Chapter 4
Chapter Outline
Collecting Information
What is a Marketing Information System (MIS)?
Components of a Modern Marketing Information System
1. Internal Records
2. Marketing intelligence activities
3. Marketing research
Major Forces in the Environment
1. Demographic Environment
2. Economic Environment
3. Social-cultural Environment
4. Natural Environment
5. Technological Environment
6. Political-legal Environment
• Forecasting and Demand Measurement
• Estimating Future Demand
Collecting Information
The major responsibility for identifying important
marketplace changes falls to the company’s marketers.
Marketers have two advantages to accomplish this
task:
Disciplined methods for collecting information
Their time spent interacting with customers and
observing competitors and other outside groups.
Collecting Information
Companies with superior information can choose
their markets better and develop better offerings and
execute better marketing plans.
Every company must organize and distribute a
continuous flow of information to its marketing
managers.
Components of Modern Marketing
Information System
A marketing information system (MIS) is made of
people, equipment, and procedures to gather, sort,
analyze, and distribute needed, timely information to
marketing decision makers.
10 useful questions for determining the information
needs of marketing managers.
What decisions do you regularly make?
What information do you need to make these decisions?
What information do you regularly get?
What special studies do you periodically request?
Components of Modern Marketing
Information System
Information Needs Probes
What information would you want that you are not
getting now?
What information would you want daily? Weekly?
Monthly? Yearly?
What magazines and trade reports would you like to see
on a regular basis?
What topics would you like to be kept informed of?
What data analysis programs would you want?
What are the four most helpful improvements that
could be made in the present marketing information
system?
Components of a Modern
Marketing Information System
A marketing information system (MIS) depends
on three components:
1. Internal Records
2. Marketing intelligence activities
3. Marketing research
1. Internal Records
Companies use reports of orders, sales, prices, costs,
inventory levels, receivables and payable to look for
opportunities and potential problems.
Order-to-Payment Cycle
1. Sales Representatives and customers send orders to the
company
2. The sales department prepares invoices, transmit copies
to various departments
3. Shipped items generate shipping and billing documents
that go to various departments
Customers want companies to perform these steps
quickly and accurately.
1. Internal Records
Sales Information Systems- Marketing managers
need timely and accurate reports on current sales.
Databases- Companies organize information into
customer, product, and salesperson databases and
place them in data warehouses.
Data mining- Analysts can mine the data to get
information on neglected customer segments, and
customer trends.
2. Marketing Intelligence
A marketing intelligence system is a set of
procedures and sources that managers use to obtain
everyday information about developments in the
marketing environment.
The marketing intelligence system is happening data
while the internal records is results data.
Marketing managers get their intelligence by
Reading books, newspapers, talking to customers,
suppliers, and distributors; monitoring social media,
and meeting with other company managers.
How can companies improve the quality and quantity of
their marketing intelligence?
1. Train and motivate the sales force to spot and report
new developments.
2. Motivate distributors, retailers, and other
intermediaries to share intelligence.
3. Hire specialists to gather marketing intelligence
(mystery shoppers).
4. Purchase competitors’ products, published reports,
and ads, consult with suppliers and attend trade
shows.
How can companies improve the quality and quantity of
their marketing intelligence?
5. Set up a customer advisory panel made up of either
the largest, most outspoken, most sophisticated, or most
representative customers.
6. Take advantage of government-related data resources.
7. Purchase information from outside research firms and
vendors.
It is important to act quickly on the information
gathered through marketing intelligence.
Collecting marketing intelligence on the
internet
Independent customer goods and service review forum
Distributor or sales agent feedback sites
Combo sites offering customer reviews and expert
opinions
Customer complain sites
Public blogs
Communicating and acting on marketing
intelligence
Analyzing the Macroenvironment
Needs and Trends
Successful companies recognize and respond profitably to
unmet needs and trends.
A fad is a product, service, or idea that is extremely popular for a
very brief period of time and then becomes unpopular just as
quickly.
A trend is a pattern or direction in the way something is
changing; a movement toward a style or idea. Example: A trend
towards healthier eating.
Trends have a more lasting effect on the marketplace than fads.
A megatrend is a major movement in pattern or emerging trend
in the macro-environment. It is an emerging force that will have
an impact on the kinds of products consumers will prioritize
when buying in the future. Example: People living longer,
Globalization, and alternative energy.
Major Forces in the Environment
1. Demographic Environment
2. Economic Environment
3. Social-cultural Environment
4. Natural Environment
5. Technological Environment
6. Political-legal Environment
1. The Demographic Environment
Demography: the study of human populations-- size, density,
location, age, gender, race, occupation, and other statistics.
Population growth- A growing population does not mean a
growing market unless there is enough purchasing power.
Population age mix-
Preschool children, school-age children, teens, young adult age
20-40, middle age adults 40-65, and older adults 65 and over.
Some countries have a young population and some countries
have an old population.
Educational Groups
Illiterates, high school dropouts, high school diplomas, college
degrees, and professional degrees.
2. The Economic Environment
The available purchasing power in an economy is
dependents on:
Current incomes
Prices
Savings
Debt
Credit Availability
3. The Sociocultural Environment
Core Beliefs and values- are passed from parents to
children and reinforced by social institutions-schools,
religious institutions, businesses, and governments.
Secondary beliefs and values are more open to
change.
Marketers have some change of changing secondary
values but little chance of changing core values.
Subcultures are a group with shared values, beliefs,
preference, and behaviors emerging from their special
life experiences or circumstances.
4. The Natural Environment
Trends in the natural environment
1. Increased environmental regulations-more laws to
protect the environment
2. Shortage of raw material
3. Increased energy costs
Corporate environmentalism recognizes the need
to integrate environmental issues into the company’s
strategic plans.
The Technological Environment
Marketers should monitor the following
technology trends:
Accelerating pace of change- more ideas than ever
are in the works and the time between idea and
implementation is shrinking. (shorter product life
cycles)
Unlimited opportunities for innovation-
(biotechnology, telecommunications, robotics)
The Technological Environment
Varying R & D Budgets- Companies are focusing on
the development as opposed to the research side.
Increased regulation of technological change-
Regulations to ban potentially unsafe products.
The Political-Legal Environment
Increase in Business Legislation to
1. Protect companies from unfair competition.
2. Protect consumers for unfair business practices.
3. Protect society from unethical business behavior.
4. Charge businesses with the social costs of their
products or production processes.
The consumerist movement-organized citizens
and government to strengthen the rights and powers
of buyers in relationship to sellers.
Forecasting and Demand
Measurement
Companies must measure and forecast the size,
growth , and profit potential of each new
opportunities.
Forecasting is the art of anticipating what buyers are
likely to do under a given set of conditions.
Forecasting and Demand
Measurement
The Measures of Market Demand
Figure 5-3: Ninety
Types of Demand
Measurement
(6X5X3)
Forecasting and Demand Measurement
The measures of Market Demand
Forecasting and Demand
Measurement
Forecasting and Demand Measurement
A vocabulary for demand management
Market demand -for a product is the total volume that would be bought by a defined
customer group in a defined geographical area in a defined time period in a defined
marketing environment under a defined marketing program.
Market demand is not a fixed number, but rather a function of the stated conditions. For
this reason, we call it the market demand function. Its dependence on underlying conditions
is illustrated in Figure 4.1
Market minimum
Market potential
Marketing sensitivity of demand
Expansible market
Non-expansible market
Forecasting and Demand Measurement
Market demand function
Figure 5-4: Market Demand Functions
Forecasting and Demand Measurement
A vocabulary for demand management
MARKET FORECAST- Only one level of industry marketing expenditure will actually
occur. The market demand corresponding to this level is called the market forecast.
Market potential - is the limit approached by market demand as industry marketing
expenditures approach infinity for a given marketing environment.
Companies interested in market potential have a special interest in the product-
penetration percentage, the percentage of ownership or use of a product or service in a
population.
Company demand is -the company’s estimated share of market demand at alternative
levels of company marketing effort in a given time period. It depends on how the company’s
products, services, prices, and communications are perceived relative to the competitors’.
The company sales forecast - is the expected level of company sales based on a chosen
marketing plan and an assumed marketing environment.
Company sales potential is the sales limit approached by company demand as company
marketing effort increases relative to that of competitors. The absolute limit of company
demand is, of course, the market potential. The two would be equal if the company got 100
percent of the market.
Forecasting and Demand Measurement
Forecasting and Demand
Measurement
Forecasting and Demand
Measurement
Estimating future demand
Composite of Sales Force Opinions
Expert Opinion
Group discussion method
Pooling of individual estimates
Past-Sales Analysis
Time-series analysis
Exponential smoothing
Statistical demand analysis
Econometric analysis
Market-Test Method
