The Rise of Marketing Information Systems


Information and decision making
According to classical management function models, the duties of a manager include planning, organising, controlling, directing and deciding. To undertake these roles, the manager needs timely, comprehensive and accurate information.
The nature of competition today requires that decisions be made with clinical precision. The marketing manager cannot possibly rely on instincts to decide on market needs and how to service them. The increasingly complex decision making environment underlines the importance of developing systems to manage the relevant and necessary information.
Information is derived from processing data. Raw data is of little value despite the heavy investment that may be required to collect it. Software and personnel with proper analytical skills are needed to derive information from this data.
The most exciting words these days are “big data”. This is large volume of data, which is fast changing to the extent that traditional software tools may not be sufficient to make sense of it. Big data is where the future lies because when such is mined, the decisions, which are made, speak powerfully to consumers’ needs and wants.

Components of a Marketing Information System (MKIS)
The role of marketing information systems is to collect, collate, store and analyse data to support decision making.There are four components of a marketing information system. These relate to the source of data, its purpose and level of analysis. These components include the following:

Internal Reporting System
Every business maintains certain information on its customers such as their contact details and purchase history. These records are helpful in establishing information such as sales trends categorised by market segments, products and brands.
The business should capture as much information as possible about what the customers buy, when they buy and how they buy it. Such information can be helpful in deciding how to target the customers with relevant communication.
Internal records should also contain information on customers’ feedback and complaints. Such data should assist in determining causes of customer dissatisfaction, how long complaints take to resolve and whether customers are satisfied with grievance handling mechanisms.
The greatest importance of internal reporting system is performance measurement as well as monitoring and control. When we develop a marketing plan, we have objectives to achieve for each product, market segment and sales person. The records we keep will assist us in determining the progress we are making towards reaching these objectives. Furthermore, this information will help in diagnosing the issues that could be curtailing the achievement of set objectives. It also assists us to forecast future sales performance during our next planning cycle.
I recently met some friends who have developed sales management software, which helps track the activities of salespersons. Using GPS, the salesperson can only report activities such as meeting with clients when they are actually at the client’s place of business.
This illustrates how helpful a marketing information system can be in not only recording data, but also increasing its validity. The sales staff is also able to record details about the competitor products, their availability and pricing. They also record feedback from shop owners for instance on what customers are ordering most and any complaints they might have.
Since the salespeople use an App on their phone, they do not need to report to the office on a daily basis. Information is recorded and utilised on a real-time basis. These conveniences in managing salespersons and sales processes are very important in the highly competitive first moving consumer goods markets.

Marketing Intelligence System
Marketing intelligence systems are concerned with collection of external data on the business environment and market conditions. The marketing environment needs continuous monitoring so that decisions can be taken in good time to adapt to changes.
Marketing intelligence data is obtained from published sources such as newspapers, magazines, internet, trade journals, economic reports and company annual reports. Data may also be obtained by managers making calls to key industry informants such as suppliers, fellow managers, clients, consultants and researchers.
From the example above, the need for salespersons to be alert and attentive cannot be overemphasized. These are the company’s ears on the ground. Using an organised system such as an application for data collection will ensure the salespeople record any information gleaned from the field and relay it to the head office. Managers also need to develop a culture of constantly monitoring the environment through wide reading and watching of current economic and business news.
Such information can be graded in terms of importance and urgency. This will ensure that top-level decision makers such as directors and senior managers do not fail to take notice of a critical emerging concern.
Management can also task the research team to be writing regular market intelligence reports. Such briefs should summarise the major developments in the market say on a weekly or monthly basis and suggest possible responses.
Marketing intelligence is very crucial for tactical decisions. These are decisions that are made in response to short-term market environment changes.
For instance, when a competitor lowers prices you cannot just wait and see the outcome. It would be painful to lose market share just because you did not react to a market threat on time.
A good of example of why market intelligence is important is the goings on that followed the interest rate capping law enacted recently. Many of the banks’ CEOs found themselves issuing all manner of information only to later retract it or come up with more contradictions. Such mishaps point to poor market intelligence.

Marketing Research
In the past, I have written articles that are more detailed on marketing research. In this context, it is important to consider marketing research as collecting of information with the intention of solving a specific well-defined problem. This is in contrast with the other two components above which collect data for general decision support.
Every business (whatever its size) must invest in marketing research. There are many decisions, which cannot be made based on secondary data not collected by ourselves. For instance, if we want to know whether customers are satisfied with our products or not, we need to collect data specifically for that purpose.

Marketing decision support systems/marketing models
In this context, models refer to statistical formulas, which show the relationships between various variables relevant for decision-making. For instance, a model can show the extent to which investing in advertising affects sales. We may also wish to know how increasing advertising budget by say 20% will influence sales.
Such a question can be answered by feeding the data into a model and obtaining the results. By so doing, we will know the level of investment we need to make in advertising in order to achieve the desired sales targets.
Models are useful in predicting the possible outcomes of the decisions that management are about to make from time to time. Without such a model, managers will be making decisions based on guesswork. While the model will not perfectly predict reality, it will go a long way in improving decision-making.
We have seen cases where the government has come with a tax measure hoping to collect more revenue only for the measure to cripple a thriving industry, hence it ends up collecting even less than before. Such errors would rarely arise if a model were used when the decisions are made. The model would predict the outcome on the industry revenues as well as the performance of the tax measure on government revenues.
Models can be very comprehensive including many variables, which will influence the decision we plan to make. While unintended consequences may still arise, such will be better mitigated by considering all the key factors. The impact of the unpredictable factors will be minimal. A good model will at least explain 70% of the variables influencing our subject of interest.

We are living in the information age. Information is one of the most important business assets. It is therefore critical for each business to invest in information communication technology hardware, software and personnel to collect, store and analyze data to ensure decisions are evidence driven.
There are many factors to be considered in today’s decision making environment. A single individual cannot be expected to obtain and process such information. Haphazard approach to data and information management is unacceptable. Strategies which are not based on information will put the business at a disadvantage when compared with competitors operating from a point of information.
The current business environment is very complex, the competition is stiff and consumer trends are changing all the time. Robust information systems are needed to match these emerging issues. Without them, decision-making will be a painstaking exercise awash with errors and replete with risks. If you think knowledge is expensive, try ignorance.

The writer is an entrepreneurship, management and marketing consultant or