Business Information Systems

Information systems in functional area of management: Marketing information systems,

Manufacturing information systems, financial and accounting information systems. 6 L.H.
There are many tasks every business needs to do if it is going to succeed. Each of these
tasks is described as being a function of a business. There are information systems to be
used in these various functional areas. They are
Marketing IS: pricing, distribution, promotional, and information by customer and
salesperson.
Manufacturing IS: regular reports on production, yield, quality, inventory levels.
These systems typically deal ith manufacturing, sourcing, and supply chain
management.
!inancial IS: provide internal and e"ternal professional access to stock, investment
and capital spending information.
#ccounting IS: similar to financial MIS, more related to invoicing, payroll,
receivables.
Marketing management is about finding ays of satisfying customer ants and needs,
hile achieving organi$ational ob%ectives or requirements in terms of profit or some other
measure of corporate performance.
The art or science of marketing management is concerned ith making decisions&policies
ith respect to the elements of the' marketing mi" such that the company's interface ith
its markets is both profitable and customer satisfying.
Managers require information to help them forecast changes in product demand, increase
selling (roductivity, and e"ercise control over sales and distribution e"penses.
Information is needed for decision making. )nfortunately, in many firms, it is often difficult
to obtain information of the right kind. The kinds of complaints one often encounters are:
There is too much information of the rong kind.
There is not enough information of the right kind.
Information is too dispersed to be useful.
Information arrives too late to be useful.
Information often arrives in a form that leaves no idea of its accuracy and therefore
lacks credibility.
*learly, there is a need to overcome these kinds of problems and complaints and it is for
this reason that marketing information systems have evolved.
# Marketing Information System can be defined as 'a system in hich marketing data is
formally gathered, stored, analy$ed and distributed to managers in accordance ith their
informational needs on a regular basis hich can be used by the marketing managers for
taking marketing decisions.'
+ne can define a marketing information system as one hich scans and collects data from
the environment, makes use of data from transactions and operations ithin the firm and
then filters, organi$es and selects data before presenting them as information to
management.
MIS ,marketing information systems- can be classified under folloing headings:
EXHIBIT I. BENEFITS POSSIBLE WITH A SOPHISTICATED MIS
TYPICAL APPLICATlON BENEFITS EXAMPLES
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1. Control of marketing cot. 1. More timel! com"#teri$e% re"ort. 1. &n%eira'le cot tren% are "otte% more
(#ickl! o t)at correcti*e action ma! 'e
taken ooner.
+. ,iagnoi of "oor ale
"erformance.
+. Fle-i'le on.line retrie*al of %ata. +. E-ec#ti*e can ak #""lementar!
(#etion of t)e com"#ter to )el" "in"oint
reaon for a ale %ecline an% reac) an
action %eciion more (#ickl!.
/. Management of fa)ion goo%. /. A#tomatic "otting of "ro'lem an%
o""ort#nitie.
/. Fat.mo*ing fa)ion item are re"orte%
%ail! for (#ick reor%er an% lo0.mo*ing
item are alo re"orte% for fat "rice
re%#ction
1. Fle-i'le "romotion trateg!. 1. C)ea"er2 more %etaile%2 an% more
fre(#ent re"ort.
1. On.going e*al#ation of a "romotional
cam"aign "ermit reallocation of f#n% to
area 'e)in% target.
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1. Forecating. 1. A#tomatic tranlation of term an%
claification 'et0een %e"artment.
1. S#r*e!.'ae% forecat of %eman% for
com"le- in%#trial goo% can 'e
a#tomaticall! tranlate% into "arti
re(#irement an% "ro%#ction c)e%#le.
+. Promotional "lanning an% cor"orate
long.range "lanning
+. S!tematic teting of alternati*e
"romotional "lan an% com"ati'ilit! teting
of *ario# %i*iional "lan.
+. Com"le- im#lation mo%el 'ot)
%e*elo"e% an% o"erate% 0it) t)e )el" of
%ata 'ank information can 'e #e% for
"romotional "lanning '! "ro%#ct manager
an% for trategic "lanning '! to"
management.
/. Cre%it management. /. Programrne% e-ec#ti*e %eciion r#le can
o"erate on %ata 'ank information.
/. Cre%it %eciion are a#tomaticall! ma%e a
eac) or%er i "rocee%.
1. P#rc)aing. 1. ,etaile% ale re"orting "ermit
a#tomation of management %eciion.
1. Com"#ter a#tomaticall! re"#rc)ae
tan%ar% item on t)e 'ai of correlation
of ale %ata 0it) "rogramme% %eciion
r#le
.
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1. A%*ertiing trateg! 1. A%%itional mani"#lation of %ata i "oi'le
0)en tore% for com"#ter in an
#naggregate% file
1. Sale anal!i i "oi'le '! ne0 market
egment 'reak%o0n.
+. Bi%%ing trateg! +. Im"ro*e% torage an% retrie*al ca"a'ilitie
allo0 ne0 t!"e of %ata to 'e collecte%
an% #e%.
+. S!tematic recor%ing of information a'o#t
"at 34,2 contract 'i%%ing it#ation
allo0 im"ro*e% 'i%%ing trategie
/. E*al#ation of a%*ertiing
e-"en%it#re
/. 5ell.%eigne% %ata 'ank "ermit
integration an% com"arion of %ifferent
et of %ata.
/. A%*ertiing e-"en%it#re are com"are% to
)i"ment '! co#nt! to "ro*i%e information
a'o#t a%*ertiing effecti*ene.
1. Contin#o# e-"riment 1. Com"re)eni*e monitoring of in"#t an%
"erformance *aria'le !iel% information
0)en c)ange are ma%e.
1. C)ange in "romotional trateg! '! t!"e of
c#tomer are matc)e% againt ale re#lt
on a contin#o# 'ai.
Control systems . these provide continuous monitoring of marketing activities and
enable marketing e"ecutives to identify problems and opportunities in the
marketplace. #t the same time, they permit a more detailed and comprehensive
revie of performance against plans.
*ontrol System Eg.
I/M's 0ata (rocessing 0ivision has developed an MIS hich district sales managers
can interrogate through a time.sharing computer terminal located in an e"ecutive's
office. # manager punches a typeriter.like keyboard and receives an immediate print.
out of information such as:
. Sales ,or rentals- to date . broken don by product code, type of customer, and
branch making the sale.
. Sales in relation to goals.
. *ombinations of information hich relate to sales, customer classifications, product
codes, and so forth.
The data are current to ithin three or four days, alloing the manager to keep up to date
on marketing problems and opportunities and on progress in relation to goals.
Planning systems . hich provide information on sales, costs and competitive
activity, together ith any kind of information hich is needed to formulate plans.
(lanning System Eg.
# large pharmaceutical company has developed an even more comple" model. The
company has programmed an artificial panel representing the nation's population of
doctors. Every eek the company simulates each doctor's prescription decision for
every patient he 1sees.1 ,*ommercial research services are available hich provide
information on the incidence of symptoms of illness and the 1patient mi"1 of the various
medical specialists.- The doctor considers the symptoms 1presented1 by each patient
and decides hether to prescribe a drug and, if so, hich type and brand. 2is decision
is based on factors such as his e"perience ith the drug, current attitudes, e"posure to
the advertising of various brands, e"posure to detail men, and ord.of.mouth
information from other doctors. The simulation even includes a 1forgetting routine1
hich causes a doctor to forget from time to time some of the information he has
acquired.
3hile the company does not disclose ho the simulation model is being used, it
certainly is capable of generating e"tremely sophisticated marketing planning. !or
e"ample, marketing managers can test the effects on share of market and sales of
variations in amount, type, and timing of advertising and simultaneously test the effects of
variations in frequency of detail men's calls. +n a broader basis, the system can be used
to screen a number of alternative marketing programs to select the most promising ones to
be actually test marketed.
Marketing research systems . such systems allo e"ecutives to test decision rules
and cause&effect hypotheses. This permits the assessment of the effects of
marketing actions and encourages improved learning from e"perience.
Marketing 4esearch System Eg.
# large consumer goods company is developing an MIS hich, among other things,
stores in computer memory the characteristics of each advertisement run ,color versus
black and hite, nature of illustration, amount of copy, and so forth- and readership and
attitude change scores for each ad. The purpose is to be able to relate ad
characteristics to effectiveness measurements under different conditions and ith
different types of consumers by systematically studying 1e"perience.1
The role of MIS is to identify ,find out- hat sort of information is required by the marketing
managers. It then collects and analy$es the information. It supplies this information to the
marketing manager at the right time. MIS collects the information through its subsystems.
These subsystems are called components.
The four main components of Marketing Information System ,MIS- are:
5. Internal 4ecords,
6. Marketing Intelligence,
7. Marketing 4esearch ,M4-, and
8. Marketing 0ecision Support System.
5. Internal records : The first component of MIS is 9Internal 4ecord:. Marketing managers
get lots of information from the internal.records of the company. These records provide
current information about sales, costs, inventories, cash flos and account receivable and
payable. Many companies maintain their computeri$ed internal records. Inside records
help marketing managers to gain faster access to reliable information.
6. Marketing intelligence :
The second component of MIS is 9Marketing Intelligence:. It collects information from
e"ternal sources. It provides information about current marketing.environment and
changing conditions in the market. This information can be easily gathered from e"ternal
sources like; maga$ines, trade %ournals, commercial press, so on. This information cannot
be collected from the #nnual 4eports of the Trade #ssociation and *hambers of
*ommerce, #nnual 4eport of *ompanies, etc. The salesmen:s report also contains
information about market trends.
The information hich is collected from the e"ternal sources cannot be used directly. It
must be first evaluated and arranged in a proper order. It can be then used by the
marketing manager for taking decisions and making policies about marketing.
So, marketing intelligence is an important component of MIS.
7. Marketing research : The third important component of MIS is 9Marketing 4esearch:. M4
is conducted to solve specific marketing problems of the company. It collects data about
the problem. This data is tabulated, analy$ed and conclusions are dran. Then the
recommendations are given for solving the problem. Marketing research also provides
information to the marketing managers. 2oever, this information is specific information. It
can be used only for a particular purpose. MIS and M4 are not substitutes of each other.
The scope of MIS is very ide. It includes 9M4:. 2oever, the scope of M4 is very narro.
8. Marketing decision support system : The fourth component of MIS is 9Marketing
0ecision Support System:. These are the tools hich help the marketing managers to
analy$e data and to take better marketing decisions. They include hardare, i.e. computer
and softare programs. *omputer helps the marketing manager to analy$e the marketing
information. It also helps them to take better decisions. In fact, today marketing managers
cannot ork ithout computers. There are many softare programs, hich help the
marketing manager to do market segmentation, price fi"ing, advertising budgets, etc.