3Understanding Markets, Market Demand, and the Marketing Environment

Chapter Questions

What are the components of a modern marketing information system?How can marketers use intelligence systems and marketing research?How can demand be more accurately measured and forecasted?What are some important macro-environmental developments?

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What is a Marketing Information System?

A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

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Internal RecordsOrder-to-payment cycle – send orders, prepare invoices, transmit copies to other departments, back-orders, out-of-stock itemsSales information system – timely and accurate reports on current salesDatabases, warehousing, data mining – combining data from customer, product, salesperson and other databases

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What is a Marketing Intelligence System?

A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment.

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Steps to Quality Marketing IntelligenceTrain sales force to scan for new developmentsMotivate channel members to share intelligenceHire external experts to collect intelligenceNetwork externallyUtilize a customer advisory panelUtilize government data sourcesPurchase information from outside suppliersUtilize online customer feedback systems to collect competitive intelligence

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What is Marketing Research?

Marketing research is the systematic design, collection, analysis, and reporting of data

and findings relevant to a specific marketing situation facing the company.

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The Marketing Research Process

Define the problem

Develop research plan

Collect information

Analyze information

Present findings

Makedecision

Step 1: Define the Problem

Define the problemSpecify decision alternativesState research objectives

Types of ResearchExploratoryDescriptiveCausal

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Step 2: Develop the Research Plan

Data Sources

ContactMethods

ResearchInstruments

SamplingPlan

Research Approach

Data sources

Secondary

Primary

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Research Approaches

Observational and ethnographic research Focus groupSurvey researchBehavioral dataExperimental research

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Research Instruments

QuestionnairesQualitative Measures – word associations, visualization, projective techniques, ladderingTechnological Devices – galvanometers, eye cameras, audiometers, GPS

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Questionnaire Do’s and Don’ts

Ensure questions are free of biasMake questions simpleMake questions specificAvoid jargonAvoid sophisticated wordsAvoid ambiguous words

Avoid negativesAvoid hypotheticalsAvoid words that could be misheardUse response bandsUse mutually exclusive categoriesAllow for “other” in fixed response questions

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Sampling Plan

Sampling unit: Who is to be surveyed?Sample size: How many people should be surveyed?Sampling procedure: How should the respondents be chosen?

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Contact Methods

Mail Questionnaire

TelephoneInterview

PersonalInterview

OnlineInterview

Marketing Research Process -Contd.

Step 3. Collect the information

Step 4. Analyze the information

Step 5. Present the findings

Step 6. Make the decision

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Characteristics of Good Marketing ResearchScientific methodResearch creativityMultiple methodsInterdependenceValue and cost of informationHealthy skepticismEthical marketing

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Pros and Cons of Online Research

DisadvantagesSmall samplesSkewed samplesTechnological problems Inconsistencies

AdvantagesInexpensiveFastAccuracy of dataVersatility

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Forecasting and Demand Measurement

Which market to measure?Potential marketAvailable marketTarget marketPenetrated market

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Market Demand Functions

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Estimating Current Demand: Area Market Potential

Market-Buildup

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Estimating Current Demand: Area Market Potential

Multiple-Factor Index

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Estimating Current Demand: Total Market Potential

CalculationsMultiple potential number of buyers by average quantity each purchases times priceChain-ratio method

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Sales Forecast Methods

Survey of Buyers’ IntentionsComposite of Sales Force OpinionsExpert OpinionPast-Sales AnalysisMarket-Test Method

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Analyzing the Macroenvironment:Needs and Trends

Fad

Trend

Megatrend

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Major Forces in the Environment

Demographic

EconomicPolitical-legal

Socio-culturalTechnological

Natural

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Population and Demographics

Population growthPopulation age mixEthnic marketsEducational groupsHousehold patternsGeographic shifts in population

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Perspective on the Global Demographic Environment

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Economic Environment and Consumer Psychology

Income Distribution

Savings, Debt, Credit

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Social-Cultural Environment

Views of themselvesViews of othersViews of organizationsViews of societyViews of natureViews of the universe

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Natural Environment

Shortage of raw materialsIncreased energy costsAnti-pollution pressuresGovernmental protections

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Technological Environment

Accelerating pace of changeUnlimited opportunities for innovationVarying R&D budgetsIncreased regulation of technological change

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The Political-Legal Environment

Business legislationGrowth of special interest groups

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