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MIS – Marketing information system
November 25, 2010 By Hitesh Bhasin 1 Comment

A marketing information system (MIS) is a set of procedures and methods designed to

generate, analyze, disseminate, and store anticipated marketing decision information on a
regular, continuous basis. An information system can be used operationally,
managerially, and strategically for several aspects of marketing.

A marketing information system can be used operationally, managerially, and

strategically for several aspects of marketing.

We all know that no marketing activity can be carried out in isolation, know when we say
it doesn’t work in isolation that means there are various forces could be external or
internal, controllable or uncontrollable which are working on it. Thus to know which
forces are acting on it and its impact the marketer needs to gathering the data through its
own resources which in terms of marketing we can say he is trying to gather the market
information or form a marketing information system. This collection of information is a
continuous process that gathers data from a variety of sources synthesizes it and sends it
to those responsible for meeting the market places needs. The effectiveness of marketing
decision is proved if it has a strong information system offering the firm a Competitive
advantage. Marketing Information should not be approached in an infrequent manner. If
research is done this way, a firm could face these risks:

1. Opportunities may be missed.

2. There may be a lack of awareness of environmental changes and competitors’
actions.
3. Data collection may be difficult to analyze over several time periods.
4. Marketing plans and decisions may not be properly reviewed.
5. Data collection may be disjointed.
6. Previous studies may not be stored in an easy to use format.
7. Time lags may result if a new study is required.
8. Actions may be reactionary rather than anticipatory.

The total information needs of the marketing department can be specified and satisfied
via a marketing intelligence network, which contains three components.

1. Continuous monitoring is the procedure by which the changing environment is

regularly viewed.
2. Marketing research is used to obtain information on particular marketing issues.
3. Data warehousing involves the retention of all types of relevant company records, as
well as the information collected through continuous monitoring and marketing research
that is kept by the organization.

Depending on a firm’s resources and the complexity of its needs, a marketing intelligence
network may or may not be fully computerized. The ingredients for a good MIS are
consistency, completeness, and orderliness. Marketing plans should be implemented on
the basis of information obtained from the intelligence network.

An Marketing Information System offers many advantages:

1. Organized data collection.

2. A broad perspective.
3. The storage of important data.
4. An avoidance of crises.
5. Coordinated marketing plans.
6. Speed in obtaining sufficient information to make decisions.
7. Data amassed and kept over several time periods.
8. The ability to do a cost-benefit analysis.

The disadvantages of a Marketing information system are high initial time and labor costs
and the complexity of setting up an information system. Marketers often complain that
they lack enough marketing information or the right kind, or have too much of the wrong
kind. The solution is an effective marketing information system.

The information needed by marketing managers comes from three main sources:

1) Internal company information – E.g. sales, orders, customer profiles, stocks, customer
service reports etc

2) Marketing intelligence – This can be information gathered from many sources,

including suppliers, customers, and distributors. Marketing intelligence is a catchall term
to include all the everyday information about developments in the market that helps a
business prepare and adjust its marketing plans. It is possible to buy intelligence
information from outside suppliers (e.g. IDC, ORG, MARG) who set up data gathering
systems to support commercial intelligence products that can be profitably sold to all
players in a market.

(3) Market research – Management cannot always wait for information to arrive in bits
and pieces from internal sources. Also, sources of market intelligence cannot always be
relied upon to provide relevant or up-to-date information (particularly for smaller or
niche market segments). In such circumstances, businesses often need to undertake
specific studies to support their marketing strategy – this is market research.
8 Advantages of Marketing Information
Systems
August 6, 2011 By Hitesh Bhasin 1 Comment

With an increasingly competitive and expanding market, the amount of information

needed daily by an organization is profound. Thus they have to establish a Marketing
Information system. There are several advantages of Marketing information systems

1) Organized Data collection – Lots of data can be collected from the market. But the
main word here is “Organized”. Organizing data is very important else the data is
meaningless. Thus MIS helps you to organize your database thereby improving
productivity.

2) A broad perspective – With a proper MIS in place, the complete organization can be
tracked which can be used to analyse independent processes. This helps in establishing a
broader perspective which helps us know which steps can be taken to facilitate
improvement.

3) Storage of Important Data – Several times in pharmaceuticals, when one drug is

being produced they may need data of another drug which was produced years back.
Similarly in Media, photographs are stored in archives. This storage of important data
plays a crucial role in execution and thus proves again that MIS is not important only for
information but also for execution.

4) Avoidance of Crisis – The best way to analyse a stock (share market) is to see its past
performance. Top websites like moneycontrol thrive on MIS. Similarly MIS helps you
keep tracks of margins and profits. With an amazing information system established, you
can know where your organization is moving and probably avert a crisis long before it
has taken place. Ignoring hints received from MIS reports is foolhardy.

5) Co-ordination – Consumer durables and FMCG companies have huge number of

processes which needs to be co-ordinated. These companies depend completely on MIS
for the proper running of the organization. There are dedicated people for marketing
information systems in such organizations. This is mainly because of the speed required
to access information and implement it.

7) Analysis and Planning – MIS is critical for planning. You cannot do planning
without information. For planning, the first thing which is needed is the organizations
capabilities, then the business environment and finally competitor analysis. In a proper
MIS, all these are present by default and are continuously updated. Thus MIS is very
important for planning and analysis.
 Control – Just like MIS can help in a crisis, in normal times it provides control as you
have information of the various processes going on and what is happening across the
company. Thus it provides you with a sense of control.

Disadvantages – Maintenance, complexity and setting up a MIS are one of the major
hindrances to Marketing information systems. Furthermore, wrong information being fed
in MIS can become cumbersome and appropriate filters need to be established.

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Marketing Information Systems

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Before we discuss about use of Management Information System in marketing we must

first be familiar with the term ‘Management Information System’. It is defined as a
system or process that provides the information necessary to manage an organization
effectively. MIS and the information it generates are generally considered essential
components of prudent and reasonable business decisions.

Management Information Systems are distinct from Regular information systems in that
they are used to analyze other information systems applied in operational activities in the
organization. Academically, the term is commonly used to refer to the group of
information management methods tied to the automation or support of human decision
making, e.g. Decision Support Systems, Expert systems, and Executive information
systems.

MIS should have a clearly defined framework of guidelines, policies or practices,

standards, and procedures for the organization. These should be followed throughout the
institution in the development, maintenance, and use of all MIS. It is viewed and used at
many levels by management. It should be supportive of the institution’s longer term
strategic goals and objectives.

MARKETING INFORMATION SYSTEMS

Marketing is one of the major factors for the sustenance of any business as revenues are a
direct outcome of it. Information systems in marketing process include technologies that
allow managers to access important and updated information about the customer wants
and preferences and current market demands so that they can offer prompt and apt
services. Information Systems also aid in determining and implementing effective
marketing strategy.
The Marketing Information System focuses on only the marketing aspects of the
management information system. It is an organized way of continually collecting,
accessing and analyzing information that marketing managers need in order to make
better decisions.

To understand the proper role of information systems one must examine what managers
do and what information they need for decision making. We must also understand how
decisions are made and what kinds of decision problems can be supported by formal
information systems. One can then determine whether information systems will be
valuable tools and how they should be designed.

COMPONENTS OF A MARKETING INFORMATION SYSTEM

A marketing information system (MIS) is intended to bring together disparate items of

data into a coherent body of information. An MIS is more than raw data or information
suitable for the purposes of decision making. An MIS also provides methods for
interpreting the information.
The MIS model consists of four main parts: the internal reporting system, the marketing
research system, the marketing intelligence system and the marketing models.

IMPORTANCE OF MIS IN MARKETING

The marketing function identifies consumer needs and develops products based on such
market needs. It matches the product offering with the consumer needs and ensures ready
buyers for the products of company. Marketing is a crucial activity for business firms and
this function is a major user of information system facilities.

Some of the areas of applications of MIS in marketing are as given below:

• Order Processing System: Computerized order processing system captures sales

orders from customers and processes the orders for further action. It checks the
inventory availability, pending orders, production details etc., before accepting
the customer order. Computerized sales order processing generates control report
daily on orders processed, details of back orders, etc.
• Sales Management System: Computerized sales management system uses the
data from sales order processing system to generate various sales related reports.
This system supports accounts management, direct marketing, sales forecasting
and sales Presentations.
• Logistics Management: The physical distribution is a major activity of marketing
function. It uses computer based OR models to find optimum location of
warehouses, shipment routes, quantity to be transported and stocked etc.
• Consumer Research: Computerized transaction processing systems capture huge
quantity of data about customers and their buying patterns etc. It is used to
generate vital information about consumer behaviour.
• Sales Forecasting: Computer based mathematical and operations research models
are used to forecast sales and marketing expenses.

Sources of marketing information

• Transaction data: The transaction data includes data about marketing activities
such as sales data and sales expense data.
• Marketing research data: This includes data about consumers, product
promotion, prices, and packaging distribution agents.
• Corporate strategy and corporate plans: Corporate strategy and corporate plans
based on detailed analysis of the company’s capabilities are useful sources of
marketing information.
• Marketing research agencies: Marketing research agencies regularly collect data
about markets and make such database available to companies at a fee.

Need for marketing Information System

Kishore C.S. (Dec 1999)

Marketing feedback is important for any organization. Changing customer needs,
evolving technology trends, increasing competition necessitate the need to process market
feedback and communicate to other departments of the organization. Currently very few
information systems provide a features needed by a marketing department. Enterprise
applications focus on functions like sales, production, purchase, and inventory. But
market information is becoming crucial. This document hints at conceptual framework
that marketing information system. Such a system can be very useful to any organization.

Top Management is interested in knowing the following from marketing department:

1. How much was our marketing budget and what is the actual expenditure?
2. Towards which type of marketing maximum budget was spent? What should be
future marketing budget?
3. How many prospects contacted our marketing department and how many
prospects materialized finally?
4. What is the market feedback about current quality, technology, and price of the
product? What strategy should be adopted to improve the same?
5. How effective is our communication with prospects?
6. What is the future potential of the market?
7. What trends are happening in market which should change our product strategy?

Typically all this information is available with Marketing department which needs to be
processed and passed on to top management. Besides this the marketing department also
needs effective information system to manage their own functions.

The following are the needs of marketing department

1. What are the future marketing events the company can participate in? What are the
events in which the company participated?
2. How effective are our current marketing efforts? What are the areas of
improvement? Which marketing type can be taken up new or which can be
discontinued?
3. What are the pending ‘prospects’ that can be followed up?
4. What are the various communications sent to the prospect and what is the status of
the prospect?
5. What are the various marketing materials available and how effective are they?
6. What is the number of inquiries received in last few months for each product?
Which product needs more marketing efforts?
7. What are the pending demos: who is doing what?
8. Who is the contact person(s) for each prospect?

Typical Processes that may be captured by Marketing Information System

Example 1:
 1. A Prospect sends an e-mail to marketing department asking for more information
on a product.
2. The person who receives the mail logs information about the prospect into the
system
3. Sends relevant information to the prospect
4. In Information system mark a follow-up activity for the prospect at a future date
and responsibility also.
5. Transfer queries by prospect into repository (Product – Question – Category).
Others can use this in future.

Example 2:

Someone in marketing department comes to know of an exhibition that focuses on the

market segment the company is in.

1. The marketing person logs the information in the repository

2. Similar events can be queried and see the effectiveness of participation in such
events.
3. Plan and participate in the event

4. If stall is put up in the exhibition and lot of prospects turned up – log the complete
information into repository.

The marketing information system (MIS)

Introduction
In order to make good marketing decisions, marketing managers require high quality
information about the market. It is not sufficient to rely on hearsay or hunches. Poor
information never led to a successful marketing decision except by sheer chance. There
are numerous methods of marketing research ranging from educated guesswork to hard
facts. You need to be aware of the assumptions and limitations in order to know when to
use a particular one and how to interpret and apply the information generated.

The marketing research process is only one of the sources of information for the MIS. It
is worth remembering that it is all the sources of information which contribute to the MIS
which help us understand our customer's needs and wants; that information does not
come just from our marketing research activities.

The MIS is part of the larger information system in an organisation ¾ the management
information system. The distinction between the MIS and management information
system is important. The management information system focuses on information
relevant to all aspects of an organisation's operation: for example, personnel records,
payroll data, financial ratios, financial investment analyses, inventory records, sales and
market data, market share, buying trends, and so on. The MIS focuses on only the
marketing aspects of the management information system.

Quester et al. (2004, p. 136) defines the MIS as:

an organised way of continually collecting, accessing and analysing information that

marketing managers need in order to make better decisions.

Similarly, your textbook's (Kotler et al. 2004, p. 207) definition of an MIS is a system
that:

consists of people, equipment and procedures to gather, sort, analyse, evaluate and
distribute needed, timely accurate information to marketing decision-makers.

Consider this

Read the above definition again. What does it identify as the key characteristics of an
MIS? What makes an MIS a 'system' as distinct from a haphazard collection of different
pieces of data? How would you explain the distinctive characteristics of an MIS to
someone else?

Figure 3.1 provides reasons why we need to have an MIS to help us become effective
managers. However, designing and implementing an MIS so that it performs the way it
should is not always an easy task. After all, an MIS has to meet the needs of its customers
(users) and, to do that, those needs must first be assessed. Kotler et al. (2004) make the
useful distinction between:

• identifying what information managers would LIKE to have

• identifying the information they actually NEED
• identifying what information it is FEASIBLE to offer them.
Figure 3.1 Reasons for obtaining information
Source: Evans and Berman (1992, p. 85)

Turn now to the reading to expand on what an MIS can provide for a marketing manager
and to review some of its key features.

In your text

Kotler et al. (2004) Chapter 6, pp. 204-215, 'Information management and marketing
research' and 'The marketing information system'.

Marketing research
Marketing research tends to generate a lot of attention because it focuses on solving
problems and is a complex process. When you add to this the systematic nature of
marketing research, you find that it is sometimes even presented as being the entire MIS
rather than a subsystem.

To help you remember that marketing research is only part of the MIS, the following
table summarises the differences between them.
Table 3.1 Contrasting characteristics of a marketing information system and marketing
research

Marketing information system Marketing research

1. Handles both internal and
external data
2. Is concerned with preventing as
well as solving problems.
3. Operates continuously ¾ is a
system.
4. Tends to be future-oriented.
5. Is a computer-based process.
6. Includes other subsystems
besides marketing research.
1. Emphasises the handling of
external information.
2. Is concerned with solving
problems.
3. Operates in a fragmented,
intermittent fashion ¾ on a project-
to-project basis.
4. Tends to focus on past
information.
5. Need not be computer-based.
6. Is one source of information
input for a marketing information
system.

Source: Adapted from Stanton et al. (1994, p. 69)

Many organisations, particularly smaller ones, are disinclined to undertake marketing

research. The cost and time involved in the exercise is only part of the reason for this. If
you think about it, the only alternative to marketing research is intuition. The following
table spells out the difference between the two for you.

Table 3.2 Distinctions between research and intuition in marketing decision-making

Research Intuition
Nature Formal planning, Preference based on
predicting based on personal feelings
scientific approach
Methods Logic, systematic methods, Experience and
statistical inference demonstration
Contributions General hypotheses for Minor problems solves
making predictions, quickly through
classifying relevant consideration of
variables, carrying out experience, practical
systematic description and consequences
classification

Source: Pride and Ferrell (1993)

Scope of research
Marketing research includes a variety of activities. Kotler et al. (2004, p. 213) note that
the ten most common types of marketing research activity include:

• measurement of market potentials

• market share analysis
• determination of market characteristics
• sales analysis
• studies of business trends
• short range forecasting
• competitive product studies
• long range forecasting
• marketing information systems studies
• pricing studies.

A more detailed picture of what is involved in marketing research can be found in Table
6.1 on page 214 of your textbook, which shows the result of research activities of 599
companies

Activity 3.1

To what extent could marketing research be used in port and shipping services (ad hoc,
systematically or never), and for what purposes (service, pricing, promotion)?

Marketing Information Systems

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Marketing information systems integrate the information flow required by many

marketing activities. Marketing information systems provide information for:

Internet/intranet websites and services make an interactive • marketing process possible

where customers can become partners in creating, marketing, purchasing, and improving
products and services.

Sales force automation systems use mobile computing and Internet • technologies to
automate many information processing activities for sales support and management.

Other marketing systems assist marketing managers in product • planning, pricing, and
other product management decisions, advertising and sales promotion strategies, and
market research and forecasting.

Figure 23-1 illustrates how marketing MIS provide information technologies that support
major components of the marketing function.
 Figure 23-1
AN OVERVIEW OF A MARKETING MIS

Interactive Marketing
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The explosive growth of Internet technologies has had a major impact on the marketing
function. The term interactive marketing has been coined to describe a type of marketing
that is based on using the Internet, intranets, and extranets to establish two-way
interaction between a business and its customers or potential customers. The goal of
interactive marketing is to enable a company to profitably use those networks to attract
and keep customers who will become partners with the business in creating, purchasing,
and improving products and services.

Customers are not passive participants, but are actively engaged in a network-enabled
proactive and interactive process. •

Encourages customers to become involved in product development, delivery, and service

issues. •

Enabled by various Internet technologies, including chat and • discussion groups, Web
forms and questionnaires, and e-mail correspondence.
Expected outcomes are a rich mixture of vital marketing data, new • product ideas,
volume sales and strong customer relationships.

Targeted Marketing
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Targeted marketing has become an important tool in developing advertising and

promotion strategies for a company`s electronic commerce websites. Target marketing is
an advertising and promotion management concept that includes five targeting
components:

 •Community - companies can customize their web advertising messages and promotion
methods to appeal to people in specific communities. These can be communities of
interest, such as virtual communities of online sporting enthusiasts or arts and crafts
hobbyists, or geographic communities formed by the websites of a city or other local
organizations.

 •Content - advertising such as electronic billboards or banners can be placed on various

website pages, in addition to a company`s home page. These messages reach the targeted
audience.

 •Context - advertising appears only in Web pages that are relevant to the content of a
product or service. So advertising is targeted only at people who are already looking for
information about a subject matter that is related to a company`s products.

 •Demographic/Psychographic - marketing efforts can be aimed only at specific types

or classes of people: unmarried, twenty-something, middle income, male college
graduates.

 •Online Behavior - advertising and promotion efforts can be tailored to each visit to a
site by an individual. This strategy is based on "web cookie" files recorded on the
visitor`s disk drive from previous visits. Cookie files enable a company to track a
person`s online behavior at a website so marketing efforts can be instantly developed and
targeted to that individual at each visit to their website.

Sales Force Automation

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Increasingly, computers and networks are providing the basis for sales force automation.
In many companies, the sales force is being outfitted with notebook computers that
connect them to Web browsers, and sales contact management software that connect
them to marketing websites on the Internet, extranets, and their company intranets.

Characteristics of sales force automation include:

Increases the personal productivity of salespeople. •
Dramatically speeds up the capture and analysis of sales data from the field to marketing
managers at company headquarters. •
• Allows marketing and sales management to improve the delivery of  information and
the support they provide to their salespeople.
Many • companies view sales force automation as a way to gain a strategic advantage in
sales productivity and marketing responsiveness.

Inputs to the Marketing MIS

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Among the other functional areas, the marketing MIS relies more heavily on external
sources of data. These sources include commercial intelligence, competition, customers,
trade shows, trade journals and magazines, and other publications. There are also
important internal company information sources. An overview of these inputs is
presented below.

1. The corporate strategic plan or policies. Marketing depends on the company`s

strategic plan for sales goals and projections. For instance, a strategic plan might show
sales are expected to grow by a stable 5 percent for the next three years. A marketing
MIS report for this company might detail current sales performance in terms of this
strategic target. In addition to sales projections, the strategic plan can spell out detailed
information about anticipated needs for the sales force, pricing, distribution channels,
promotion, and new product features. The strategic plan can provide a framework in
which to integrate marketing information and make appropriate marketing decisions.

2a. The transaction processing system (TPS). The TPS encompasses a huge amount of
sales and marketing data on products or services, customers, and the sales force.
Technology is revolutionizing the selling process. Most firms collect an abundance of
information on a regular basis that can also be used in making marketing decisions. Sales
data on products can expose which products are selling at high volumes, which ones are
slow sellers, and how much they are contributing to profits. The marketing MIS might
synthesize this information in such a way as to be useful in formulating promotional
plans. It can also be used to activate product development decisions. Analysis of sales by
customers may display which customers are contributing to profits. This data can also be
disseminated to determine the products specific customers are buying to help the sales
force with their promotional efforts. The performance of the sales force can also be
monitored from data captured in the TPS, which can help develop bonus and incentive
programs to reward well-performing salespeople.
2b. Internal Company Information. Internal company information includes routinely
collected accounting records, such as daily sales receipts, weekly expense records and
profit statements, production and shipment schedules, inventory records, orders, monthly
credit statements, and quarterly and biennial reports. Field salespeople are increasingly
likely to have portable personal computers, pagers, and personal digital assistants (PDAs)
to log in data for immediate transmission back to the company or customers, and to
receive information from the company and customers. Technology is revolutionizing the
selling process. Most companies collect an abundance of information on a regular basis
that can also be used in making marketing decisions.

External sources: the competition and the market. 3. In most marketing decisions it is
important to determine what is happening in the business`s external environment,
particularly anything that involves the competition, the economy, the market, and
consumers. External information can be obtained from many sources. Some of the most
commonly used sources are commercial intelligence, trade shows, trade journals, the
government, private publications, commercial data suppliers, and the popular press.
Many companies purchase their competition`s products and then perform "autopsies" to
find out what makes them tick so they can improve on them. Marketing managers attend
trade shows and read trade journals to keep an eye on the competition.

Figure 23-2 lists some trade journals and publications. Information can be purchased
from information brokers-individuals and companies who help businesses by
electronically searching information bases for useful data. Valuable information can be
obtained by training salespeople to listen to and observe customers, suppliers, members
of the distribution system, and the competition, and then contributing this intelligence to
the MIS. The intent should be to obtain usable marketing intelligence (information that is
available to the public) and not to conduct industrial espionage (stealing information not
available to the public). The latter is unethical and illegal. Marketers should be savvy
enough to realize that as they are collecting information about their competition, the
competition is probably collecting information about them.

An additional external source of important information for the marketing MIS is the
market for a company`s products. A large amount of useful data can be obtained from the
TPS for markets already being served by the company, but insights into buyer behaviors
and preferences in new markets can only be obtained from sources outside the firm.

The Internet may become the ultimate information source for both the competition and
the market. It already provides access to information provided by government (.gov), for-
profit business (.com), nonprofits (.org), universities (.edu), and individuals.

Figure 23-2
TRADE JOURNALS AND PUBLICATIONS

Air Conditioning, Heating & Refrigeration News

Airline Executive
American Banker

American Druggist

American Gas Association Monthly

Automotive Industries

Aviation Week & Space Technology

The Banker

Best`s Industry Report

Broadcasting

Brewers Digest

Chain Store Age Executive

Chemical Week

Computer Decisions

Computers and People

Credit and Financial Management

Datamation

Drug & Cosmetic Industry

Electronic News

Fleet Owner

Food Management

Food Processing

Forest Industries

Fuel Oil & Oil Heat and Solar Systems

Housing
Industry Week

Iron Age

Leather and Shoes

Paper Trade Journal

Journal of Retailing

Labor Law Journal

Merchandising

Modern Plastics

National Petroleum News

Oil and Gas Journal

Paper Trade Journal

PC World

Personnel

Pipeline & Gas Journal

Polk`s National New Car Sales

Printer`s Ink

Progressive Grocer

Public Utilities Fortnightly

Pulp & Paper

Quick Frozen Foods

Television Digest

Textile World

Transportation Journal
Ward`s Auto World

World Oil

Marketing MIS Subsystems and Outputs

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Subsystems for the marketing MIS include forecasting, marketing research, product,
place, promotion, and price subsystems. These subsystems and their outputs help
marketing managers and executives increase sales, reduce marketing expenses, and
develop plans for future products and services to meet the changing needs of customers.

Forecasting
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Forecasts are needed for marketing, production, purchasing, manpower, and financial
planning. Further, top management needs forecasts for planning and implementing long
term strategic objectives and planning for capital expenditures. Based on the firm`s
projected sales, the production function determines the machine, personnel, and material
resources needed to produce its products or services.

Marketing managers use sales forecasts to determin:

1) optimal sales force allocations,

2) set sales goals, and
3) plan promotions and advertising.

Other things such as market share, prices, and trends in new product development are
required. As soon as the company makes sure that it has enough capacity, the production
plan is developed. If the company does not have enough capacity, it will require planning
and budgeting decisions for capital spending for capacity expansion. Production planners
need forecasts in order to schedule production activities, order materials, establish
inventory levels, and plan shipments.

Some other areas which need forecasts include material requirements (purchasing and
procurement), labor scheduling, equipment purchases, maintenance requirements, and
plant capacity planning. The personnel department requires a number of forecasts in
planning for human resources in the business. Workers must be hired and trained, and for
these personnel there must be benefits that are competitive with those available in the
firm`s labor market. Also, trends that affect such variables as labor turnover, retirement
age, absenteeism, and tardiness need to be forecast as input for planning and decision
making in this function. On this basis, the financial manager must estimate the future
cash inflow and outflow.

He must plan cash and borrowing needs for the company`s future operations. Forecasts of
cash flows and the rates of expenses and revenues are needed to maintain corporate
liquidity and operating efficiency. In planning for capital investments, predictions about
future economic activity are required so that returns or cash inflows accruing from the
investment may be estimated. There are many forecasting methods in use, one of which is
regression analysis. It is illustrated below, using Excel.

EXAMPLE 1

A firm wishes to develop a sales forecasting model, by relating sales to price and
advertising.

USING REGRESSION ON EXCEL

To utilize Excel for regression analysis, the following procedure needs to be followed:

Click the 1. Tools menu.

Click 2. Add-Ins.
Click 3. Analysis ToolPak.
(If Analysis ToolPak is not listed among your available add-ins, exit Excel, double-click
the MS Excel Setup icon, click Add/Remove, double-click Add-Ins, and select Analysis
ToolPak. Then restart Excel and repeat the above instruction.)

After ensuring that the Analysis ToolPak is available, you can access the regression tool
by completing the following steps:

Click the 1. Tools menu.

Click 2. Data Analysis.
Click 3. Regression.

Marketing Research
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Marketing research is essentially a twofold activity. It involves (1) collecting current data
describing all phases of the marketing operations, and (2) presenting the findings to
marketing managers in a form suitable for decision making. The focus is on the
timeliness of the information. The goal of marketing research is to conduct a systematic,
objective, bias-free inquiry of the market and customer preferences. A variety of tools
such as surveys, questionnaires, pilot studies, and in-depth interviews are used for
marketing research. Marketing research can identify the features that customers really
want in a product or from a service. Important attributes of products or services -- style,
color, size, appearance, and general fit-- can be investigated through the use of marketing
research.

Marketing research broadly encompasses advertising research and consumer behavior

research. Advertising research is research on such advertising issues as ad and copy
effectiveness, recall, and media choice. Consumer behavior research answers questions
about consumers and their brand selection behaviors and preferences in the marketplace.
Research results are used to make marketing mix decisions and for pricing, distribution
channels, guarantees and warranties, and customer service. Inexpensive software and
statistical analysis software are used to analyze the data collected from marketing
research endeavors. These software packages can determine trends, test hypotheses,
compute statistical values, and more. This data is then often input into the marketing MIS
so that marketing managers can be better informed and can better make their planning
and resource allocation decisions.

Product Development
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Product development is one of "the four Ps" in the marketing mix -- product, place,
promotion, and price, each of which was explained earlier. Product development involves
the transformation of raw materials into finished goods and services, and primarily
focuses on the physical attributes of the product. Many factors, including materials, labor
skills, plant capacity, and technical factors are important in product development
decisions.

In many cases, a computer program for mathematical programming and simulations can
be utilized to analyze these various factors and to select the appropriate mix of labor,
materials, plant and equipment, and engineering designs. Make-or-outsource decisions
can also be made with the assistance of computer software. A framework, called the
product life cycle guides the manager in making product development decisions. It takes
into account four stages in the life cycle -- introduction, growth, maturity, and decline.

Place Planning
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Place planning involves planning on the means of physically distributing the product to
the customer. It includes production, transportation, storage, and distribution on both the
wholesale and retail levels. Where to deliver the product to the customer and how to get
the product to this location are the principal concerns of place analysis subsystems.
Typically, a distribution chain starts at the manufacturing plant and ends at the final
consumer. In the middle is a network of wholesale and retail outlets employed to
efficiently and effectively bring goods and services to the final consumer. But where are
the best places to locate manufacturing facilities, wholesale outlets, and retail distribution
points?

Factors such as manufacturing costs, transportation costs, labor costs, and localized
demand levels become factors that are critical to answering this issue. Today, marketing
MIS subsystems can analyze these factors and determine the least-cost placement of
manufacturing facilities, wholesale operations, and retail outlets. The purpose of these
locational analysis programs is to minimize total costs while satisfying product demand.
Digital maps combined with customer database information in computer mapping
software can be used to pinpoint locations for new retail outlets. For example, Yamaha
Motor Corporation, USA has made decisions as to where to locate the dealership by
blending computer graphics with behavioral demographics. Behavioral demographics
links psychological, life-style, and family-expenditure data to geographic locations, often
by zip code.

Promotion Planning
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One of the most important functions of any marketing effort is promotion. Promotion is
concerned with all the means of marketing the sale of the product, including advertising
and personal selling. Product success is a direct function of the types of advertising and
sales promotion done. The size of the promotions budget and the allocation of this budget
to various promotional mixes are important factors in deciding the type of campaigns that
will be launched. Television coverage, newspaper ads and coverage, promotional
brochures and literature, and training programs for salespeople are all components of
these promotional and advertising mixes. Because of the time and scheduling savings
they offer, computer software is widely used to establish the original budget and to
monitor expenditures and the overall effectiveness of various promotional campaigns.

Promotional effectiveness can be monitored through the TPS, or it may be monitored

through a specialized functional system focusing exclusively on sales activity. For
example, a significant proportion of many marketing managers` compensation is
determined by the results of their promotional campaigns through specialized sales
activity subsystems. Such systems often use data from retail outlet bar-code scanners to
compile information on how effective certain promotions were within the promotional
period. Without such sales activity, the time delay between wholesale shipments and
retail sales would prevent the promotion`s effectiveness from being accurately measured.

Sales Analysis
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Sales analysis assists managers in identifying those products, sales personnel, and
customers that are contributing to profits and those that are not. Several reports can be
generated to help marketing managers make good sales decisions. The sales-by-product
report lists all major products and their sales for a period of time, such as a month. This
report shows which products are doing well and which ones need improvement or should
be discarded altogether. The sales-by-salesperson report lists total sales for each
salesperson for each week or month. This report can also be subdivided by product to
show which products are being sold by each salesperson. The sales-by-customer report is
a useful way to identify high-and low-volume customers.