Marketing information systems and decision-making in organizations

Role of Information Systems in Marketing

The objective of this study is to examine the role of information systems in marketing in terms of the information that is necessary for decision making. Additionally this work will examine the role of IS for this function within the organization and the benefits of IS for the functional users at the operational level, the use of data at all levels of the organization and how IS has affected processes for this functional perspective.

Decision Making and the Marketing Information System

The work of Ismail (2011) entitled "The Role of Marketing Information System on Decision Making: An Applied Study on Royal Jordanian Air Lines (RJA)" reports a study that has the objective of emphasizing the importance of the utilization of the marketing information system (MKIS) on decision-making through making clear the requirement for decision-making that is both "quick and effective…due to time saving and preventing of duplication of work." (p.175) Marketing activities are reported to be directed "toward planning, promoting, and selling goods and services to satisfy the needs of customers and the objectives of the organization" and marketing information systems are useful in giving support to decision-making. The Marketing Information System is reported to be a "continuing and interacting structure" that is comprised by "people, equipment and procedures designed to gather, sort, analyze, evaluate and distributed needed, timely and accurate information to marketing decision makers" and is reported to begin and end "with users-marketing managers, internal external partners and others who need marketing information." (Ismail, 2011, p. 175) The optimal information system for marketing is one that "balances the information users would like to have against what they really need and what is feasible to offer." (Ismail, 2011, p. 175) The Marketing Information System is reported as a tool that is very efficient in making provision of the past, present as well as the projected information in regards to the organization's operations internally and the intelligence of the organization externally. The Marketing Information system provides support for "planning, control, and operation function in an organization by furnishing uniform information in the proper time frame to assist the decision maker." (Ismail, 2011, p. 176) Shaping the organization to realize success is dependent upon matching the information technology to the organization in regards to the capacity of information technology to define the organization. In order to provide such successful matching required is comprehension of "the value of the collection, application and management of marketing information generated by information technology applications such as Data Base Marketing." (Ismail, 2011, p. 175)

II. Components of the Marketing Information System

Components of the Marketing Information System include the following stated components: (1) Internal Records -- This refers to the organization's databases. It is reported that a great many companies have constructed internal database that are extensive including "electronic collections of consumers and market information obtained from data source within the company network" functioning meaning that marketing managers are able to access information in the database relatively easy and to work with information in the database that identifies opportunities as well as problems relating to marketing and additionally are able to make program plans and conduct performance evaluation;

III. Marketing Decision Support Systems

The Marketing Decision Support System (MDSS) is such that is comprised by a "set of core applications of the Marketing Information System. The Marketing Decision Support System is reported to make provision of "computer-based tools, models, and techniques to support the marketing manager's decision process. In the general case, MDSS is optimized for queries of historical data. MDSS data typically are derived from both internal and external market sources. The MDSS features inquiry and report generation functions where the manager can access marketing data, analyze it statistically, and use the results to determine an optimal course of action." (Harmon, 2003, p. 5)

IV. Typical Marketing Decision Support System Models and tools

The typical Marketing Decision Support System Models and tools are reported to be inclusive of those used for: (1) Sensitivity analysis. Decision-makers can explore changes in a strategic variable such as price and model its impact on demand or competitive behavior. (Harmon, 2003, p. 6)(2) What-if analysis. Can be easily accomplished with a spreadsheet. Revenues and costs can be manipulated to show the impact of each variable on profits and cash flows. (Harmon, 2003, p. 6) (3) Goal setting. Analysis focuses on the desired result and builds the resource base necessary to accomplish the goal. (Harmon, 2003, p. 6) (4) Exception reporting. Analysis looks for results that exceed or fall short of stated goals or benchmarks. Which products or segments exceeded sales forecasts? Sometimes called gap analysis. (Harmon, 2003, p. 6) (5) Pareto analysis. Analysis looks for activities that generate disproportionate results. For instance, the top 20% of customers may account for 80% of sales revenues. (Harmon, 2003, p. 6) (6) Forecasting models. Econometric models are used to analyze time series data for the purpose of predicting future sales and market share levels. (Harmon, 2003, p. 6) (7) Simulation models. Monte Carlo simulations address marketing decision making under conditions of uncertainty. Variables such as the market price, unit variable cost, and quantity sold are not known ahead of the product investment decision. Simulation models allow the marketer to analyze risk and assess the probabilities of likely outcomes of their decisions. (Harmon, 2003, p. 6) (8) Scorecards and dashboards. Scorecard systems can present a consistent framework for tracking the effectiveness of marketing activities. They often have different modules for senior executives, marketing managers, product managers, and customer service managers. Scorecard systems allow the user to "drill down" on an analytic and workflow basis to determine the status of any strategic initiative. Dashboards allow frontline managers to monitor their critical performance indicators. These systems are often used in conjunction with "best practice" standards for call-center-based customer support. (Harmon, 2003, p. 6)

V. Marketing Decision Support System Analyses

It is reported that Marketing Decision Support System models and tools are utilized for the purpose of analyzing "markets, customers, competitors and internal operations." (Harmon, 2003, p. 7) The following stated issues are those known to most frequently occur in MDSS analyses: (1) Market segment analysis -- this modeling technique is utilized to identify segments and analyze "economic trends, demographics and behavior." (Harmon, 2003) (2) Market share analysis -- Analyze trends and determinants of market share; (Harmon, 2003) (3) Competitor analysis -- Analysis of the market positions, economics customer base, and marketing strategies of competitors; (Harmon, 2003) (4) Pricing analysis -- reported to identify as well as analyze the factors affecting the ability of the organization to "set prices including price elasticity and demand analysis. Includes internal economics and market related factors; (Harmon, 2003) (5) Cost analysis -- this involves the study of the overall cost structure of the organization and how this affects cost of product. It is reported that one can combine cost analysis and pricing analysis through sue of the margin analysis. The variance analysis examines the reasons for overages of costs and underages of costs; (Harmon, 2003) (6) Sales analysis -- this is used to examine the distribution of a firm's "sales by region, product, brand, sales territory as well as other matters. (Harmon, 2003) (7) Sales Forecasting -- this is utilized for developing estimates of sales according to product, region, sales territory and other such information. (Harmon, 2003, p. 7) (8) Sales force productivity -- This is utilized in conducting an assessment of the sales force of the organization. (9) Advertising analysis -- this is a method utilized for advertising "effectiveness, media choices and brand awareness." (Harmon, 2003, p. 8) (10) Distribution -- This tool is used for conducting an analysis of channel decisions "from economic and strategies perspectives. (11) Simulation. Simulates decision making under various strategic scenarios. (12) Satisfaction of Customers -- This tool analyzes the issues of the expectations of customer as compared to with outcomes of the product. (Harmon, 2003, p. 8)

Data mining techniques are reported to include such as the following: (1) Market Basket Analysis; (2) cluster analysis; (3) decision trees; (4) Query Tools; (5) Neutral Networks. (Harmon, 2003, p. 9) Online Analytic Processing (OLAP) is reported to be a type of analysis tools and tools that can be used to generate reports from large databases. These tools enable the reporting of data that is "partially aggregated…or full reports" and allows these to be stored in a format that is multidimensional and easy to access and analyze. Geographic Information Marketing Applications are reported to include the following stated applications: (1) Customer location -- linking customer behavioral data from the master files, subscription lists, support and warranty claims, transactions history and identity with time and location information. This is powerful information used in mapping and predicting consumer behavior." (Harmon, 2003, p. 10) (2) Geographic market information -- this can be used to link physical maps and marketing data using classification of country, city, ZIP code or Census tract; (3) Marketing activity location -- this links POS transactions, distribution patterns; direct response results; sales forecasts, advertising expense and other information to geographic location; (4) business location -- this labels business facilities on a map that enables a display of retail density, population density, buying power, and media coverage; (5) Marketing resource location -- this links the assets moving to the physical location using GPS from automobiles, trucks, aircraft and wireless devices. (Harmon, 2003, p. 10) Customer management systems are reported to include 'Sales Force Automation' which is a customer management tools used and reported as "one of the fastest growing elements of the Marketing Information System. The Sales Force Automation tools are integrated applications with the CRM system and involves "the application on information technology to the sales function…to the activities leading to a sale." (Harmon, 2003, p. 11) The field sales process is comprised by various steps leading to a sale and the Marketing Information System supports this process through generating leads, processing sales management and account management. (Harmon, 2003, p. 11) CRM applications are reported to include the following:

1. E-commerce support

2. Sales force automation

3. Telesales and call center automation

4. Direct mail and catalog sales

5. Email and e-newsletter response

6. Web sales and personalization

7. Analysis of Web generated data

8. Traditional customer support and service

9. Online support and customer service

10. Mobile support through laptops, handheld devices.

11. Training (Harmon, 2003, p. 12)

Summary and Conclusion

The Marketing Information System is a system that enables the organization to optimize all aspects of marketing and enables reporting on many levels so that the organization can analyze its marketing and sales process and ultimately make the process more effective over time. The various tools that the Marketing Information System makes available increase the efficiency of the organization and the organization's success.