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. Socialcultural Environment

4. Natural Environment

5. Technological Environment

6. Political-legal Environment
• Forecasting and Demand Measurement

• Estimating Current Demand

• 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.
 Marketing Information System

o consists of people,
equipment, and
procedures to gather, sort,
analyze, evaluate, and
distribute needed, timely,
and accurate information
to marketing decision
makers.
Components of a Modern Marketing
Information System
 1. Internal Company Records

  a system under which

marketing information is
stored, retrieved.

 To spot important
opportunities and potential
problems, marketing
managers rely on internal
reports of orders, sales,
prices, costs, inventory
levels, receivables, and
payables.
 1. Internal Company Records

 The Order-to -Payment Cycle - The heart of the internal

records system.

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

 Sales Information Systems - Marketing managers need

timely and accurate reports on current sales.
 1. Internal Company Records

 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

 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.
How can companies improve the quality and
quantity of their marketing intelligence?

o Train and motivate the sales force to spot and report

new developments
o Motivate distributors, retailers, and other intermediaries
to pass along important intelligence.
o Hire external experts to collect intelligence.
o Network internally and externally.
o Set up a customer advisory panel.
o Take advantage of government-related data resources.
o Purchase information from outside research firms and
vendors.
 Collecting Marketing Intelligence
on the Internet

o Independent customer goods and service review

forums.
o Distributor or sales agent feedback sites.
o Combo sites offering customer reviews and expert
opinions.
o Customer complaint sites.
o Public blogs.
 Needs and Trends

o Successful companies recognize and respond profitably to

unmet needs and trends.
o 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.
o Trend - is a pattern or direction in the way something is
changing; a movement toward a style or idea
o Megatrend 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
 Major Forces in the Environment

1. The Demographic Environment

2. The Economic Environment
3. The Sociocultural Environment
4. The Natural Environment
5. The Technological Environment
6. The 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.
 Ethnic and Other Markets

 Educational Groups

 Illiterates, high school dropouts, high school diplomas, college

degrees, and professional degrees.

 Household Patterns
 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

 Views of ourselves
 Views of society
 Views of others
 Views of nature
 Views of organizations
 Views of the universe
 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.
o 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 firm’s
strategic plans.
 5. The Technological Environment

 Marketers should monitor the following technology

trends:
o 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)
o Unlimited opportunities for innovation- (biotechnology,
telecommunications, robotics)
o Varying R & D Budgets- Companies are focusing on the
development as opposed to the research side. (NASA)
o Increased regulation of technological change-
Regulations to ban potentially unsafe products.
 6. The Political-Legal Environment

 Increased 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

 Tools for market planning

• Potential market - is the set of consumers with a
sufficient level of interest in a market offer.
• Available market - is the set of consumers who have
interest, income, and access to a particular offer.

• Target market - is the part of the qualified available

market the company decides to pursue.

• Penetrated market - is the set of consumers who are

buying the company’s product.
 A Vocabulary for Demand
Measurement
 Market Demand - 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 Forecast - is a core component of a market analysis. It projects the

future numbers, characteristics, and trends in your target market.

 Market Potential - is the limit approached by market demand as industry

marketing expenditures approach infinity for a given marketing environment.

 Company Demand - is the company’s estimated share of market demand at

alternative levels of company marketing effort in a given time period.

 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.
 Estimating Current Demand

 Total Market
Potential
 Area Market

Potential
 Industry Sales

and Market
Shares
 Estimating Current Demand

 Total market potential - is the maximum sales

available to all firms in an industry during a given
period, under a given level of industry marketing effort
and environmental conditions.
• Chain-ratio method
 Estimating Current Demand

 Area Market Potential - companies must allocate their

marketing budget optimally among their best territories,
they need to estimate the market potential of different
cities, states, and nations.
• Market-buildup Method- method calls for identifying
all the potential buyers in each market and estimating
their potential purchases.
• Multiple-Factor Index Method
 Industry Sales and Market Shares - estimating total
potential and area potential, a company needs to know
the actual industry sales taking place in its market.
 Estimating Future Demand

 All forecasts are built on one of three

information bases:
1. What people say
2. What people do
3. What people have done
Forecasting Future demand based
on what People Say
Survey of Buyers’ Intentions-
o For major consumer durables such as appliances, research

organizations conduct periodic surveys of consumer buying intentions.

o Surveys can also ask consumers about their present and future

personal finances and expectation about the economy.

o For business buying, research firms can carry out buyer-intention

surveys for plant, equipment, and material.

 Composite of Sales Force opinions

o Ask sales representative to estimate future sales.

 Expert opinions

o Obtain forecast from experts such as dealers, distributors, suppliers

o Buy a forecast from a well-known economic-forecasting firm

o Hire a group of experts to estimate demand

 Forecasting Future demand based
on what people do
 Market-test method
o A direct market test can help forecast new product
sales or established product sales in a new
distribution channel or territory.
 Forecasting Future demand based
on what people have done
 Past-Sales Analysis
o Companies can develop sales forecasts based on
past sales.