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Understanding Markets,
Market Demand, and the
Marketing Environment
 Chapter Questions
ƒ What are the components of a modern
marketing information system?
ƒ How can marketers use intelligence systems
and marketing research?
ƒ How can demand be more accurately
measured and forecasted?
ƒ 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 Records
ƒ Order-to-payment cycle – send orders,
prepare invoices, transmit copies to other
departments, back-orders, out-of-stock items
ƒ Sales information system – timely and
accurate reports on current sales
ƒ Databases, 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
Intelligence
ƒ Train sales force to scan for new developments
ƒ Motivate channel members to share intelligence
ƒ Hire external experts to collect intelligence
ƒ Network externally
ƒ Utilize a customer advisory panel
ƒ Utilize government data sources
ƒ Purchase information from outside suppliers
ƒ Utilize 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 Make

decision
Analyze information

Present findings
 Step 1: Define the Problem

ƒ Define the problem

ƒ Specify decision alternatives
ƒ State research objectives

Types of Research
ƒ Exploratory

ƒ Descriptive

ƒ Causal

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Step 2: Develop the Research Plan

Data Research
Sources Approach

Research Sampling
Instruments Plan

Contact
Methods
 Data sources

ƒ Secondary

ƒ Primary

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 Research Approaches

ƒ Observational and ethnographic research

ƒ Focus group
ƒ Survey research
ƒ Behavioral data
ƒ Experimental research

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 Research Instruments

ƒ Questionnaires
ƒ Qualitative Measures – word associations,
visualization, projective techniques, laddering
ƒ Technological Devices – galvanometers,
eye cameras, audiometers, GPS

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 Questionnaire Do’s and Don’ts

ƒ Ensure questions are ƒ Avoid negatives

free of bias ƒ Avoid hypotheticals
ƒ Make questions simple ƒ Avoid words that could
ƒ Make questions be misheard
specific ƒ Use response bands
ƒ Avoid jargon ƒ Use mutually exclusive
ƒ Avoid sophisticated categories
words ƒ Allow for “other” in
ƒ Avoid ambiguous fixed response
words questions

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 Sampling Plan

ƒ Sampling unit: Who is to be surveyed?

ƒ Sample size: How many people should be
surveyed?
ƒ Sampling procedure: How should the
respondents be chosen?

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Contact Methods

Mail Questionnaire

Telephone
Interview

Personal
Interview

Online
Interview
 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 Research
ƒ Scientific method
ƒ Research creativity
ƒ Multiple methods
ƒ Interdependence
ƒ Value and cost of information
ƒ Healthy skepticism
ƒ Ethical marketing

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Pros and Cons of
Online Research
Advantages Disadvantages
ƒ Inexpensive ƒ Small samples

ƒ Fast ƒ Skewed samples

ƒ Accuracy of data ƒ Technological

ƒ Versatility problems
ƒ Inconsistencies

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 Forecasting and
Demand Measurement
Which market to measure?
ƒ Potential market

ƒ Available market

ƒ Target market

ƒ Penetrated 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
Calculations
ƒ Multiple potential number of buyers by
average quantity each purchases times
price
ƒ Chain-ratio method

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 Sales Forecast Methods

ƒ Survey of Buyers’ Intentions

ƒ Composite of Sales Force Opinions
ƒ Expert Opinion
ƒ Past-Sales Analysis
ƒ Market-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

Political-legal Economic

Technological Socio-cultural

Natural

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 Population and Demographics

ƒ Population growth
ƒ Population age mix
ƒ Ethnic markets
ƒ Educational groups
ƒ Household patterns
ƒ Geographic 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

ƒ Views of themselves
ƒ Views of others
ƒ Views of organizations
ƒ Views of society
ƒ Views of nature
ƒ Views of the universe

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 Natural Environment

ƒ Shortage of raw materials

ƒ Increased energy costs
ƒ Anti-pollution pressures
ƒ Governmental protections

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 Technological Environment

ƒ Accelerating pace of change

ƒ Unlimited opportunities for innovation
ƒ Varying R&D budgets
ƒ Increased regulation of technological change

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 The Political-Legal Environment

ƒ Business legislation
ƒ Growth of special interest groups

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