Marketing Information Systems:

A New Dimension for

Marketing ResearchRICHARD H. BRIEN

and

JAMES E. STAFFORD

The application of thesystems approach to mar-keting management prom-ises to breathe new life intomarketing research. In thisarticle the authors presenttheir views of the relation-ship between decision-in-formation flows and themanagement process inmarketing, and state thecase for expanding tradi-tional marketing researchinto "marketing informationsystems."

Journal of Marketing, Vol. 32 (July.1968). pp. 19-23.

TJUSINESS enterprise in the United States is caught in-*-* an ironic dilemma: our economic system generates a massivevolume of data daily, and the rate of information generation appearsto be increasing exponentially; yet most managers continue tocomplain that they have insufficient, inappropriate, or untimelyinformation on which to base operating decisions.

In 1958. Adrian McDonough observed: "Half the cost of run-ning our economy is the cost of information. No other field offerssuch concentrated room for improvement as does information analy-sis."^ Today, a decade later, the need for efficient informationmanagement is even greater, perhaps especially for marketingmanagement since its job is to match the firm's products ^vithdynamic markets. Marketing is inextricably caught up in the"Communications Revolution." The new era, "The Age of Infor-mation." will emphasize the information gathering and processingstructure of the organization.

It is the contention of this article that the problem of securingadequate decision information for marketing must, and now can,be seen from a broader perspective than previously has been thecase. In seeking to establish a new outlook on a matter it is oftenhelpful to cast the problem in new terms. The new perspectivefrom which this inquiry will be launched is that of "managerialsystems." The process of developing timely, pertinent decisiondata for marketing management can now be characterized moremeaningfully, even if somewhat prematurely, as the functioningof a "marketing information system" rather than simply as "mar-keting research."

The Role of Marketing Research

Where does research fit into the marketing management process?If the marketing concept—with its emphasis on integrateddecision-making—were widely accepted and implemented, the an-swer would be fairly clear. Research would be used to analyzespecified relationships in the various functional areas of marketing,but the emphasis would be on its use in a coordinated, systematicfashion in order to make the total marketing strategy of the firmmore efficient. (See Figure 1)

Research findings would serve at the outset as a basis for estab-lishing objectives and formulating an apparently optimal plan.At this stage the role of research essentially would be to predict

"Today's Office—Room for Improvement," Dun's Review and ModemIndustry, Vol. 73 (September, 1958). p. 50.

19

20 Journal of Marketing, July, 1968

Formulatlve orEvaluative

InlormatJon fromOther FunctionalAreas of the Firm

(Primarily Accounting)

InformotlonStoragefor N»w

Opportunities

r

MarketingProgrom

Formulation

Product Planningand Development

I. Product CharocteristicsZ Product Line CoriMJOSitio3 Adding, Dropping

Modifying Products

Pricing Strategy

1. Basic Price Levels2. Price as an Active

Variable

Chonnel B DistributionStrategy

Channel Structure2. Types of Outlets3. Market Coverogs4. Physicol Distnbtition

EvoluotiveFeedbacks

MorketingProgram

Execution

ConsumerBehaviorand theMarket

Environment

i

I

Promotion Strategy

Personal SellingAdvertisingSales PromotionPackagingPublicityPublic Relotions

Otcision Flaws —

Information Flows -

FIGURE 1. The Marketing Management Process and Information Flow,

the results of alternative business decisions (forexample, a "penetration" price versus a "skimming"price, or information dissemination through sales-men rather than through advertising). (See the "A"feedbacks in Figure 1)

If the research effort were extended full cycle,periodic post hoc studies would be conducted toevaluate the execution of specific aspects or phases ofthe marketing program. ("B" feedbacks in Figure1) In this role, research would provide the basis forcontrol, modification, or l-edirection of the overallprogram.

Control and modification (or redirection"), in sum,represent reformulation, and the "B" feedbacks(evaluative) in fact would become "A" feedbacks(formulative), for the succeeding stage of the mar-keting program. Tbis condition simply underscoresthe fact that marketing management is an ongoing

• ABOUT THE AUTHORS. Richard H.Brien is Assistant Professor of Market-ing and Acting Director of GraduateStudies at the University of Houston.He earned his Ph.D. at the Universityof Texas and has contributed to BUSI-NESS HORIZONS and other Journals.He also is the author of a forthcomingmonograph on industrial development inCentral America.

James E. Stafford is Assistant Profes-sor of Marketing at the University ofHouston. He earned his Ph.D. at theUniversity of Texas and has been a con-tributor to the JOURNAL OF MARKET-ING RESEARCH. THE JOURNAL OFRETAILING. BUSINESS HORIZONS,and other publications.

Marketing Information Systems: A New Dimension for Marketing Research 21

process, or—in the newer terminology—a dynamicsystem.

Formulative and evaluative information can alsocome from inside the firm, notably from the account-ing department. This information flow typicallyis not considered part of "marketing research." Itis definitely an integral part, however, of a market-ing information system.

Under the marketing concept, research shouldalso help to anticipate new profit opportunities forthe firm in the form of new products or services.("C" feedback in Figure 1) In many U. S. indus-tries—especially consumer goods industries—the rateof product innovation, the rate of new product fail-ure, and the cost of new product failure are allextremely high and still rising. To survive in suchdynamic markets the firm must try to develop asensitivity to changes in consumer behavior and inthe conditions that influence behavior, both of whichcreate opportunities for successful new products.

It is meaningless to talk of a new product \vith-out considering at the same time the related mar-keting decisions Cthe rest of that product's mar-keting mix) that will have to be made. Thisconsideration would bring the cycle back to theformulative role of research (the "A" feedbacks),suggesting again that marketing research reallyshould be a coordinating agent. Each marketingdecision should be thought of as an input in thedynamic system, and research should be used as anagent to assist in phasing the inputs. The commongoal of the decision inputs is the profitable satis-faction of consumer needs or wants; this brings thematter back to the marketing concept, and the pack-age seems reasonably complete. In fact, if marketingresearch and the marketing concept had this kindof relationship in viddespread practice, the case formarketing- information systems would be consider-ably weakened.

Research by Fits and Starts

A recent survey revealed that unfortunatelythere is still considerable confusion and widedivergence of opinion regarding the definition andmanagerial implications of the marketing concept.̂Especially disappointing was the failure of manycompanies to cite customer-orientation and inte-grated decision-making as important aspects of theconcept. One of the consequences of this narrowview has been the evolution of marketing researchsomewhat "by fits and starts."

A widely used definition of marketing research is"the systematic gathering, recording, and analyzingof data about problems relating to the marketingof goods and services."^ Unfortunately, the researchprocedure has tended to be unsystematic, to empha-size data collection per se instead of the develop-

ment of decision-pertinent information, and to con-cern itself with isolated problems almost on an adhoc basis. "There is a widespread failure to visual-ize marketing research as a continuing process ofinquiry in which executives are helped to think moreeffectively."^

Toward Marketing Information Systems

The systems approach to marketing managementis breathing new life into marketing research. Theemphasis that systems theory places on interactionand integration in the decision-making process makesit clear that the particularistic, "brush-fire" ap-proach that has characterized traditional marketingresearch is rapidly becoming obsolete. What isneeded is "a Tnarketing intelligence system tailoredto the needs of each marketer. Such a system wouldserve as the ever-alert nerve center of the marketingoperation."^

The "nerve center" concept is the theme used byPhilip Kotler who has drafted a blueprint for a neworganizational unit within the firm, the MarketingInformation and Analysis Center (MIAC).'* MIACrepresents a complete overhaul and expansion of themarketing research department into a comprehen-sive executive marketing information service.

Definition of MIS

Despite minor variations in terminolog>% it isclear that many of the critics of the narrow viewof the role of marketing research are advocating acommon concept—"the concept of careful search togenerate a flow of ideas and information which willhelp executives make better decisions.""

The notion of a sustained flow of decision-infor-mation leads to the term, "marketing informationsystem," defined as follows:

A structured, interacting complex of persons, ma-chines and procedures designed to generate anorderly flow of pertinent information collectedfrom both intra- and extra-firm sources, for useas the bases for decision-making in specified re-sponsibility areas of marketing management.It will be helpful to take a closer look at the

essential components of the definition: first, a struc-tured, interacting complex. The important notion

2 Martin L. Bell, Marketing: Concepts and Strategy(Boston: Hough ton Mifflin Company, 1966), p. 10.

•̂ Committee on Definitions of the American MarketingAssociation, Ralph S. Alexander, Chairman, Market-ing Definitions: A Glossary of Marketing Terms(Chicago: American Marketing Association, 1962),p. 16-17.

^ Joseph W. Newman, "Put Research Into MarketingDecisions," Harvard Biisiness Review, Vol. 40(March-April, 1962), p. 106.

5 Lee Adler, "Systems Approach to Marketing," Har-vard Business Review, Vol. 45 (May-June, 1967),p. 110.

6 Philip Kotler, "A Design for the Firm's MarketingNerve Center," Business Horizons, Vol. 9 (Fall, 1966),p. 70.

'̂ Same reference as footnote 4, p. 106.

22 Journal of Marketing, July, 1968

here is that the marketing information system is acarefully developed master plan for informationflow, with explicit objectives and a home in theformal organization. Successful information sys-tems will not evolve spontaneously within the organi-zation, nor will they result if their creation is leftexclusively to information technicians. Donald Coxand Robert Good point out that a characteristic com-mon to each of the companies that so far has hadsuccess with its marketing information system isthe support of top management.^

A marketing information system is a structured,interacting complex of persons, machines, and proce-dures, requiring the coordinated efforts of manydepartments and individuals, including:

• Top management• Marketing management, brand management• Sales management• New product groups• Market research personnel• Control and finance departments• Systems analysts and designers• Operations researchers, statisticians, and model

builders• Programmers• Computer equipment experts and suppliers.*It is clear that in traditional management terms

both line and staff personnel inevitably will be in-volved in any marketing information system. De-cision-makers will have to be a great deal moreprecise in specifying their information needs, anda complete crew of information specialists will becalled upon to satisfy them.

What is not clear is the determination of the mosteffective organization pattern for implementing andadministering the system. In fact, the organiza-tion problem is probably the greatest deterrent tothe more rapid and widespread diffusion of the in-formation systems concept. The question, like manyothers in the area of organization structure, is notgenerically answerable; each firm's system will haveto be tailor-made.

One of the major factors that makes it meaning-ful to talk of information systems is the tremendousimprovement since World War II in informationhandling technology and machinery. The buildingof the first primitive computer, only slightly morethan two decades ago, has been designated the begin-ning of a revolution in the information sciences.

There has been some confusion, however, aboutthe relationship between computers and informationsystems. They are not synonymous; nor is either thesine qua non of the other. The system is the structureand procedure of the entire organization's communi-cative process; the computer is a processing device

that may or may not be included in the informationsystem.

The consideration of the use of computers has,however, forced many organizations to pay explicitattention to their information systems. "The flex-ibility and power of the new tool, as well as itsgreat cost, has caused many managers to think forthe first time of formally planning their informationfiows and processing functions."'"

Business information systems include many ma-chines other than the computer and some of thempromise to have an impact on future systems thatwill rival the computer's influence. In particular,data copying, storage, and retrieval machines havegreatly expanded management's information proc-essing capability.

It is estimated that in 1966 some half a millionduplicating machines spewed out 400 billion copies.̂ *At the same time, a new document storage systemwas developed permitting the storage of up to500,000 single-page documents on a single 7,200 footreel of videotape. This means that roughly 20,000articles or chapters from books could be stored onone reel with a retrieval time measured in seconds.

But the physical capacity to generate and processfantastic volumes of data at very high speed is anasset only if the types of data to be gathered andthe sources from which they are to be elicited arecarefully prescribed. The definition of a marketing in-formation system alleged that it is designed to gen-erate an orderly flow of pertinent information,collected from both intra- and extra-fvnn sources.

Computer-based Reporting SystemsInternal information includes fundamental rec-

ords of costs, shipments, and sales and any analysesof these that can be made to measure the firm'sperformance (distribution cost analysis, marketshares by product and region, and the like). Thecomputer and more progressive accounting depart-ments that see their role as the provision of man-agement information rather than as simply "score-keeping" have been two of tbe most importantcontributors to the integration of such data, on aregular basis, into the marketing information fiow.

Many companies are experimenting with "com-puterized marketing infonnation" in an attempt toshorten the delay between the performance of theirproducts in the market and the receipt of perfonn-ance reports. In doing so, they stand to sharpentbeir strategy by gaining valuable lead-time overtheir competitors.

One producer and nation-wide marketer of con-

8 Donald F. Cox and Robert E. Good, "How to Builda Marketing Information System," Harvard BusinessReview, No. 3, Vol. 45 (May-June, 1967), p. 149.

9 Same reference as footnote 8.

10 Frederick G. Withington. The Use of Computers inBusiness Organizations (Reading, Mass.: Addison-Wesley, 1966), p. 3.

1' E. B. Weiss, "The Communications Revolution andHow It Will Affect All Business and All Marketing,"a special issue reprinted from Advertising Age (Chi-cago: Advertising Publications, Inc., 1966), p. 22.

Marketing Information Systems: A New Dimension for Marketing Research 23

sumer goods gets monthly reports on 3,000 keyaccounts 20 days earlier than before, thanks tocomputer-based reporting systems. Each account iscompared with its performance at the same pointin time during the previous year and with the com-pany's current total volume in the particular marketzone. Also provided are gross daily tabulations foreach package size of each brand by geographicdistrict.

When the doors open each morning at anothercompany, a major grocery products manufacturer,marketing management has a complete sales analy-sis and inventory position as of closing time theprevious day. The data are fed by teletypewriterfrom the company's sales offices and warehouses toa central computer which analyzes the day's orders.In addition, each salesman is required to "marksense" his daily call reports and send them in toheadquarters each evening for computer analysis.Once accumulated, these reports on the in-storeimpact of frontings, shelf positions, and point-of-salematerials provide marketing management with anup-to-date retail product-movement picture.^-

Integrating Research into the MISThe most important notion in these examples is

that a timely, basic data flow has been establishedto chart the firm's progress and raise warning sig-nals when there is a marketing malfunction. Sucha framework will make additional data needs muchclearer, allowing special supplementary informationto be collected, a^ needed, from external sourcesthrough surveys, panels or experiments. At thispoint, then, the proper order will have been estab-lished; the need for conducting "marketing research"and the technique to be used will be determined inthe context of specific managerial informationrequirements.

Such an approach will help assure that any datagathered are pertinent, another important aspect ofthe definition of a marketing information system.It is perhaps a more grievous sin to collect unneces-sary or redundant information than it is to fail tocollect any data at all about a particular matter.Superfluous information costs money to develop andwastes decision-makers' time; it represents a seriousmisallocation of managerial resources. It must beremembered, the deflnition asserts, that the data gen-erated are to be used as the bases for decision-making in specified responsibility areas of marketingmanagement.

Thus, the questions of the types of data the infor-mation system is to generate and the sources fromwhich it is to elicit the data really can be answeredonly in the framework of a careful designation ofthe organizational decision-structure and the speci-fication of the information requirements for thedecision process. In fact, according to many or-ganizational theorists, information processing and

decision-making are inseparable in practice. A de-cision occurs only on "the receipt of some kind ofcommunication, it consists of a complicated processof combining communications from various sourcesand it results in the transmission of further com-munications."^^

Mr. Paul Funk, executive vice-president ofMcCann/ITSM, contends that marketing informationmanagement is the basic business of business:

Only by putting together an over-all constructionof the total marketing process; only by identifying—and in most instances by visualizing—interre-lationships, information flows, concurrent andsequential work patterns and critical decisionpoints can one truly grasp control of the bewilder-ing and complex range of activities engaged inby the present-day major corporation.^*The pursuit of marketing information systems,

then, really involves much more than expanding andautomating the data gathering process. It is aninextricable part of the larger pursuit of more effi-cient forms and methods of organization for mar-keting management.

We Are Running LateThere is ample evidence that marketing decision-

making is becoming more complex, making the needfor a systematic approach to information manage-ment all the greater. First, there is a growing com-plexity of the areas that have to be managed, largelya function of the tendency toward larger scale en-terprise. Second, as expanded marketing efforttakes the firm across existing environmental fron-tiers, whether geographic, economic or social (or,more likely, all three), the information needs of theenterprise are substantially compounded. It is highlylikely that the most crucial constraint currently im-posed on the growth of international marketing,for example, is the dearth of pertinent decision-information.

But perhaps the most compelling argument formarketing information systems is the "InformationExplosion" itself. The world's store of knowledgehas allegedly doubled during the past decade andis expected at least to double again in the nextdecade.

Information, including management information,is growing by the microsecond and even nanosec-ond. We cannot turn off the flow. We had there-fore better learn to control it—and we are alreadyrunning

12 Same reference as footnote 11, pp. 13-14.

T. Dorsey, Jr., "A Communication Model forAdministration," Administrative Science Quarterly,Vol. 2 (December, 1957), p. 309.

14 "Why Industrial Marketers Aren't Using Computers,"Industrial Marketing, Vol. 51 (November, 1966), pp.88-89.

If* Howell M. Estes, "Will Managers Be Overwhelmedby the Information Explosion?," Armed Forces Man-agement, Vol. 13 (December, 1966), p. 84.