Marketing decision support systems (MKDSS)

What is Marketing decision support systems (MKDSS)?

Marketing decision support systems (MKDSS) is an Information system that helps with decisionmaking in the formation of a marketing plan. The reason for using an MKDSS is because it helps to support the software vendors’ planning strategy for marketing products; it can help to identify advantageous levels of pricing, advertising spending, and advertising copy for the firm’s products. This help determines the firms marketing mix for product software.

This model, is an example of market response model for a product manufacturer of expert system shells which uses only direct marketing for sales (so no retailers are included). The boxes represent sources of information with overlapping boxes representing many. The arrows represent data flows and are labeled with the specific type. This model helps to predict the actions of customers which good to know to increase your marketing efficiency. Models like this are used to construct an MKDSS by providing an illustration of the analysis that it contains; included are two sub-models for advertising copy and spending, and price which use calculus for computation. Both methodological and technological options are available in an MKDSS such as statistical science models, managerial models, and decision-making support for managers. It includes information from customer analysis and industry analysis as well as general market conditions. This decision support system combines external data obtained from market analysis with internal data to form a comprehensive marketing plan of action for advertising and price setting.

In an increasingly complex market place competitive advantage of an enterprise is dependant on the quality of the market information it has, its utilization for decision making, and response to the market. As mentioned earlier, marketing research and market intelligence are two significant components of MIS in any organization. In addition, the following are also a part of MIS.

  • Order generation, processing, delivery and payment cycle
  • Sales Management information, giving details on the firm’s sales, market share, profitability, and trends in each market
  • payment history
  • orders lost/won
  • brand monitors
  • distribution audit reports
  • service monitor reports
  • product performance reports

All the above are generally available within the organization. The problem is that more often than not, it is widely scattered and decision maker is different from information generator.

Consequently, the decision maker may not even know of the existence of information in the organization. For example, the marketing head or the CEO may not know of product performance reports that may be generated by the sales team on the request of production department. Further, the decision maker may not even utilize the internal databases and base his decision purely on his hunch or his experience. When such a situation occurs, the company loses out to the competition.

As we mentioned earlier, internal database is a useful starting point in the development of a strong market information system. In order to develop a co-ordinated marketing information system, today most companies use information technology. Several software solutions are available which provide integrated market information to decision makers at different levels.

Typically any such system provides a perspective at three different levels.

(a) Transaction processing level

(b) Managerial and operational level

(c) Strategic level

While the transaction level information system is useful at the sales person level, the other two are used at higher levels. Typically, sales call planning, sales call reports, customer account information, and dealer reports are information at the transaction level. Reports on performance of branch, region, and product as well as sundry debtors status, etc., form a part of managerial  and operation level information system. But national sales data, relative market share, shifts in customer preferences, competition in different product/markets, and receivables are information used at the strategic level or top management level. Another key input in the decision is supply chain management. How the product and information flow in the supply chain (i.e., from company to the customer and back) is today being reviewed at senior and, in some cases, top management levels also.

Decision Making:

It is a five step sequence and the sophistication of any information system is based on the number of sequences involved in the system, rather than the ones being left to the decision maker.

This five step sequence consists of:

  • Source: This consists of the physical activities and objects which are relevant to the enterprise, like the retail outlet.
  • Data: Observation, measurement, and recording of data from a source (like a retail store) audit and information systems to record information on sale by product class, and other non- sale data like the promotional activities of competition.
  • Predictions and Inferences: Generalizations, conclusions, and prediction of future scenarios like comparative product sales data across competition brands will reveal customer preferences. This combined with price and other non- price data (like promotions over a period of time) may help the decision maker generalize on his brands and customer preferences.
  • Values and Choice: What are the goals, alternatives, and choices for the organization? In the above case what should the firm do to counter competition- reduce price, introduce new products, or invest in merchandizing and store promotions?
  • Action: Take a course of action.