Marketing Information System (MKIS): Components, Advantages & Disadvantages

Marketing Information System

A Marketing Information System (MKIS) is defined as a set of procedures and methods designed to generate, analyse, disseminate, and store information required for marketing decision-making on a regular and continuous basis. An information system can be used at the operational, managerial, and strategic levels for various aspects of marketing.

A Marketing Information System can also be defined as “a system in which marketing data is formally gathered, stored, analysed, and distributed to managers according to their information needs on a regular basis.”

No marketing activity can be carried out in isolation. Various forces—both internal and external, controllable and uncontrollable—influence marketing activities. Therefore, marketers need to identify these forces, understand their impact, and collect relevant information to support effective decision-making. This process of systematically gathering and managing market-related information forms the basis of a Marketing Information System.

The collection of information is a continuous process. It gathers data from a variety of sources, synthesises and analyses it, and provides useful information to those responsible for meeting the needs of the marketplace. The effectiveness of marketing decisions largely depends on the quality and reliability of the information available to managers. A strong Marketing Information System can therefore provide a firm with a competitive advantage by enabling it to respond quickly and effectively to changes in the market.

Locating Data and Developing Information

The information required by marketing managers comes from several important sources. These include:

1. Internal Company Records
2. Marketing Intelligence
3. Marketing Research

An information analysis system processes the information obtained from these sources and converts it into a more useful form for marketing managers.

1. Internal Records

Internal records consist of information collected from sources within the organisation. These records help managers evaluate marketing performance and identify marketing problems and opportunities.

Most marketing managers regularly use internal records and reports, particularly for making day-to-day planning, implementation, and control decisions.

Internal information is generally quicker and less expensive to obtain than information from external sources. However, it also has certain limitations. Since the information may have originally been collected for purposes other than marketing, it may be incomplete or may not be presented in a form suitable for marketing decision-making.

For example, the accounting department may maintain sales and cost data primarily for preparing financial statements. Marketing managers may need to modify or reorganise this information to evaluate the performance of individual products, sales personnel, or distribution channels.

Thus, internal records are an important and readily available source of marketing information, but the data often needs to be properly processed and interpreted before it can be used for marketing decisions.

2. Marketing Intelligence

The information needs of a marketing department can be identified and fulfilled through a marketing intelligence system. A marketing intelligence system determines the type of information required, collects it by systematically observing and analysing the marketing environment, and delivers it to the managers who need it.

Marketing intelligence can be obtained from a wide variety of sources. A significant amount of intelligence comes from the organisation's own employees, including executives, engineers, scientists, purchasing agents, and sales personnel. However, employees may sometimes be too busy to recognise or report important developments. Therefore, organisations should encourage employees to understand their role as information gatherers, train them to identify relevant developments, and motivate them to report useful information to management.

A company can also obtain valuable intelligence from suppliers, resellers, distributors, and customers. These stakeholders may provide information about market trends, customer preferences, competitors, and changes in the business environment.

Information about competitors can be obtained from various sources. Competitors often reveal information about themselves through annual reports, speeches, press releases, advertisements, websites, and other public communications. Companies can also learn about competitors through business publications, industry conferences, trade shows, and other industry-related sources.

Another approach is to observe what competitors actually do. Companies may study competitors' products, monitor their sales activities, examine their marketing strategies, and track developments such as new patents or product launches. Organisations may also purchase market and competitive intelligence from specialised external information providers.

Therefore, marketing intelligence enables an organisation to continuously monitor its marketing environment, identify emerging opportunities and threats, and make better-informed marketing decisions.

3. Marketing Research Systems

Marketing research is a proactive search for information. An organisation generally commissions marketing research to solve a specific or perceived marketing problem. In many cases, data is collected systematically and purposefully to address a clearly defined problem and support managerial decision-making.

Another form of marketing research focuses not on a specific marketing problem but on the continuous monitoring of the marketing environment. These monitoring or tracking exercises involve continuous marketing research studies, often using panels of farmers, consumers, distributors, or other relevant groups, from whom the same or similar information is collected at regular intervals.

Although ad hoc marketing research and continuous marketing research differ in their orientation and purpose, both are proactive in nature. Ad hoc research is conducted to address a particular problem, whereas continuous research is carried out regularly to monitor changes in the market environment.

Importance of Continuous Marketing Information

Marketing information should not be collected or analysed only on an infrequent or occasional basis. If a firm approaches marketing research in this manner, it may face several risks and limitations:

1. Opportunities may be missed.
   Infrequent research may prevent the firm from identifying new market opportunities at the right time.
2. Lack of awareness of environmental changes and competitors' actions.
   The organisation may fail to recognise important changes in customer preferences, market conditions, technology, or competitors' strategies.
3. Difficulty in analysing data over time.
   If data is not collected regularly, it becomes difficult to compare information across different time periods and identify meaningful trends.
4. Marketing plans and decisions may not be properly reviewed.
   Without continuous information, managers may not be able to evaluate the effectiveness of existing marketing strategies and make timely adjustments.
5. Data collection may become disjointed.
   Information gathered at different times and for different purposes may lack consistency, making it difficult to develop a comprehensive understanding of the market.
6. Previous studies may not be stored in an easily usable format.
   Valuable information from earlier research may become difficult to locate, retrieve, or use when it is not properly organised and maintained.
7. Time lags may occur when a new study is required.
   When an urgent marketing problem arises, the organisation may need to conduct new research from the beginning, resulting in delays in decision-making.
8. Actions may become reactionary rather than anticipatory.
   Without continuous marketing information, managers may respond to market changes only after they occur instead of anticipating changes and preparing for them in advance.

Conclusion

Thus, a systematic and continuous approach to marketing research enables an organisation to identify opportunities, anticipate threats, monitor competitors, understand changing customer needs, and improve the effectiveness of marketing decisions. It is therefore an essential component of an effective Marketing Information System.

Marketing Information System Helps in the Decision-Making Process

A Marketing Information System (MKIS) is designed to support management in the decision-making process. It provides managers with relevant, timely, and useful information required for planning, implementing, and controlling marketing activities.

Management generally performs five important functions, and each function requires appropriate information support. These functions are:

1. Planning
2. Organising
3. Coordinating
4. Decision-making
5. Controlling

Therefore, a Marketing Information System should be designed according to the way managers actually work and make decisions.

Research suggests that managers continuously deal with a wide variety of tasks and often spend only a short period of time on each task. Because of the dynamic nature of managerial work, managers tend to rely heavily on information that is timely, concise, and readily available, often in verbal form, even though such information may be less accurate than information generated by more formal and complex information systems.

Managerial Roles

Managers generally perform at least three important roles:

• Interpersonal role – dealing with employees, customers, suppliers, and other stakeholders.
• Informational role – collecting, processing, and communicating information.
• Decisional role – using information to make appropriate business and marketing decisions.

Components of a Marketing Information System

A Marketing Information System has four major components:

1. Internal Reporting System
2. Marketing Research System
3. Marketing Intelligence System
4. Marketing Models

1. Internal Reporting System

The internal reporting system provides information generated from within the organisation. It includes records such as:

• Orders received
• Inventory records
• Sales invoices
• Sales reports
• Cost and financial records

This information helps managers monitor marketing performance and make routine operational decisions.

2. Marketing Research System

The marketing research system involves the systematic collection and analysis of information for specific marketing purposes. Marketing research may be conducted in two forms:

• Ad hoc research – conducted to address a specific marketing problem.
• Continuous research – conducted regularly to monitor changes in the marketing environment.

Thus, marketing research is generally purposeful and proactive in nature.

3. Marketing Intelligence System

In contrast to marketing research, marketing intelligence is less specific in its purpose. It is primarily concerned with continuously gathering information about the external marketing environment, including competitors, customers, suppliers, market trends, and other relevant developments.

Marketing intelligence is generally:

• Less specific in its purpose
• Informal in nature
• Primarily carried out by managers and employees themselves, rather than by professional marketing researchers

Managers may obtain marketing intelligence through conversations with customers and suppliers, observations of competitors, industry publications, trade shows, websites, sales personnel, and other sources.

4. Marketing Models

Marketing models use available marketing information and analytical techniques to help managers understand situations, evaluate alternatives, predict outcomes, and make better decisions.

Quick Summary

Thus, the four components of a Marketing Information System work together to provide managers with the information required for effective decision-making: Internal Reporting System + Marketing Research System + Marketing Intelligence System + Marketing Models → Better Marketing Decisions 

A well-designed MKIS helps managers make decisions that are timely, informed, systematic, and responsive to changes in the marketing environment.

Advantages and Disadvantages of a Marketing Information System

A Marketing Information System (MKIS) provides managers with relevant and timely information for effective marketing planning and decision-making. The major advantages of an MKIS are as follows:

Advantages of Marketing Information System

1. Organised Data Collection
   An MKIS provides a systematic and organised method of collecting marketing data from various internal and external sources.
2. Provides a Broad Perspective
   It gives managers a comprehensive view of the market, customers, competitors, and the overall marketing environment.
3. Storage of Important Data
   Important marketing information can be stored systematically and retrieved whenever required for future decision-making.
4. Avoidance of Crises
   Continuous access to marketing information helps managers identify potential problems and threats at an early stage, allowing them to take preventive action.
5. Coordinated Marketing Plans
   Information from different departments and sources helps managers coordinate marketing activities and develop more effective marketing plans.
6. Speedy Access to Information
   An MKIS enables managers to obtain sufficient and relevant information quickly, helping them make timely decisions.
7. Data Available Over Several Time Periods
   Data collected and stored over a long period allows managers to compare different time periods, identify trends, and understand changes in the market.
8. Ability to Conduct Cost-Benefit Analysis
   An MKIS provides information that helps managers compare the costs and expected benefits of different marketing activities and decisions.

Disadvantages of Marketing Information System

Despite its advantages, a Marketing Information System also has some limitations:

1. High Initial Cost
   Setting up an MKIS can require significant financial investment in technology, software, infrastructure, and personnel.
2. High Time and Labour Costs
   Collecting, processing, analysing, and maintaining marketing information requires considerable time and human resources.
3. Complexity of the System
   Designing and implementing an effective information system can be complex, particularly for organisations with large amounts of data and multiple information sources.
4. Risk of Too Much or Irrelevant Information
   Marketers may sometimes have too much information of the wrong kind, while lacking the specific information they actually need. Therefore, simply having more data does not necessarily lead to better decisions.
5. Difficulty in Identifying Relevant Information
   Managers need to ensure that the information provided by the system is accurate, relevant, timely, and appropriate for their particular decision-making needs.

Conclusion

Marketers often face two major problems: not having enough marketing information or not having the right kind of information. In some cases, they may even have excessive amounts of irrelevant information. An effective Marketing Information System helps overcome these problems by ensuring that the right information is collected, processed, stored, and delivered to the right managers at the right time.