MARKETING MANAGEMENT AND INTERNATIONAL TRADE

Lesson 10. MARKETING INFORMATION SYSTEM

Module 2. Consumer behaviour and market intelligence

Lesson 10

MARKETING INFORMATION SYSTEM

10.1 Introduction

The successful marketing activities depend upon the careful analysis of the marketing environment i.e. the external and internal focus affecting various marketing activities. The marketing opportunities need to be analyzed and captured for earning the profits. It is therefore required to gather the marketing information or forming a marketing information system for analysis of marketing environment The marketing environment consists of all actors and factors which affect the firm’s ability to maintain successful and sustained relationships with its customers. The marketing environment can be divided into micro and macro environment. The components of micro environment are the company, suppliers, marketing channel firms (intermediaries), customers, competitors and public. The macro-environment factors are demographic, economic, technological, political and cultural. The marketing information is a critical element in effective marketing of products and services. Though most of the firms operate with some form of marketing information system but the systems vary in terms of their sophistication.Well designed marketing information systems helps in gathering and analyzing the desired marketing information for efficient coordination of marketing plans.

10.2 What is Marketing Information System (MkIS)?

Kotler has defined MkIS as a system that consists of people, equipment and procedure to gather, sort, analyze, evaluate and distribute marketing information. The marketing information system encompasses the analysis, planning, implementation and control function of marketing management. The overall objective of MkIS is to provide input from targets markets, marketing channels, competitors, consumers and other forces for creating, changing and improving the marketing decisions and formulating marketing strategies.

In a broader sense, the Marketing information system creates an organized and timely flow of information required by the decision makers for effective and efficient marketing. It involves the equipments, software, databases, procedures, methodologies and people necessary for the system to meet its organizational objectives.

A MkIS is a computerized system that is designed to provide an organized flow of information to enable and support the marketing activities of an organization. The MkIS serves collaborative, analytical and operational needs. In the collaborative mode, the MkIS enables managers to share information and work together virtually. In addition, the MkIS can enable the marketing firms to collaborate with customers on product attributes and customer requirements.

The well designed MkIS begins and ends with the user. MkIS assesses the information needs by interviewing marketing managers and surveying the marketing environment to determine that which information is needed, designed and feasible to offer. The desired information set is developed and distributed to managers for effective decision making.

10.3 Dimensions of MkIS

The information systems could be understood in terms of the quality and quantity of information they possess. It is important that the marketing information systems possess and provide relevant information. Therefore, it is important to give emphasis not only to generation, storage and retrieval of the relevant information to fill in the existing gaps but attention should also be paid to elimination of irrelevant data. The benefits from a marketing information system could be ascertained by the following:

1. Information Accessibility: The ease and speed with which the particular information could be obtained. Faster and easier access will be valuable to the decision makers in making effective and efficient decisions.
2. Comprehensiveness: It is completeness of the information and indicates about the usefulness of the marketing information.
3. Accuracy: It means the exactness of the information.
4. Timeliness Information: This indicates the readiness of the information for timely decision making and how it is made available to the user manager.
5. Authenticity: This indicates the mechanisms used for generating the information. If the information is generated from a scientific and formal information system, it can be treated as authentic and could be measurable.

10.4 Steps in Design of Marketing Information System

10.4.1 Defining the system

There is need to define the system and its elements for which design is to be made. This involves defining the elements and their inter-linkages in the system. For example, a firm may be interested in the MkIS on the sales and prices of various types of dairy products in a particular locality.

10.4.2 Source of information and frequency

After deciding the information needs, the sources and the frequency of information have to be decided. The information can be obtained from the internal as well as external sources. The internal records and databases of the company will serve as the internal sources. For example, the competitors’ information on dairy products’ sales and prices would be obtained from local dealers and distributors.

10.4.3 MkIS formats

There are basically two formats which are important for MkIS, viz., the Research Assessment Sheet, and Marketing Activity Evaluation Sheet. The Research Assessment Sheet contains information like marketing decisions, parameters, frequency, source and the format code, whereas the Marketing Activity Evaluation Sheet will contain the items, relationship, standard, actual, variance and reason. The first format is useful from the information point of view while the second format could be used for control. For example, the Research Assessment Sheet may contain the marketing decision like introducing different size variants (paneer in 200 g, 400 g, 500 g and one kg packs) and the quantity bought at different time periods ( may be a day, week or fortnight). The Marketing Activity Evaluation Sheet must contain the impact of introducing the size variants on the sales of that product.

10.4.4 MkIS implementation

Once the system, source's frequency and MkIS formats have been defined, the MkIS needs to be implemented. For this, the training of research staff is required. The information schedules are to be developed and the information needs to be collected.

10.5 Benefits of the Marketing Information System

The Marketing information system increases the number of options available to decision-makers and supports every element of marketing strategy. It affects marketing interfaces with customers, suppliers and other partners. The primary benefits of the MkIS are given below:

10.5.1 Monitoring of the market

The marketing information system can enable the identification of emerging market segments, and the monitoring of the market environment for changes in consumer behavior, competitor activities, new technologies, economic conditions and governmental policies.

10.5.2 Development of marketing strategies

The marketing information system provides the information necessary to develop the marketing strategies for development of new products, product positioning, marketing communications, pricing, personal selling, distribution, customer service and partnerships and alliances.

10.5.3 Implementation of marketing strategies

The marketing information system provides support for product launches, enables the coordination of marketing strategies, and is an integral part of customer relationship management and customer service systems implementations. It enables the decision makers to effectively manage the sales force as well as customer relationships. This has become increasingly important as many marketers are choosing to outsource important marketing functions and form strategic alliances to address new markets.

10.5.4 Integration of functional areas

The MkIS enables the coordination of activities within the marketing department and other organizational functions such as engineering, product management, production, finance, manufacturing, logistics, and customer service.

10.6 The Sub-Systems of MkIS

The inputs for the MkIS are provided through the following:

10.6.1 Internal record system

The information gathered from sources within the company to evaluate the marketing performance and analyze marketing problems and opportunities. The marketing managers use internal records and reports for day-to-day planning, implementation and control decisions. Internal records consist of information gathered from the sources within the company. The companies maintain their internal records and these are available on intranet (only for internal users). The internal record system provide current data on costs, sales, inventories, cash-flows and accounts receivable and payable. The companies have now developed advanced software based internal record system to allow for speedy and comprehensive information. The information from internal records is quicker and cheaper as compared other sources. But, it might lead to misleading inferences when the information collected for some other purpose is used for making marketing decisions.

10.6.2 Marketing intelligence system

It supplies the marketing managers with everyday information and developments in the external marketing environment based on scientific methods. The everyday information about developments in changing marketing environment helps the marketing managers prepare marketing plans. This system determines the intelligence needed, collects it and delivers it to marketing managers. The marketing intelligence comes from many sources like company's personnel and executives, marketing agents and the sales force. Marketing intelligence is generally publicly available information. The information can be scanned from annual reports, press releases, advertisements and other business publications. The marketing intelligence staff scans relevant publications, summarize important news and sends important information to marketing managers. The intelligence services greatly improve the decision making.

10.6.3 Marketing research

It involves collecting information which is relevant to specific marketing situation facing the company. The marketing research process involves a number of steps like formulation of research problem and objectives, developing the research plan, collecting and analyzing the information, and making the final report.

10.6.4 Marketing decision support system (MDSS)

It consists of statistical and decision tools to assist marketing managers in making better decisions. It is a coordinated collection of data and data systems, tools, techniques with supporting software and hardware. The organizations use MDSS software and decision models, gather and interpret relevant and reliable information and turn it into a marketing action

Fig. 10.1 Marketing decision support system

10.7 Use of Marketing Information Systems

1. Identifying market segments, analyzing economic trends

2. Analyze the market shares and the factors affect ting market share

3. Analyzing the market structure, competitors’ market positions and marketing strategies

4. Understanding consumer behavior and the factors affecting it

5. Identifying and analyzing the factors affecting price determination and demand analysis

6. Studying a firm’s overall cost structure and its impact on production cost

7. Analyzing the firm’s sales by region, product, brand, territory, etc

8. Developing estimates of sales potential

10.8 An Example of AGMARKNET (NICNET Based Agricultural Marketing Information System Network)

10.8.1 Justification for the project

Indian agricultural marketing is undergoing a significant change because of economic liberalization and globalisation. The market information is an important aspect of Agricultural Marketing. To boost up the agricultural production, it becomes necessary on the part of regulatory agencies to ensure remunerative prices to the farmers. The Government has taken a number of measures to protect and safeguard the interests of farmers. Some of these are regulation of markets, grading of agricultural produce, cooperative marketing etc. Recently, a number of other schemes like Rural Godown Scheme were also started for creating more storage facilities at farmers’ fields. But, it is being felt that the benefits are not percolating down to the farmers and they are unable to plan their strategies for sale of their produce at remunerative prices.

10.8.2 Steps in designing AGMARKNET

1. Defining the System of AGMARKNET

Majority of the States in India are providing market information to the market participants like producers, traders and consumers. The information is collected by different agencies and disseminated by use of conventional methods and the information does not reach timely. Therefore, it was realized that the present market information system should be improved. For that, it is required to link all Agricultural Produce Wholesale markets, the State Agricultural Marketing Boards and State Directorates of Agricultural Marketing, with the Directorate of Marketing & Inspection of the Ministry of Agriculture, for providing effective and efficient market information to the users. Considering this, the Department of Agriculture & Cooperation has sanctioned a Central Sector Scheme on "NICNET Based Agricultural Marketing Information Network (AGMARK-NET)". The address of the portal is www.agmarket.nic.in.

Fig. 10.2 Web page view of www.agmarket.nic.in.

2. Sources of information and frequency

This scheme has networked around 3000 agricultural/regulated markets of the country and covers almost all agricultural commodities. The markets have been networked by providing the personal computers and internet facilities.

All regulated markets maintain the information on daily prices and arrivals of various agricultural commodities. Each market network provides the market information on the market arrival and prices to the NIC. Every day, the market information provided by all networks is uploaded on the AGMARKNET by NIC. Sometimes, the networks are not able to provide information due to power failure and connectivity problems.

3. Format of AGMARKNET

The project covers information on two key parameters i.e. prices and arrivals of all agricultural commodities in major markets. The central designing part is done by NIC with support from DMI and the information provided by networks is fed in the designed network

Fig. 10.3 Format of AGMARKNET shown on web page

4. Implementation of AGMARKNET

National Informatics Centre (NIC), Ministry of Communications & Information Technology is responsible for implementing the project throughout the country. The organization is provided with all required softwares and infrastructure for project implementation. The Directorate of Marketing and Inspection (DMI), headed by Agricultural Marketing Advisor to the Government of India (AMA) maintains a close liaison between the Central and State Governments and helps in effective implementation of this scheme. DMI has 11 regional offices and various sub-offices spread all over the country. With the help of this portal, the farmers and traders can analyze the prices prevailing in different markets and have choices to sell their produce in the lucrative markets.

Suggested Readings

1. Kotler, P., (1988) Marketing Management: Analysis Planning and Control, Prentice-Hall

2. Varshney, R.L. and S.L. Gupta, (2005) Marketing Management: Text and Cases, Sultan Chand & Sons, New Delhi.

3. http://www.agmarknet.nic.in

4. http://www.fao.org/docrep/W3241E/w3241e0a.htm