What Is the Definition of Marketing Information & What Is a Marketing Information System?
What, precisely, is a marketing information system? In his book Marketing Management, Kellogg School of Management Professor of International Marketing Philip Kotler defines it as “people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.” These systems have been enabled by developments in the broader field of management information systems (MIS), which have allowed marketers and other business partners to gather large volumes of data and analyze it with sophisticated analytical tools. A marketing information system is the ideal approach for marketing information management, i.e., keeping your marketing information organized and actionable.
Marketing research isn’t in and of itself a marketing information system. Typical marketing research is focused on answering a specific problem or question based on external data and is often done on a project-by-project basis. For example, a marketing research initiative might determine what features should be added to a new product and include competitive analysis as well as consumer surveys and focus groups. This kind of research can be a valuable input for a marketing information system, but doesn’t include the same components or meet the same needs.
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What Are the Components of a Marketing Information System?
According to Kotler’s model, a marketing information system should have four major components:
- Internal Reports: This includes data from within a company, such as sales records, inventories, and product costs. This type of information can provide valuable insights on company capabilities and tell you if products are succeeding.
- Marketing Intelligence: These are external insights from third-party sources, such as trade journals or industry associations. Marketing intelligence enables companies to better understand the landscape of their individual sector as well as competitive forces at work.
- Marketing Research: As discussed previously, project-based research seeks to answer specific marketing questions. These insights remain important within a broader marketing information framework and are even more powerful when combined with internal and external data.
- Marketing Data Support System: This system consists of tools that make it possible for companies to gather, organize, and analyze the three sets of data discussed above. This typically refers to computer software applications organized around specific tasks, such as market segmentation or media planning.
Why Do You Need Marketing Information Management?
There are many different ways that marketing information management systems can help companies drive growth. Key benefits include ensuring you understand your business better, gaining important guidance for designing successful products, and improving company operations, among other issues.
- Improve Your Understanding of Your Business: Marketing campaign tracking systems can often be inadequate or have limited effectiveness when taken in isolation. Avoid the problems caused by inadequate campaign tracking systems and gain a better understanding of the following elements:
- Customers: Depending on the internal reporting inputs you use, a marketing information system can ensure you keep track of customer demographics, attitudes, and behavior. Tracking sales on a customer level can provide important insights into buying cycles as well as different taste profiles. Meanwhile, social media tracking and consumer-based research can help you understand how potential customers perceive your brand and products.
- Markets: The marketing intelligence included in marketing information systems helps ensure decisions are based on a strong understanding of the specific market niche or industry where you operate, as well as within the overall competitive landscape. When you combine these insights with economic forecasts and macro trends, you can use them to size your market and predict growth trends for your business.
- Outside Forces: Other outside forces that can be tracked through marketing information systems include regulatory and legal risks. For example, privacy and data collection may be something you need to monitor if your marketing information system includes insights about individual customers. Or, if you sell a product that is heavily regulated (such as pharma or medical devices) or impacted by government trade policies (such as agricultural or energy products), you can also make sure you stay on top of any new developments.
- Drive Product Design and Placement: The insights that can be developed from a robust marketing information system are invaluable for product marketing teams. Sector and competitive information, along with consumer research, can help drive the process of analyzing your competitive niche, setting product positioning, messaging, and pricing, and determining your product’s value proposition. When you include insights regarding your sales trends and company capabilities, you have a solid foundation for developing ideas for new products, features, packaging, and delivery.
- Drive Operations throughout Your Organization: A marketing information system can provide valuable guidance for many parts of your organization:
- Marketing Teams: This group is the initial beneficiary of a marketing information system. They can use it to develop product messaging and positioning (as noted earlier), generate with ideas for specific campaigns and track success for those campaigns, and determine the right marketing mix based on what’s succeeding and what’s already being used within the industry. The right marketing information management system can take a lot of the guesswork out of marketing and ensure decisions are based on a strong understanding of return on investment (ROI).
- Customer-Facing Teams: Sales and account teams can benefit from better understanding the competitive landscape and customer needs, so they can speed up the sales cycle and win more customers, provide better service to customers, and provide ongoing support throughout the customer relationship management (CRM) cycle.
- Financial Teams: A marketing information system can help drive integration of accounting systems into the broader business. The internal data within the system can help manage product inventory and distribution, and can also help track and manage customer churn. Having a strong understanding of product sales and industry factors can also help financial teams analyze profit margins and drivers.
- Enterprise-Wide: Throughout the organization, marketing information systems can ensure all managers have a strong understanding of their sector and business and provide broad inputs into strategy development. Companies can also use a marketing information system to understand which parts of the business are doing the most to support the bottom line and which parts are contributing the most resources toward growth.
- Improve Data Access: Storing essential data and making it easy to access is a core aspect of any marketing information system, by definition. The tools that make up the marketing decision support system can be used to facilitate data access throughout an organization.
- Avoid Crisis: With their extensive external data inputs, these systems can help you avoid getting caught unprepared by competitors or changes in your industry. They can also help you maintain solid control over your marketing systems, so you can spend marketing budgets wisely and minimize risk.
- Increase Sales and Profits: Marketing information management systems help improve your bottom line. By providing a solid analytical basis for everything from product development to marketing initiatives to customer relationship management, they can help you create products that clients want to buy and help you control costs.
Common Pitfalls of Marketing Information Systems
Of course, nothing is perfect, and marketing information systems are no exception. Some key potential issues include data risks, business resource management issues, and human factors.
- Data Risks: As recent high-profile breaches involving companies like Equifax and Uber have shown, storing data always includes the risk that someone will hack into that data. Potentially sensitive customer information can play a significant role in marketing information systems, which leads to equally significant risk. Ensuring that you collect accurate data is another concern, particularly for third-party data within the system — after all, you can’t expect to make good decisions based on bad data.
- Business Resource Management Issues: Resource issues pose another challenge. To begin with, creating a comprehensive marketing information system can require more money, time, and expertise than many companies have to spare. Internal systems may not be able to capture the right information, or may not be able to coordinate with each other and connect. Additionally, timing can be everything when it comes to marketing information: If the system is too slow or isn’t updated often enough, you can end up with lags and gaps between your understanding and the current competitive landscape. Or, you may be forced to simply react to changing events rather than anticipate them and take proactive measures.
- Human and Outside Factors: Marketing information systems can also pose ethical and legal issues, especially given how much data companies can capture about clients today. For example, a company that has a mobile app might be able to collect detailed information about a customer’s location and movements, which, combined with information about their shopping history, social media presence, behavior, and attitudes, could prove too invasive for many consumers. Of course, government regulations do exist to protect consumers against invasions of privacy and other concerns, and companies would be well advised to avoid breaching those regulations.
Setting up a Marketing Information System Function
Once you’ve weighed the benefits, risks, and resource needs, you’re ready to get started setting up your own marketing information system. The basic steps are fairly simple but can be more complex — and time-consuming — than they may look, so make sure to plan accordingly.
- Step 1 - Goal Analysis: There are a lot of different potential functions a marketing information system can include, so plan for success by establishing clear goals at the beginning. Is your primary interest tracking campaigns from beginning to end, or driving product development or corporate strategy? These goals will help you decide what data to include within your system.
- Step 2 - Metrics Analysis: Once you’ve established your goals, you can move on to determining what data points you will include in your marketing information system. As discussed in more detail below, there are a broad number of different internal and external inputs you may want to consider. Your goals will drive this process. For campaign tracking, you may be more focused on internal metrics, such as clickstream data, email open rates, and sales records. For product design and strategy initiatives, external inputs (such as competitive research and economic forecasts) might matter more.
- Step 3 - Marketing Department Coordination: Once you know what data will be available to you, you can then move on to identify how this data will fit into your processes. Determine who in your marketing team will be responsible for maintaining and using the data as well as what decisions will be supported by the data. If other groups within your organization, such as product or sales, will also be using the system, you’ll also need to consider their needs.
- Step 4 - Tool Identification: Now, it’s time to identify what marketing decision support tools you want to use. There are many variables here based on the amount and type of data you are dealing with, as discussed further below. For simpler systems, spreadsheets may be enough. Others may need more extensive data visualization tools, dashboards, or other types of decision support. You may need a skilled IT resource to assist you with this process.
- Step 5 - Implementation and Deployment: The details of this process will emerge after you complete the first four steps. Common steps will include collecting all the data you need for the system, ensuring how it will work together, and then integrating it into your tools. In order to be successful, it’s critical to carve out plenty of time for testing and QA and make sure to properly train all users. Once you’ve completed all these steps, you’ll be ready for launch.
Deeper Dive: Information Resource Acquisition & Incorporation
Determining what data to include in your marketing information system can be a challenge. There are lots of different potential inputs that could be relevant, but if you include too many, you might never get your project off the ground or end up with a system that is unwieldy and slow or difficult to use. Here’s a list of some of the data types you could incorporate, along with some factors to consider:
- Enterprise Size and Total Resources Available: The size of your company and resources available will play an important role in the structure of your system. A small company may not do much formal data collection or have many internal research resources. Customer insights may be gained primarily through talking with sales teams or managers, and while any formal research may need to be conducted by vendors, there may be limited funding. Meanwhile, large companies may have the opposite problem, with tons of different data being collected but remaining unused or stuck in silos. Understanding what is realistic for your organization as well as what budget you have will be key in getting your marketing information system off the ground.
- Internal/Primary Research: There are many different potential internal inputs you might want to consider using, including both sales and operational data as well as any primary research your company conducts (either internally or with external partners).
- Campaign and Communications Data: What are your touchpoints with customers, and what tracking capabilities do you have? Here are some examples:
- Company Website: Your site offers a rich trove of information on customer and prospect interests and behavior. Common key metrics here include site traffic data (such as unique visitors and pageviews), clickstream data (the path customers use getting to and going through your site), and site stickiness measures (time spent on site and number of pages per visit).
- Email Campaigns: If email plays an important role in customer outreach, tracking this channel will be critical. Open and clickthrough rates, along with bounces and unsubscribes, are always worth tracking, and some companies may also be doing multi-variant testing or have other more sophisticated metrics.
- Social Data: Social channels are a huge part of the marketing mix for many companies today and can also be a valuable source of customer feedback. Monitoring likes, comments, and shares on company pages and profiles is of course critical, but some companies may also benefit from a social listening monitoring service that tracks everything that’s being said about their brand and products.
- Sales Data: Connecting marketing campaign data to sales will be critical to measuring ROI and understanding the sales cycle, although that doesn’t mean it’s always an easy process, particularly for products that are ultimately sold through retailers. Loyalty cards or programs can help with this process, allowing brands to create direct relationships with customers and also track purchases and behavior on an individual level.
- Customer Support Data: Customer support data can also help measure things that aren’t working so you can optimize and improve. What problems are customers calling about and when are they calling? A volume of calls around a specific issue may mean you could benefit from a strategic product enhancement or improved messaging on your packaging or manuals.
- Primary Research: Whether you conduct this internally or with a third party, any marketing research you have should also be considered for incorporation in your marketing information system. This could include customer surveys, focus groups, behavioral research, product testing, and many other types of research.
- External/Secondary Research: External data typically makes up a significant amount of the marketing intelligence component of your system, and it is important to ensure you bear your industries and the competition in mind when setting strategies.
- For-Profit Companies: Here are some common sources for marketing intelligence:
- Media and Publications: Staying up to date on the news is a simple and helpful step. Setting a wide net can be helpful — major industry journals and newsletters are of course always a must-read, but a great piece of insider news might come from a blog. Setting up news alerts can also help ensure you don’t miss anything.
- Search Engines: It can also be useful to do a search about key industry topics and see what comes up.
- Advertising and Marketing Agencies: If you work with an agency, they may either already have insights into your sector or may be able to help you conduct any research needed, so you stay informed about your competitive landscape.
- Specialty Market Research Firms: You may also rely on data from specialty market research firms that are relevant to your industry. Syndicated services they provide (as compared to custom research done specifically for your company) could include sales data for your industry, competitive analyses, or other types of research.
- Nonprofit Organizations: These organizations can provide some incredibly helpful data, often at no cost or a low cost.
- Government Agencies: A huge wealth of data is generated by government agencies, including the demographic data provided by the Census Bureau and the economic data provided by the Bureau of Economic Analysis and the Bureau of Labor Statistics. Depending on your sector, other agencies may provide helpful insights. For example, if you sell a product to schools, you may rely on the National Center for Educational Statistics. Tracking changes in regulations and the law may also be critical for some businesses.
- Non-Governmental Organizations (NGO): Non-governmental organizations may also be doing studies on your sector or your customers that should be included in your system.
- Trade Associations: These groups are another important source for market data and competitive intelligence, and your company may already have free access if it is a member.
Deeper Dive: Marketing Information System IT Structure and Tools
The right IT structure and tools will be crucial to pulling all this data together. Portland State School of Business Professor Robert Harmon describes an overall framework for this structure in his contribution to the Encyclopedia of Information Systems, which includes four key components: a data warehouse, applications software, the user interface, and a data support system.
- Data Warehouse: The marketing information system will need to store and provide access to large volumes of data; this is typically done by connecting to different databases of marketing files. Databases can be formatted as flat files (text files that have one record per line) or relational databases (more complex databases organized into rows and columns).
As discussed above, the marketing information system may include both internal and external data and integrating them into a single system can be tricky. For example, a company may wish to unite its sales and inventory data and product and pricing information, along with its website and campaign metrics and its marketing research — all of them likely coming from different systems. The organization may then wish to layer external data (such as demographic or geographic databases) on top of this, which can create further challenges. However, integrating this data can then reveal powerful insights, such as regions or demographic segments where there is greater potential to make sales.
- Applications Software: You will need powerful software to integrate and analyze all this data, and there are many tools available to help with these needs:
- Oracle Crystal Ball: This is a powerful forecasting tool that allows you to predict potential outcomes.
- SAS Visual Analytics: This product is a data visualization tool that allows you to monitor key metrics and generate interactive reports.
- SPSS: A widely used statistical analysis package owned by IBM, SPSS caters more to data scientists rather than to business users.
- Tableau: This is a popular data visualization tool that allows organizations to create dashboards based on a wide variety of different types of databases.
- Qlik: This enterprise data visualization tool is an up-and-coming competitor to Tableau.
- User Interface: A marketing information system is only helpful if people can use it and rely on it. Accordingly, it’s critical to have an easy-to-use interface that allows users to quickly get the information they need. The design of this interface can vary, however, based on a multitude of different factors, including the types of decisions marketers need to make, the way they would like to analyze and display information, and the hardware and software being used. In addition to ease of use, you should consider cost and security.
- System Support: Providing ongoing support for the marketing information system is crucial to its long-term success. Typically, this means you will need system managers to manage and maintain both the hardware and software used in your system, monitor the system regularly, and provide any needed assistance to users.
Deeper Dive: Common Marketing Data Support System Models
Creating reports that make it easy to understand trends and facilitate informed decision making is an important goal for the data support system component of any marketing information system. In order for you to be able to consistently rely on these insights, it’s essential that any reports can be generated on a regular basis and be standardized and customized to the specific need of your target audience. The look and feel of your reports will vary based on the tools you use but may include some of these common models:
- Time Series Sales Models: Forecast future sales by looking at historic trends, including seasonality, sales cycles, and other issues.
- Brand-Switching Models: Particularly important in highly competitive sectors, you can use inputs on customer behavior, attitudes, and lifecycle to determine what might encourage customers to switch to your brand.
- Linear Programming: This refers to mathematical models you can use to predict outcomes, such as highest profit or highest sales.
- Elasticity Models: Show how outlooks change when specific factors change, such as the price of your product, consumer incomes, product supply, or client demand.
- Regression and Correlation Models: Demonstrate the relationship between different variables, such as sales of your product and an outside factor, like a change in competitor pricing or the weather.
- Analysis of Variance (ANOVA) Models: This is a collection of models that’s useful for comparing differences between groups, such as customer segments.
- Sensitivity Analysis: Show results when you change a specific factor, for example, the impact on purchasing by different groups when you increase prices.
- Discounted Cash Flow: Estimate the value of a specific product or business line over time.
- “What If” Models: These are spreadsheet templates that allow you to weigh different options and predict what will happen if specific factors change, such as launching a new product or opening a new store.
Deeper Dive: IT Resource Management and Business Requirements
IT issues are a major part of setting up and maintaining a marketing information system. Here are some key factors to bear in mind:
- Integrating Multiple Data Sources and Types: The data warehouse component of your marketing information system may include many different types of data. Make sure to create a plan for integrating and harmonizing this data, so you can be confident your system provides you with accurate insights.
- Multiple Business Line Reporting Requirements: Are different groups within your business using the system? Then, you need to make sure those groups receive reports that meet their needs — for example, what works for marketing may not make sense for finance. Interviewing the other groups and viewing sample reports can help.
- IT Structure Integration: It’s likely that several different systems will end up getting integrated into your marketing information system. How will these systems work with each other, and are they all supported by your software tools?
- IT Resources and Vendor Management: Does your internal IT team have the capabilities you need to set up and manage the system on an ongoing basis, or will you need to hire a third-party vendor? What kind of service level agreements (SLA) does each group have? For example, if you need constant access to support, getting part-time hours from an IT team member who works a single shift probably won’t be enough.
- Ongoing IT Support and Information Backup: Setup is just the beginning. Who is going to maintain your system on an ongoing basis, and how will you back up and store data?
Additional Resources for Marketing Information Systems and Management
Ready to get started on your own marketing information system? Look into these resources to make sure you are prepared to take the plunge:
- Encyclopedia of Information Systems, edited by Hossein Bidgoli
- Information Marketing, by Jennifer Rowley
- Managing Marketing Information, by Nigel Piercy and Martin Evans
- Marketing Management, by Philip Kotler and Kevin Keller
- Trends and Innovations in Marketing Innovation Systems, by Theodosios Tsiakis
- The International Institute of Marketing Professionals (IIMP) offers a broad certification program for marketing professionals.
- The Certified Marketing Management Professional (CMMP) certification is recommended for marketing research managers.
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