Unit 4

Understanding the Marketing Information

System

Book Code - MB0046

Dr. Smita Choudhary

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 Contents
• Introduction
• Characteristics of MIS
• Benefits of MIS
• Types of marketing information
• Components of MIS
• Marketing research
• Features of marketing research
• Objectives of marketing research
• Marketing research process
• Importance of marketing research
• Advantages and limitations of marketing research

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 Introduction
• The marketing environment is changing and presenting new
opportunities and threats to an organization.
• The marketing department is responsible for finding the changes
that take place in the market. They can perform this task
better because they regularly interact with customers.
• The marketing department must develop Marketing Information
System that provides them information about needs of the
buyer, preferences, behavior and competition.
• A marketing information system is a set of procedures to
collect, analyze and distribute accurate, prompt and appropriate
information to different levels of marketing decision makers.

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 Learning Objectives
After studying this unit, you will be able to
• Understand the concept of marketing information system, as well
as its characteristics and benefits.
• Outline different components of a marketing information system
and classify different types of marketing information that are
being used.
• Understand role and scope of marketing research in making
marketing decisions.
• Define the objectives of a typical marketing research study.
• Outline and explain the steps involved in marketing research
process.
• Understand the importance of marketing research.
• Explain the advantages and limitations of the marketing research
function.

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 Characteristics of MIS
 “MIS is a system that consists of people, equipment
and procedures to gather, sort, analyze, evaluate and
distribute needed, timely and accurate information to
marketing decision makers”

---- Philip Kotler

 The characteristics of MIS are
 It is a planned system developed to help in smooth and
continuous flow of information.
 It provides relevant information collected from internal
and external sources to the company. This information is
used as a basis of marketing decision making.
 It provides right information to the right person at the right
time.
 The Marketing Decision Support System (MDSS) links
a decision maker to relevant databases and analysis
tools, which helps him to know the needs and trends of
customers with the help of statistical analysis.
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 Benefits of MIS
The benefits of MIS are
 It helps marketing managers to carry out their analysis, planning,
implementation and control responsibilities more effectively.
 It helps to exploit marketing opportunities and enables the company
to develop effective protection against emerging marketing threats.
 It provides marketing intelligence to the firm and helps to identify
changing trends very early.
 It helps the firm to change its products and services according to the
needs and tastes of the customers.
 MIS provides high quality marketing information to the decision
maker and hence helps in improving the quality of decision making.

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 Types of Marketing Information
A marketing information system supplies three types of information
 Recurrent information – It is the data that MIS supplies periodically at
weekly, monthly, quarterly or annual interval. It includes data such as
sales, market share, sales call reports, inventory levels, receivables and
payables, etc.
 Monitoring information – It is the data obtained from regular scanning
of certain sources such as trade journals and other publications. Here,
data from external environment is collected to keep a watch on changes
and trends related to marketing situation.
 Problem related or customized information – It is developed in
response to some particular requirement related to a marketing problem
or any particular data requested by a manager. Primary data or
secondary data are collected through survey research to meet a
particular need.

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 Components of MIS
The components of a marketing information system are
1.Internal records system
2.Marketing intelligence system
3.Marketing research system
4.Analytical marketing system

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 1. Internal Records System - This includes information on
Order to payment cycle
 It has a system which records the timing and size of orders
placed by consumers, payment cycle followed by consumers
and the time taken to fulfill the orders.
 A proper record system for order to payment cycle
management helps managers in deciding on production and
dispatch schedule, inventory and accounts receivable schedule
and logistics and distribution management schedule.
Sales information systems
 It records everything in the sales department, i.e., from sales
calls reports to prospects history to sales territory and quota
information for better sales planning and forecasting function.

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2. Marketing intelligence system
 It is a set of procedures and sources used by managers to get
everyday information about development in the marketing
department.
 It provides ‘happenings’ data whereas the internal records system
provides the ‘results’ data.
 Marketing managers collect data from published sources like
books, magazines and journals and also by talking to customers,
intermediaries and sales personnel.
3. Marketing research system
 Marketing research provides information to marketing managers
when he/she faces some marketing problems.
 In this, marketing research survey is conducted to collect primary
data. The marketing department can itself conduct the survey or
may take the services of an external marketing research agency.
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 4. Analytical marketing systems
 It is also known as the Marketing Decision Support System
(MDSS).
 It is a collection of data, systems, tools and techniques with
hardware and software support which help an organization to
collect and interpret information from business and
environment and use it for taking marketing action.
 The data collected through the other three systems are stored in
a database.
 The decision support system helps in collection and use of a
wide variety of data in the company.
 Senior managers can use the database and keep a watch on
sales, markets, performance of the sales people and other
marketing systems also.
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 Marketing Research
 Marketers must have a good understanding of their own
markets to monitor the changing environment.
 They need information to evaluate their own past performance
and to prepare future marketing plans.
 For this, they require accurate information about their
consumers and competitors.
 Marketing research helps in collecting, recording and
analyzing relevant data.
 “Marketing research is defined as the systematic design,
collection, analysis and reporting of data findings relevant to a
specific marketing situation facing the company.”
---- Philip Kotler

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 Features of Marketing Research
 It is a systematic process – It has to be conducted step by
step and systematically with proper planning and clear
objective.
 It should be objective – The methods used and the
interpretation should be unbiased. The research should not
be done to form an opinion and it should not produce
predetermined results.
 It is multi-disciplinary – Marketing research takes its
concepts from other fields like statistics for getting reliable
data and from economics, psychology and sociology to
understand the buyers better.

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 Objectives of Marketing Research
According to the use of marketing research, its objectives
are
 To understand why customers buy a product.
 To predict future sales or expected market share.
 To evaluate competitive strengths and strategies.
 To evaluate the effectiveness of marketing action already
taken.
 To assess customer satisfaction for company’s products
and services.

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 Marketing Research Process
Develop the problem and research objectives

Develop the research plan and design

Collect the information

Analyze the information

Present the findings

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 Step 1 – Define the problem and research objectives

 First it is important to identify the problem correctly because ‘a

problem well - defined is a problem half – solved’.
 A problem well defined will provide useful and relevant
results.
 The research project should have one or more objectives.
These objectives provide the outline about how the research
has to be conducted.
 An error in problem definition may make the entire study
wrong and provide incorrect and error prone results.

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 Step II - Develop the research plan and design
 A research plan is an outline within which collection and analysis of data is
done.
 Here, decision is taken regarding data sources, research approaches, research
instruments, sampling plan and contact methods.
1. Data sources
 The researcher has to decide which data source to use – secondary data or
primary data or both.
 Secondary data are data collected for some other purpose or for commercial
purpose of selling.
 Primary data are collected for a particular purpose or a particular research
project.
 Researchers first see whether the problem can be partially or fully solved using
secondary data, without collecting primary data.
 Secondary data should be used after checking it for reliability, accuracy and
relevance to situation.
 If secondary data fulfills the above conditions then it is a better option as it is
cheaper and immediately available, otherwise primary data has to be collected.

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 2. Research approaches
Primary data can be collected using the following approaches:
1. Observational research – Fresh data can be collected by observing the
situation and the people in the situation.
2. Focus group research – In this method, a group of 8-12 people are involved
in a group discussion in presence of a moderator to discuss a product,
service, a firm, or any activity. The discussion is observed and recorded on
videotape and analyzed later.
3. Survey research – In this method, survey is conducted with the help of a
questionnaire know more about people’s knowledge, beliefs and preferences.
4. Behavioral research – In this approach, customer’s actual behavior during
actual purchases explain their preferences better and are reliable as
compared to responses provided in survey.
5. Experimental research – It is the most scientific method of research in
which cause and affect relationships are studied. Experiments are conducted
on groups and different treatments are given to groups. The extraneous
variables (external variables that affect the research process) are controlled
and then the responses of the two groups are observed.
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 3. Research instruments
The research instruments are of two types – questionnaires and
mechanical devices.
i. Questionnaire – It is a set of questions suitably arranged and
presented to the respondent to answer. It is most commonly
used because it is flexible. It should be pre-tested before using
it for actual data collection.
ii. Mechanical devices – Mechanical devices like galvanometer
are used to measure the interest or emotions generated when
the respondent is watching an advertisement. Eye cameras
study the eye movement of the respondents to find which part
of the ad attracted the attention first and how long they watch a
single item. Such data is more accurate than data collected by
human observation.

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 4. Sampling plan
Sampling plan means outlining who should be surveyed (sampling unit), how
many should be surveyed (Sample size) and how they should be selected
for survey (sampling procedure).
i. Sampling unit – Researchers first decide from whom the information shall
be collected.
ii. Sample size – Then it is decided from how many people the information
has to be collected. This is known as the sample size. Large samples
provides more reliable result than small samples. The sample size is
decided on the basis of nature of study and variance in population, level of
accuracy desired and money available for research.
iii. Sampling procedure – It is the method of selecting the sample. There are
two methods for selecting the sample – probability sampling and non-
probability sampling.
 Probability sampling : In this method, each element of the population has an equal chance
of being selected.
 Non-probability sampling: In this method, the respondents are selected on the basis of
researcher’s judgment or convenience. The commonly used methods of non-probability
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sampling are convenience sampling, judgment sampling and quota sampling.
 5. Contact methods
Now the researcher has to decide what methods are to be used to contact the
respondents. The methods available are
i. Mail questionnaire – It is a good way to contact people who may not give
personal interview. Such questionnaire should be simple and words should
be very clear so that the respondent does not require any help. The response
rate is low and responses come slowly.
ii. Telephone interview – It is a quick way of collecting information. The
method is interactive and any doubt can be cleared. It should be short.
iii. Personal interview – It is the flexible method which can be used for any
kind of research. It involves face to face interaction, hence researcher can
make personal observation. It is expensive and time consuming. Interviews
conducted at shopping malls are known as mall intercept method.
iv. Online interviews – Information can be collected through the internet also.
A company can put a questionnaire on its web site and give incentive to
people who answer the questionnaire. This method is very inexpensive and
fast. It has limited reach and the results can be biased.
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 Step III – Collect the information
 After deciding which research instrument to use, the researcher contacts the
respondents and collects information. The research must maintain quality of
data by making sure that the answers are accurate and unbiased. Data
collectors should be well trained and motivated.
Step IV – Analyze the information
 The researcher collects the data and encodes it. The coded data is tabulated
to get frequency distribution and then it is analyzed. Statistical techniques
are used to obtain important findings of the research. These findings are
used for decision making.

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 Step V – Present the findings
 Now, the researcher presents the findings of the study to the decision maker
or users of information.
 The findings are presented in the form of a report, the format of which is as
follows:
General format of a report
1. Introduction – An introduction to the general background of the marketing
problem and the firm.
2. Statement of purpose – Objectives of study and the hypotheses are stated.
3. Research methodology – Method of data collection, tools used, sampling
procedure used, sample size and limitations of the study, if any are stated.
4. Analysis of data – Consists of tables or graphs, statistical analysis used and
data interpretation.
5. Findings and conclusions – Major findings and conclusions
6. Recommendations – Suggestions for action to be taken.
7. Appendix and bibliography.

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 Importance of Marketing Research
 With increase in customer orientation, it has become
necessary to collect information on the needs, preferences
and opinions of customers.
 It helps the marketers to make suitable changes in the
marketing mix.
 Marketing research improves the decision making power of
the marketer.

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 Advantages of Marketing Research
1. It is a scientific approach that helps in designing the problem and
finding solutions with the help of statistical and mathematical
techniques.
2. It helps in better decision making as they are based on reliable
information and not on judgment or guess work.
3. It helps to know whether the marketing actions have been
effective or not and helps to find problem areas.
4. It helps in determining the reputation of the firm and its products.
5. It helps a firm to know the marketing and pricing strategies of its
competitors.
6. It helps a firm in making sales forecasts for its products and helps
maintain a balance between demand and supply.

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 Limitations of Marketing Research
1. Not an exact science – Marketing research uses scientific methods but it is
not an exact science. It deals with human behavior and many controllable and
uncontrollable factors.
2. It is not a panacea – Marketing research provides accurate information for
marketers to use in decision making, but it does not provide solutions.
3. Human tendencies – Marketing research is carried out on consumers,
dealers, wholesalers, etc. Human beings behave artificially when they are
asked for information for research. This negatively affects the quality of
marketing research data.
4. Inexperienced research staff – Research requires well trained and
experienced people otherwise the quality of data is poor.
5. Involves high cost – Research requires heavy expenditure, hence in India it is
considered a luxury or a wasteful activity.
6. Limitations of tools and techniques – The validity of marketing research is
limited due to limitations of tools and techniques involved.

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