive customers. “If Clubcard
data could identify the products that were brought by the price-conscious customers,
but not by the rest of us, then lowering those prices would have a huge benefit for
them, at the lowest possible cost for Tesco…. By not knowing their customers, many
retailers are effectively wasting their money on price cuts that could be targeted to
people who want them because they need them.”

The targeted price cuts enabled Tesco to attract more shoppers from competitors and
capture the volume that supported the lower prices—all without hurting overall
corporate profitability.

The programme has been successful because it gave value to customers and created
value for Tesco, Profitably. And it didn't attempt to do anything else - like mass
personalization. This would have been extremely expensive. I still think there was an
element of luck. Clubcard's glory years have been those when UK customers have
been looking for value. Directly or indirectly Tesco has benefited from these market
shifts as it has given its customers money back while nudging them spend more on
premium products and constantly expanding the range of services available. Today
you don't need to go to the store to purchase a significant proportion of Tesco’s
products. Nor do they need to keep the stock in store. Most of the promotional cost of
the programme is borne by suppliers who may regard it as a devil's contract but at
least one which with measurable returns. This shows how hard it is to succeed at
establishing and supporting loyalty schemes and how easy it is to fail with a loyalty
scheme that is focused more on sales than on retention and profitability.

Use of Online Business Intelligence

Tesco decided in 2006, to use site intelligence for effective online business
intelligence. This site intelligence is used for Tesco.com. The action taken by
company is a move towards Tesco’s multi-channel retail strategy and will enable
the company to analyze all aspects of its online customer acquisition, retention
and conversion behavior. Tesco uses Site Intelligence’s “Visitor Behavior
Information System” (VBISTM), to convert online business data into precise, usable
and actionable information, in order to drive profit generation. Tesco chose the site
intelligence system to provide its customers with a solution which is fast, adaptable
and present a solution which can be run on the Tesco system. This proves a point that
Tesco has enough capability to collect and analyze large pools of information from all
of its online business streams and can prepare or receive informative and valuable
reports that give much greater customer understanding and the ability to improve
upon their services as well as the website design and marketing. This will lead to
better conversion rates and improved customer retention for the business. This will
also enable them to have customer loyalty and have longer term loyalty contracts with
the customers.

Stuart Gregory, Tesco.com said: “We wanted a robust web analytics system that we
could manage in-house and were flexible enough to meet the growing demands of all
our business managers. VBIS from Site Intelligence will provide us with online
marketing intelligence ensuring all our marketing campaigns are measured, evaluated
and consistently improved".
Tesco uses this VBIS across Tesco.com, Tesco personal finance and Tesco.net. This
helps them to understand how the online business channel is used and also guide the
continued development of channel to better serve its existing and potential customers.
This system also helps the marketing decision support system because it enables the
managers to get there reports prepared quicker and further interrogation can be
exercised instantaneously and efficiently. In addition VBIS has a robust database that
has been proven to work effectively in large organizations with high levels of data. It
is simple to add in new data sources and undertake cross analysis of all data. VBIS
enables businesses to gain the insight they require quickly and cost-effectively in
order to profitably drive future customer led activity.
 AT&T WI-FI COUPON ONLINE
CAMPAIGN

When Telecomm giants SBC and AT&T merged in 2006, it meant AT&T was
acquiring one of the largest Wi-Fi networks in the nation. AT&T’s new Wi-Fi service
had been available in Barnes & Noble book stores, Caribou Coffee shops, hundreds of
.airports, and many other venues. However, they wanted and needed more

The key to expanding a Wi-Fi user base is to get people to actually try the service.
"Couponing" is the traditional method to get people to try the service; however,
conversion rates for getting non Wi-Fi users to bring a laptop or other mobile device
to a venue and login is low using traditional advertising such as direct mail & POP
advertising. Acquisition cost for traditional media was estimated to be above $60 per
.user

The Challenge

Create a broad reaching Wi-Fi couponing campaign that produces the lowest cost per
.visitor

The Solution

Online buzz marketing was determined to have the most potential to reach the target
audience. A Wi-Fi locator site was built to enable people to find local venues and to
act as the coupon awareness focal point. A wide variety of online marketing
techniques was used, from banner ads and pay per click to content networking and
guerilla marketing on Wi-Fi related sites. All marketing was proactively monitored
.and adjusted to ensure effort was focused on the highest return areas

The Results

Within a few weeks of launch, the campaign started producing significant traction,
generating 183 coupon usages a week. During the next four weeks, the campaign was
tuned using live metrics to increase usage by more than four times per same dollar
spend. By the end of the three month exploratory campaign, 1,675 unique coupons
were used, representing an acquisition cost of less than $15.00 per user. Online buzz
marketing had achieved returns four times less than the estimate for traditional
marketing.
 REFERENCES

1. E-consultancy, 21 November 2006, Tesco chooses site intelligence

for web analytics,

http://www.e-consultancy.com/news-blog/362196/tesco-chooses-

site-intelligence-for-web-

analytics.html?keywords=site+intelligence

2. Kotler, P., (1988) Marketing Management: Analysis Planning and

Control, Prentice-Hall

3. Marketing glossary, 2007, marketing,

http://www.marketing.org.au/glossary/DICM.htm

4. Schultheis R. & Sumner M., 1995, marketing information systems,

Management Information Systems; the manager’s view, 3rd

edition

5. Telecom glossary 2k, February 28, 2001, information systems,

http://www.atis.org/tg2k/_information_system.html

6. Wreden N., July 13, 2004, Tesco winning customer loyalty,

http://www.marketingprofs.com/4/wreden8.asp?sp=1#split

7. Jawadekar W., 2007, E-business enterprise, management

information system; text and cases, third edition, Tata McGraw-

Hill.
8. Jawadekar W., 2007, applications in manufacturing sector,

management information system; text and cases, third edition, Tata

McGraw-Hill.
OPTIONAL
APPLICATIONS OF SPECIFIC
SOFTWARES TO THE MARKETING
FUNCTION

In last few years many specialized softwares have been developed for the variety of
marketing activities. Specialized marketing can be classified into five categories;
1. Help salespeople sell the organization’s products and services
2. Helps sales managers manage sales personnel
3. Help manage the telemarketing program
4. Help manage customer support
5. Provide integrated services for many sales and marketing activities

Sales personnel support software

Sales personnel support software provides document, file, scheduling, and other
support for sales people. Document support features may include a package of form
letters that salespeople can use or adapt, the ability to keep customer lists, and the
ability to merge letter with customer lists for large mailings.

File support features may include the ability to record and store information about
potential and current customers. Customer, prospect, and contact files can be used to
schedule or analyze sales calls and for selective or mass mailings. Prospect or current
customer files can be searched to identify which customers were visited during a
period to display how often they were visited, to find which customers have not been
visited during the last month, to list customers who requested a follow-up visit by date
and to relate sales calls to other factors, such as total revenues generated by customers
total previous sales, or type of product purchased. Sales people have adopted sales
contact software, which is known as contact management software.
Sales person support software often includes a calendar module to help salespeople
manage their meetings and customer appointments and a tickler file module to ensure
that they follow through on their promises to customers at the appointed time. The
tickler file may provide an alarm to prompt sales people to make preplanned calls,
even if they are working in another software package at the time. Many vendors
provide to-do lists, e-mails, fax capabilities, and auto dialers with their products so
that the sales person can automatically dial customers for voice or fax sessions.

Sales management software

Sales management software gives the sales manager the ability to assess the product
activity of the sales force, the fertileness of sales territories, and the success of
products by sales person, territory, and customer type. Sales management software
keeps track of sales person call activities, sales orders and customer activity. The
software allows the manager to identify weak territories or weak products in a
territory; to compare sales person performance by product and customer type; to
compare sales person performance against sales person goals; to analyze sales person
calls within territories or by customer types; to identify trends in customer purchases;
to identify potential shortages or excess stock in inventory; and to perform other
planning, controlling, and organizing tasks with ease and speed.

Sales management software may access data from the financial information system or
from the database created by sales person using sales support software.

Telemarketing software
Telemarketing software provides computer support for identifying customers and
calling them from disk-based telephone directories or from customer files maintains
on a database. The software company might provide sales people with regularly
updated telephone directories of major corporations or specialized lists of selected
customer types. The packages may allow them to make notes about the telephone
calls they make, generate follow-up letters to the customer, and view a customer file
while a call to that customer is in progress.
Other software is designed to find, dial and connect sales people automatically top
people or companies listed in disk-based telephone directories. This software may
then provide a digitized message about a product to those who answer the phone, or
permit the sales person to answer the call.

Telemarketing has moved from mainframe systems to microcomputer systems. This

software has allowed many firms to substantially increase sales while decreasing the
costs per sale. These firms have increased market shares over their competitors by
using the technology.

Customer support software

Customer support software provides information to salesperson about the previous
experiences of customers with the organization such as detailed information on
purchases, payments, and specific products purchased by each customer, including
competitor products. Customer support software allows sales people to view customer
data prior to sales call, to identify customers who should be called, to analyze
customer purchasing trends, to identify customers who have purchased products that
require follow-up calls, and to perform many other sales activities pertaining to
customer maintenance. Thus the use of customer support software results not only in
improved sales force productivity, but also improved customer service.

Integrated marketing software

Integrated marketing software combines programs that also may be sold as standalone
packages for sales person support, sales management, or customer support. In addition
it supports many marketing professional throughout the organization by drawing on
data not only from sales people through out the organization’s financial database.
Thus, integrated software can bring together the islands of un-integrated data
contained in contact files, prospect files, and order entry files to enhance decision
support. Because of the wide variety of data available through such software, it is
helpful to a large number of marketing personnel, including marketing researchers
and those who develop strategic marketing plans.