What Are Marketing Information Systems? (With Examples)

You may have heard the term ‘Marketing Information System’ and just sent it to a folder in the back of your brain, with other new business-tech-sounding words that you glaze over when you hear. While you might understand each of the words separately, what do they all mean together?

Marketing Information Systems (MkIS) are systems that involve the collection, analysis, and presentation of data related to marketing. It is primarily used by marketing decision-makers to improve their planning, implementation, and monitoring.

Whether you’re working for yourself or a large corporation, effectively marketing your business is a crucial factor in its survival and success. There is so much useful data gathered in numerous transactions these days that how to use it well can be overwhelming. We’ll examine what Marketing Information Systems are, how they work and whether there are benefits or downfalls to this technology.

How Do Marketing Information Systems Work?

Marketing Information Systems involve people, technology, equipment, and various processes, which all work together continuously; gathering, sorting, analyzing, and distributing accurate and up-to-date information for decision-makers in marketing.

MkIS combine different types of data in different systems that produce different outputs, depending on what the system user is looking to get out of the system or the purpose that it’ll be used for. These types of data, systems, and output will be described below.

Different Types of Marketing Information Systems

There are four different types of data that can be used in MkIS. These can all be used in various combinations to be processed in the MkIS. The more and more varied the data, the more the scope and accuracy of the outcomes generated will be improved.

1. Acquired Data

The first type of data is that which companies can acquire. This can expand the inputs into their MkIS and gain information from a wider group of people. Depending on the context and way the information generated will be used, this type of data has more or less relevance. For example, a company offering payment solutions might buy data from a bank to include in its system.

2. Internally Generated Data

The second type of data is that which the company generates internally. This includes details on sales and marketing activities, for example, and can be linked to the intranet to access information on different departments or groups within the organization.

3. Marketing intelligence

Marketing intelligence can be accessed through smart systems that get information from competitor websites, industry publications, and employees in the market. It can include feedback from customers (for example, from review websites or mystery shoppers), distributors or partners, and entered into the system.

4. Marketing Research

The final type of data, marketing research, is more specific than marketing intelligence. It comes from primary or secondary research customized for a specific organization to provide data on the market, customers, or competitors. The more specific the research, the higher the value it can provide to an organization. An example of this may be the results of a focus group or survey that a company has conducted to determine customer opinions on their product.

What Purpose do Marketing Information Systems Serve?

You might be asking what the point of all of this data is – what it can be used for in a practical, tangible way that will impact the company. MkIS have the ultimate objective of helping the marketing decision-maker to make better, more informed decisions. There are several applications for these decisions that can have very impactful outcomes for a business. MkIS can help businesses determine what their customers want and customer perceptions of the product or service and the organization as a whole.

These insights can impact the organization in many different ways to assist with different kinds of decisions.

• Product development teams can use insights generated by MkIS to determine which direction they should be moving in terms of their new product pipeline. Data about what customers are looking for and which elements of current products or services they like and dislike can guide the development of future products or add-ons to current products or services.
  
• The insights can also guide the company’s strategic marketing direction by assisting in providing both feedback about current products and services, as well as perceptions that may impact expansion plans, the launch of new products, or the opening of new locations, amongst other factors. In addition to impacting the strategy, it can also affect the pricing and distribution of products by providing valuable feedback on price points, sales trends and locations, and other useful related data.
  
• MkIS can be very helpful in product positioning by providing useful feedback that could help marketing teams better segment and target their customers. Doing this successfully can help increase profits and prevent a lot of both time and money from being wasted.
  
• This better positioning of the product can, in turn, drive more effective marketing communications and campaigns, which can also help companies to seek more successful partnerships or alliances. For those businesses looking to team up with others, knowing the customer and the brand perception is key, and MkIS can provide extremely useful feedback to get an accurate grasp of this in real-time.

There are multiple purposes that MkIS can serve in an organization, helping to drive more informed decision-making in several different ways and affecting people and decisions at all levels in an organization. As with all systems, there are different parts that work together to function as a whole.

What are the Elements of Marketing Information Systems?

For the system to provide accurate and insightful data to decision-makers, there are many different systems that work together. Together, these elements all form the MkIS, which can be divided into four different components.

1. Internal Reporting System. This is a combination of all the data that businesses keep on various operational aspects of their business. Data on sales, stock, purchase orders, cash flows, accounts receivable and payable, and employee costs are grouped together.
   
2. Market Research Systems. The input to these systems is primary or secondary data which is then processed to provide an outcome that includes possible solutions or opportunities. For example, information from surveys conducted by a company can recommend what products customers want to see grocery stores expanding their offering with.
   
3. Marketing Intelligence Systems. These systems generate updates that have evaluated the external marketing environment, current market trends and conditions, technological developments, and competitors’ strategies, amongst other things. Together, the insights gleaned from this system help decision-makers be aware of potential challenges that lie ahead of them and adequately plan for upcoming opportunities. For example, tech retailers could see what price points and discounts their competitors are currently offering.
   
4. Marketing Decision Support Systems. Marketing decision support systems help the marketing decision-makers with their role by providing reports and data to support their decision-making. This is done using mathematical and econometric tools to process raw data and other specialized software.

Examples of Marketing Information Systems

So how do all these components come together, and what is a MkIS that you can wrap your head around?

Loyalty Cards

The loyalty card you use at a grocery store is an easy example. Every time you swipe the card with your purchase to get points or discounts, the transaction details are recorded. What you buy, what time the purchase is made, at which location, and how frequently would all be some of the data stored with these transactions.

These can then inform a company that can make decisions based on these details, combined with those of other shoppers and additional factors. When the store combines these details from thousands of shoppers, a process that would be almost impossible to do manually, but which is possible with a MkIS, the grocery store can use it to improve their sales and marketing, directing advertising and specials at specific groups of people and even selling this data to third parties to make money from it.

Airlines

Another example would be airlines – there is a lot of data to gather in various places. Their MkIS might include:

• data from customers’ (private and corporate) loyalty cards, both personal details and your flying habits, food preferences, etc.
• data from other airlines online about their pricing, routes, discount rates, etc.
• data from inflight feedback (logged by cabin crew and from passenger feedback forms)
• internal data about sales, passenger loads, etc.
• external data, which could be sold to them by caterers or other vendors, and then external market data.

All of these different sources (and others, such as social media) and types of data would be combined in the MkIS to provide the airline with details not only to help them be able to come up with smart suggestions such as routes you’d like to fly, which you’d get through a mailer or a suggestion on the airline home page, but also to help the company decide whether to extend capacity on more popular routes at certain times of the year, cut down on other routes, or add a destination to their network because it’s what all their competitors are doing.

All of this information is gathered together and presented in many ways to different groups of decision-makers, depending on what they want from the information. Being able to pull certain insights and suggestions from this vast amount of cumulative data and make sense of it to assist with and benefit business decisions is a huge advantage for companies who know how to use it well.

Whether a company can use this data well will depend, in part, on the efficiency of their systems at all levels, from data collection to storage capacity, analysis, interpretation, and dissemination. Aside from the MkIS, other factors will include their staff, budget, and other internal factors.

Advantages of Marketing Information Systems?

• Aides in Decision Making. From a business point of view, MkIS make a lot of sense. They can save vast amounts of money by targeting marketing campaigns to the right audiences, by using the information that they store in smart ways, by being aware of and able to change the perception of their company, and also by knowing what people want, all to enable good decisions around which projects to go ahead with and which not to pursue.
  
• Valuable Source of Information. When these systems are in place in a company, and data is being systematically gathered, it becomes a precious source of information for the company as it collects, building up a history for the company that it can learn from, that warns it of both future challenges and opportunities, and that can be used intelligently for increasing company profits.
  
• More Consumer-Relevant Marketing. From an individual point of view, people will find that using these systems, the ways they are marketed to and the products they see are far more tailored and feel less like spam marketing. What individuals are exposed to becomes more relevant for them with good use of these systems and might expose them to products and services they need or are interested in.

Disadvantages of Marketing Information Systems?

• Requires Time, Money, and Expertise. On the downside, good MkIS can require time, money, and expertise for companies. As with putting any system into place, there will be costs involved. After the upfront cost of the hardware or software required to run these systems, the largest investment is likely to be in staff – learning, operating, maintaining, and optimizing these systems to be able to take full advantage of them. This can require organization and training, which can be time and cost-intensive.
  
• Adoption Issues and Resistance. Further, people in the marketing decision-making roles need to have an open mind to using these systems. When the system presents data, results, or insights that are counter-intuitive or not what the decision-maker expected, the decision-maker has a choice about whether to trust the system and follow its recommendation or not. Sometimes there needs to be a blend of rational judgment and trust in the system. There may be resistance from the users or adoption issues implementing such systems, particularly if the results are surprising or the outcomes are not as expected.
  
• System Errors. Aside from mental blocks in adopting such systems, there can also be genuine errors in the systems, with the weighting of factors being incorrect or parts of the system giving skewed results. Once again, this is where the time investment for the running and optimization of these systems comes into play, and ensuring that the company has people who can select the correct data to be inputted into the system, the correct metrics to measure by and other factors that determine the analysis of information and operation of these systems is vital.
  
• Reinforces Preferences. For the individual, these systems use your preferences and data you volunteer to be better able to sell to you. You can end up reinforcing your existing preferences and not exposing yourself to new products or services. Instead, similar products and services to those you have already purchased or expressed interest in will be shown to you, and you may end up missing out on newness, as your exposure could lack variety.

Conclusion

When used correctly and optimized well, MkIS can provide huge value to companies in organizing and preparing their marketing decision-makers on all levels and for various decisions. They can use the information from these systems to help them to better stand out in crowded, competitive markets, simultaneously saving money and making more money, which at the end of the day, is what most businesses come down to.