1. A FRAMEWORK for MARKETING MANAGEMENT Kotler KellerCunningham Chapter 3 Understanding Markets, Market Demand, and the Marketing Environment

2. Chapter Questions What are the components of a modern marketing information system? How can marketers improve marketing decisions through intelligence systems and marketing research? © Copyright 2008 Pearson Education Canada 3-2

3. Chapter Questions How can demand be more accurately measured and forecast? What are some key macro environmental developments that marketers must understand? © Copyright 2008 Pearson Education Canada 3-3

4. Profile: Canadian Marketing Excellence HEALTHY CHOICES The obesity epidemic has led many Canadian marketers to rethink their strategies and tactics Obesity rates have doubled since 2002 Lawsuits, legislation consumer fears, and ultimately falling profits threaten the food industry Kraft Foods demonstrated its commitment to healthy eating through clearer labeling, smaller portions, and an end to in-school marketing Other companies, including McCain Foods, Coca-Cola, and Frito-Lay, have all followed suit by introducing healthier products Sleeman’s even launched its low-carb beer in 2003 © Copyright 2008 Pearson Education Canada 3-4

5. Marketing Information System A marketing information system (MIS) consists of people, equipment, and processes to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. © Copyright 2008 Pearson Education Canada 3-5

6. MIS Resources Internal company records Marketing intelligence Marketing research © Copyright 2008 Pearson Education Canada 3-6

7. Internal Records Order-to-payment cycle Databases and warehouses Sales information system Data mining © Copyright 2008 Pearson Education Canada 3-7

8. Internal Records CANADIAN TIRE In 2002, Canadian Tire entered into an agreement with NAPA Canada (a distributor of automotive parts), whereby NAPA would supply Canadian Tire with emergency parts using its parts-ordering automated inventory technology Assisted Canadian Tire by allowing it to grow its automotive organization without adding infrastructure and inventory costs The parts supplied now make up around 15% of Canadian Tire’s automotive hard part sales (2005) © Copyright 2008 Pearson Education Canada 3-8

9. Improving the Quality of Marketing Intelligence Train sales force to scan for new developments Motivate channel members to share intelligence Network internally Establish a customer advisory panel Utilize government data resources Purchase information Collect customer feedback online © Copyright 2008 Pearson Education Canada 3-9

10. Marketing Research Defined Systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing a company © Copyright 2008 Pearson Education Canada 3-10

11. The Marketing Research Process Define problem Develop research plan Collect information Analyze information Present findings Make decision © Copyright 2008 Pearson Education Canada 3-11

12. Step 1 Define problem Specify decision alternatives State research objectives © Copyright 2008 Pearson Education Canada 3-12

13. Step 2 Data sources Contact methods Research instruments Sampling plan Research approach © Copyright 2008 Pearson Education Canada 3-13

14. Data Sources Secondary data Primary data © Copyright 2008 Pearson Education Canada 3-14

15. Research Approaches Observation Focus group Survey research Behavioural data Experimentation © Copyright 2008 Pearson Education Canada 3-15

16. Research Instruments  Questionnaires  Qualitative research techniques  Mechanical devices © Copyright 2008 Pearson Education Canada 3-16

17. 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? © Copyright 2008 Pearson Education Canada 3-17

18. Contact Methods Mail questionnaire Telephone interview Personal interview Online interview © Copyright 2008 Pearson Education Canada 3-18

19. Forecasting and Demand Measurement Which market to measure? Potential market Available market Penetrated market Target market © Copyright 2008 Pearson Education Canada 3-19

20. Company Demand and Sales Forecast Company demand is the company’s estimated share of market demand at alternative levels of company marketing effort in a given time Company sales forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment © Copyright 2008 Pearson Education Canada 3-20

21. Figure 3.2 Market Demand Functions © Copyright 2008 Pearson Education Canada 3-21

22. Figure 3.2 Market Demand Functions © Copyright 2008 Pearson Education Canada 3-22

23. Estimating Current Demand Total market potential is the maximum number of sales that might be available to all of the firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions Area market potential is the market potential of a specific location Market buildup method Multiple-factor index method © Copyright 2008 Pearson Education Canada 3-23

24. Estimating Future Demand Survey of buyers’ intentions Composite of sales force opinions Expert opinion Past-sales analysis Market-test method © Copyright 2008 Pearson Education Canada 3-24

25. Macro Environmental Trends and Forces Fad Trend © Copyright 2008 Pearson Education Canada 3-25

26. Environmental Forces Demographic EconomicPolitical-Legal Socio-Cultural Technological Natural © Copyright 2008 Pearson Education Canada 3-26

27. Population and Demographics Worldwide population growth Population age mix Ethnic markets Educational groups Household patterns Geographic shifts in population © Copyright 2008 Pearson Education Canada 3-27

28. Marketing Skills: SPOTTING TRENDS In 2003,when Canada began to legalize gay marriage, DeBoer’s Furniture (Concord, Ontario) spotted a key opportunity Gay and lesbian couples earn above average incomes DeBoer’s created advertising around this segment and the notion that “everybody needs a sofa” © Copyright 2008 Pearson Education Canada 3-28

29. Population Age Groups Preschool School-age Teens 25-40 40-65 65+ © Copyright 2008 Pearson Education Canada 3-29

30. Household Patterns © Copyright 2008 Pearson Education Canada 3-30

31. Economic Environment Income distribution Savings, debt, and credit availability Outsourcing and free trade © Copyright 2008 Pearson Education Canada 3-31

32. Types of Industrial Structures Industrial economies Subsistence economies Raw-material- exporting economies Industrializing economies © Copyright 2008 Pearson Education Canada 3-32

33. Social-Cultural Environment Views of themselves Views of others Views of nature Views of organizations Views of society Views of the universe © Copyright 2008 Pearson Education Canada 3-33

34. Natural Environment Shortage of raw materials Increased energy costs Anti-pollution pressures Governmental protections © Copyright 2008 Pearson Education Canada 3-34

35. Technological Environment Pace of change Opportunities for innovation Varying R&D budgets Increased regulation of change © Copyright 2008 Pearson Education Canada 3-35

36. Political-Legal Environment Increase in business legislation Growth of special interest groups © Copyright 2008 Pearson Education Canada 3-36

37. For Discussion When was the last time you participated in a survey? How helpful do you think was the information you provided? Could the research have been done differently? © Copyright 2008 Pearson Education Canada 3-37