A Framework for Marketing Management Chapter 3 Understanding Markets, Market Demand, and the Marketing Environment Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. 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 macroenvironmental developments? Copyright 2009, Prentice-Hall, Inc.

Marketing Information System (MIS) Consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. MIS Resources Internal records Marketing intelligence Marketing research Copyright 2009, Prentice-Hall, Inc.

Marketing Insights vs. Marketing Research Marketing insights provide diagnostic information about how and why certain effects are observed in the marketplace, and what that means to marketers. Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. Copyright 2009, Prentice-Hall, Inc.

Marketing Research Process Define the problem and research objectives Develop the research plan Collect the information Analyze the information Present the findings Make the decision Copyright 2009, Prentice-Hall, Inc.

Step 1: Define the Problem and Research Objectives Specify decision alternatives State research objectives Copyright 2009, Prentice-Hall, Inc.

Step 2: Develop the Research Plan Identify data sources Design research approach Develop research instruments Design sampling plan Select contact methods Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Data Sources Secondary data—collected for another purpose and already exist somewhere. Primary data—freshly gathered for a specific purpose or a specific research project. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Research Approaches Observational research Focus-group research Survey research Behavioral data Experimental research Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Research Instruments Questionnaires Qualitative research techniques Technological devices Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Sampling Plan Sampling unit—Who should we survey? Sample size—How many people should we survey? Sampling procedure—How should we choose the respondents? Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Contact Methods Mail questionnaire Telephone interview Personal interview Online interview Copyright 2009, Prentice-Hall, Inc.

Forecasting and Demand Measurement Which market to measure? Potential market—set of consumers who have sufficient interest in a market offer. Available market—set of consumers who have interest, income, and access to a particular offer. Target market—the qualified available market that the company decides to pursue. Penetrated market—set of consumers who are buying the company’s product. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Demand Measurement Market demand—the total volume for a product 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 potential—the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. Copyright 2009, Prentice-Hall, Inc.

Company Demand and Sales Forecast Company demand—the company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. Company sales forecast—the expected level of company sales based on a chosen marketing plan and an assumed marketing environment. Copyright 2009, Prentice-Hall, Inc.

Estimating Current Demand Total market potential—the maximum number of sales that might be available to all of the industry’s firms during a given period, under a given level of industry marketing effort and environmental conditions. Area market potential—the market potential of a specific location: Market buildup method Multiple-factor method Copyright 2009, Prentice-Hall, Inc.

Estimating Future Demand Survey of buyers’ intentions Composite of sales force opinions Expert opinion Past-sales analysis Market-test method Copyright 2009, Prentice-Hall, Inc.

Macroenvironmental Trends and Forces Demographic Economic Political-legal Natural Social-cultural Technological Copyright 2009, Prentice-Hall, Inc.

Demographic Environment Worldwide population growth Population age mix Ethnic markets Educational groups Household patterns Geographical shifts in population Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Economic Environment Income distribution Savings, debt, and credit availability Copyright 2009, Prentice-Hall, Inc.

Social-Cultural Environment Views of themselves Views of others Views of organizations Views of society Views of nature Views of the universe Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Natural Environment Shortage of raw materials Increased cost of energy Increased pollution levels Changing role of governments Copyright 2009, Prentice-Hall, Inc.

Technological Environment Accelerating pace of technological change Unlimited opportunities for innovation Varying R & D budgets Increased regulation of technological change Copyright 2009, Prentice-Hall, Inc.

Political-Legal Environment Increase in business legislation Growth of special-interest groups Copyright 2009, Prentice-Hall, Inc.

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