Marketing Information System (MKIS)

Marketing is concerned with identifying the customers for the firm’s products or services, determining what they need
or want, planning and developing products and services to meet their needs, and advertising and promoting these
products and services. A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely information for use by marketing
decision markers to improve their marketing planning, implementation , and control. According to Philip Kotler, a
marketing information system consists of four interrelated components – Internal reports (Records) System, Marketing
Research System, Marketing Intelligence and accurate System, and Marketing decision Support System. All components
are interrelated and interdependent.

Internal Records System

Marketing managers get lots of information from the internal-records of the company. These records provide current
information about sales, costs, inventories, cash flows and account receivable and payable. Many companies maintain
their computerized internal records. Internal records help marketing managers to gain faster access to reliable
information.

Marketing Intelligence System

It collects information from external sources. It provides information about current marketing environment and
changing conditions in the markets. This information can be easily gathered from external sources like; magazines, trade
journals, commercial press so on. This information cannot be collected from the Annual Reports of the Trade Association
and Chambers of Commerce, Annual Reports of Companies, etc. The salesmen’s reports also contain information about
markets trends. The information which is collected from the external sources cannot be used directly. It must be first
evaluated and arranged in a proper order.

Marketing Research System

Markets research is conducted to solve specific marketing problems of the company. It collects data about the problem.
This data is tabulated, analyzed and conclusions are drawn. Then the recommendations are given for solving the
problem. Marketing research also provides information to the marketing managers. However, this information is specific
information. It can be used only for a particular purpose.
Market ting Decision Supports system

While former the components supply data the marketing decision support system concerns with processing for
analyzing available data. It is the set of tools which help the marketing managers to analyze data to take better
marketing decisions. It includes hardware and software programs. Computer helps the marketing manager to analyze
the marketing information. It also helps them to take better decisions.

Features of MKIS:

1. Making Better Marketing Strategies:

MKIS provides information related to the marketing, it helps marketing strategies; it helps to analyze and see the
effectiveness of the marketing strategies. MKIS uses mining techniques to identify which social init (such as age group,
location, occupation group, gender group etc) bought the company’s product mostly. This information may he helpful
for making better marketing strategies.

2. Promoting Products
Advertising is a tool of remarketing a product. Different types of advertising are in use these days: online
advertising (web page, social networks) or offline advertising (boarding boards, dash board etc) which
advertising method will be effective for the purpose of promoting product can be decided by analyzing different
advertising methods used in past and use by other organization. MKIS helps to study and analyze used
advertising strategies.

3. Pricing products:
By studying different products available in the market it can be known what is range of price of different
products; using this information with pro production and manufacturing information and anticipated profit
margin, MKIS helps to specify price of the product.
4. Demand Forecasting:
Product demand may change with time. It may increase or decrease with time or it may be mix of both. Product
demand may also very according to season. MKIS analyzes past data and forecast product demand in near
future. This helps in proactive product manufacturing and developing marketing plans.
5. Trend Analysis:
MKIS helps managers to recognize market trends. The changing trends may be in respect of process, product
design, packaging, promotion schemes etc. Managers can take effective decisions in respect of prices, product
design etc, in response to changing trends in the environment.

6. Tapping of business opportunities:

These are number of business opportunities which have remained untapped for various reasons. This is
especially due to unavailability of sufficient information. MKIS makes it possible to tap business opportunities as
it can supply required and reliable information.

7. Functional integration:
The MKIS enables the coordination of activities within the marketing department and between marketing and
other organizational functions.
Application of MKIS

You need to measure effectiveness of marketing activities carried out to enhance revenue and hence profitability of your
company. To perform such revaluation lots of data related to marketing, sales and other income and expenditure is
needed. Hence is not easy and time consuming to make evaluation. MKIS is used to perform these evaluation quick way.
Some of the parameter used to evaluate effectiveness of marketing activities is discussed below:

Evaluation Marketing Campaigns

Return on Investment (ROI) is widely used parameter for evaluating marketing campaigns, ROI calculations for marketing
campaigns can be complex – you may have many variables on both the profit side and the investment (cost) side, for
marketing ROI, The tricky part is determining what constitutes your return, and what your true investment is. For
example, different marketers might consider the following for return:

1) Total revenue: Total revenue generated for a campaign.

2) Gross Profit: It is revenue minus the cost of goods to produce/deliver.
3) Net Profit: It is gross profit minus expenses.

On the investment side, it’s easy for marketers to input the media costs as the investment. But what other costs
should you include? To execute your campaign, you might have:
1) Creative costs
2) Printing costs
3) Technical costs (such as email platforms, website coding, etc)
4) Management time
5) Cost of sale

Basic formula uses the gross profit for units sold in the campaign and the marketing investment for the campaign is:

ROI = gross profit-marketing investement × 100

Marketing investment

You can also use the Customer Lifetime Value (CLV) instead of Gross Profit. CLV is a measure of the profit generated by a
single customer or set of customer or set of customers over their lifetime with your company.

ROI= CLV-marketing investement × 100

Marketing investment
Some companies deduct other expenses to provide a closer estimate of the true profit their marketting campaigns are
generating for the company and use a formula like this:

ROI = gross profit-indirect expense- marketing investement × 100

Marketing investment

The components for calculating marketing ROI can be different for each organization, but with solid ROI calculations, you
can focus on campaigns that deliver the greatest [Link] helps you justify marketing investments. In tough times,
companies often sales their marketing budgets – a dangerous move since marketing is an investment to produce
revenue. By focusing on ROI, you can help your company move away from the idea that marketing is a fluffy expense
that can be cut when times get tough.

Marketing Expense to Revenue

Marketing, including advertising and sales, is necessary for most businesses to earn a profit. How much marketing a
company needs in order to earn revenue is common question with no clear answer? Some companies may be highly
Profitable with a marketing budgets set at a fraction of one percent, whereas other might need to spend a quarter of
their revenue on sales and marketing. Calculating this ratio and comparing it against your industry as a whole is a key
measure of how efficiently you’re turning marketing spending into sales revenue.

Calculating the marketing to sales ratio is extremely easy; just divide total marketing spending by total revenue from
sales. Exclude any revenue that’s not from sales activity, such as royalty earnings or interest on savings. Marketing
spending includes all costs of sales and marketing, including advertising, sales staff, marketing including your website,
branding consultants and so on.

Marketing expense to revenue = marketing investement

Total revenue from sales

Customer acquisition cost: (CAC) : It refers to the resources that a business must allocate in order to acquire an
additional customers. It includes every single effort necessary to introduce your products and services to potential
customers and then convenience them to buy and become active customers. One way to calculate CAC is to consider the
three variables that compose it.

Cost Per Lead (CPL): It consider marketing cost

Touch cost: It considers sales staff’s salaries
Conversion rate

CAC = (CPL per customer + touch cost per customer) x conversion rate

An easier way to do it is some all of sales and marketing expenses and divide it by number of customer acquired on a
given period some common sales and marketing expenses are: paid advertisement, sales and marketing staffs salaries
CRM and marketing automation software’s license events, sponsorships, gifts to customers, content production, social
media and web site maintenance and more.

CAC= Total sales and Marketing expenses

Number of new customers

Time to payback CAC:

This metric calculates the amount of time taken for your business to get back the money it spent to acquire new
customers (or CAC) . This is especially important for companies whose customers pay an annual or monthly recurring fee
such as gym memberships, software licensing or other subscription based services. To calculate time to payback CAC,
you must first known that your customer Acquisition cost (CAC) is. You’ll also need to know your margin adjusted
revenue. It is basically how your customer must pay you each month in terms of your margin. Time to payback CAC can
be calculated as:
Time to payback CAC = CAC (customer Acquisition cost)
Margin- Adjusted revenue
Break Even Analysis:
The break- even point is a critical number that must be analyzed within a business. It’s the point where the sale of a
company is enough to cover the expenses of the business. To calculate the break- even point, there are specific numbers
that are needed: sales and costs. Costs include fixes cost and variable cost. Fixed costs are expenses that remain
relatively the same and don’t change based on production or sales volume e.g equipment expenses. Variable cost is not
consistent and change based on production output or a change in sales volume e.g commissions and marketing.
Breakeven point = Fixed cost
Price of product- variable cost

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