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SCANNING THE MARKETING ENVIROMENT, FORECASTING DEMAND, AND CONDUCTING MARKETING RESEARCH

PRESENTED BYMUHAMMAD REHAN KIRAN AZAMSHAFAQ GULLSADIA GULAMIR ASGHARASMA IQBALOBJECTIVE In this chapter, we consider how firms can develop processes to identify and track

important macro-environment trends develop good sales forecastsconduct more customized research develop effective metrics for measuring marketing performanceA 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. WHAT IS MARKETING INFORMATION SYSTEM?COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM

Marketers have the major responsibility for identifying significant marketplace changes.

They have two advantages for the task: disciplined methods for collecting information, and time spent interacting with customers and observing competitors and other outside groups. COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEMInternal recordsMarketing intelligence activitiesMarketing researchInformation Needs ProbesWhat Decision do you regularly make?

2. What information do you need to make these decisions?3. What information do you regularly get?4. What special studies do you periodically request?5. What information d would you want that you are not getting now?6. What information would you want daily? Weekly? Monthly? Yearly? 7. What topic would you like to be kept informed of?8. What data analysis and reporting programs would you want?9. What are the most helpful improvements that could be made in the present marketing information system?INTERNAL RECORDS To spot important opportunities and potential problems, marketing managers rely on internal reports of orders, sales, prices, cost, inventory levels, receivables, and payables.

Order-to-PaymentCycleDatabases,Warehousing, Data MiningSales InformationSystemTHE ORDER-TO- PAYMENT CYCLE

Customer favors firms that can promise timely delivery, companies need to performs these steps quickly and accurately.

Many firms use the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle

SALES INFORMATION SYSTEMS Marketing managers need timely and accurate reports on current sales. Wal-Mart operates a sales and inventory data warehouse that captures data on every items for every customer, every store, every day and refresher it every hour.

DATABASES, DATA WAREHOUSING, AND DATA MINING

Companies organizer their information in to customer, product, and salesperson databases-and then combine their data.

The customer databases will contain every customers name, address, past transactions, and sometimes even demographics and psychographics (activities, interest, and opinions).

MARKETING INTELLIGENCEThe 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.

The internal records system supplies results data, but the marketing intelligence system supplies happenings data.

Marketing managers collect marketing intelligence in a variety of different ways, such as by

reading books, newspapers, and trade publicationstalking to customers, suppliers, and distributorsmonitoring social media on the internet and meeting with other company managers.

MARKETING INTELLIGENCETrain And Motivate The Sales Force To Spot And Report New DevelopmentsMotivate Distributors, Retailers, And Other Intermediaries To Pass Along Important IntelligenceHire External Experts To Collect Intelligence Network Internally And ExternallySet up a customer advisory panelTake advantage of government data resourcesPurchase information from outside suppliers

MARKETING INTELLIGENCEANALYZING THE MACROENVIRONMENTIMPORTANT DEFINITIONS6 MAJOR FORCES IN THE ENVIRONMENT:Demographic EconomicSocioculturalNaturalTechnologicalPolitical-legalNeeds and TrendsFadTrendMegatrend16A fad is unpredictable, short-lived, and without social, economic, and political significance. A company can cash in on a fad such as Crocs clogs, Elmo TMX dolls, and Pokmon gifts and toys, but getting it right requires luck and good timing. A direction or sequence of events with momentum and durability, a trend is more predictable and durable than a fad; trends reveal the shape of the future and can provide strategic direction. A megatrend is a large social, economic, political, and technological change [that] is slow to form, and once in place, influences us for some timebetween seven and ten years, or longer. What are todays fads, trends, and megatrends?Fad: A product, service, or idea that is extremely popular for a very brief period of time and then becomes unpopular just as quickly.Examples:Atkins diet planPokemon cartoons

Trend: A pattern or direction in the way something is changing; a movement toward a style or ideaExamples: Organic food products, shift towards a healthier lifestyle Mc Donalds has started to post calorie data in menus, adding several healthier options to menu

Megatrend: A large social, economic, political or technological change that is slow to form, and once in place, influences us for ten years or longer.Examples include: UrbanizationShrinking familiesIncreasing life expectancy MAJOR FORCES OF THE ENVIRONMENTCompanies need to identify and monitor these forces to be successful

Each force, and their interaction with other forces, can lead to new opportunities and threats for the companyMAJOR FORCES IN THE ENVIRONMENTDemographicEconomicPolitical-LegalSocio-CulturalTechnologicalNatural21

THE DEMOGRAPHIC ENVIRONMENTPopulation growth: Developing regions: 84% of worlds population, growing at 1-2% /yearDeveloped countries: Population growing at 0.3% / yearA growing population doesnt necessarily mean growing markets unless there is sufficient purchasing power.

Population age mix:Marketers divide the population into 6 age groups: pre-school, school age, teens, young adults 20-40, middle aged 40-65, and elderly 65 onwards. Ethnic and racial groupsTHE DEMOGRAPHIC ENVIRONMENT

Educational groups: Illiterates, high school dropouts, high school diplomas, college degrees and professional degrees.Household patterns: Nuclear family, joint-family, singles and couples.THE DEMOGRAPHIC ENVIRONMENTTHE ECONOMIC ENVIRONMENTThe available purchasing power in an economy depends on:Income levelsSavingsDebtCredit availabilityPrices

Marketers distinguish countries using 5 income-distribution patterns: 1) very low incomes2) mostly low incomes3) very low, very high incomes4) low, medium, high incomes5) mostly medium incomesTHE ECONOMIC ENVIRONMENT

SOCIO CULTURAL ENVIRONMENTA set of beliefs, customs, practices and behavior that exists with a population is called Culture.

The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business.

If we are doing business than we need to focus on culture, cultural environment consist of religious, family, educational and social system.

Before the company decided to move overseas to decrease their overhead they researched the socio-cultural environment.

Internationalcompaniesoften include anexamination of the socio-cultural environmentpriorto entering theirtarget markets.

NATURAL ENVIRONMENTNatural Environment involves all the natural resources.

Many business operations depend on the environment, as it can be the primary source of raw materials and can affect business processes

Companies in the industrial or manufacturing industry often work with different kinds of equipment, machinery and chemical-producing agents.

In effect, a business' day-to-day operations can pose an ongoing threat to the natural environment.

The natural environment can influence the business in a way of variety.

companies must comply with environmental regulations in all stages of a business' development

Technological EnvironmentChanges in technology affect how a company will do businessTechnological changeis improvement in the 'art' of making products or developing processes.Atechnological processis a means to make and improve products and servicesBusiness technology has revolutionized the way companies conduct business.Small businesses use computers, servers, websites and personal digital products to develop competitive advantages in the economic marketplaceSmall business owners can use technology to reduce business costs.

POLITICAL LEGAL ENVIRONMENTThe Environment can be simply described as the laws and regulations that business has to follow in order to make sure the business owners do not get arrested.

Laws are made by politicians

The political environment in a country affects business organizations and could introduce a risk factor that could cause them to suffer a loss.

Businesses need to be prepared to deal with the fallouts of government politics.

The political environment in a country affects its economic environment

FORECASTING AND DEMAND MEASUREMENT35

Figure 3.2 illustrates that companies can prepare as many as 90 different types of demand estimates for six different product levels, five space levels, and three time periods. Each demand measure serves a specific purpose. A company might forecast short-run demand to order raw materials, plan production, and borrow cash. It might forecast regional demand to decide whether to set up regional distribution.

36How can we measure market demand?

Potential marketAvailable marketTarget marketPenetrated market

There are many productive ways to break down the market:The potential market is the set of consumers with a sufficient level of interest in a market offer. The available market is the set of consumers who have interest, income, and access to a particular offer. The target market is the part of the qualified available market the company decides to pursue.The penetrated market is the set of consumers who are buying the companys product.

37The potential market is the set of consumers with a sufficient level of interest in a market offer. The available market is the set of consumers who have interest, income, to buy a particular offer. The target market is the part of the qualified available market the company decides to pursue.The penetrated market is the set of consumers who are buying the companys product.

DEMAND MEASUREMENTMARKET DEMANDA defined marketing program by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment. COMPANY DEMANDIt is the companys estimated share of market demand at alternative levels of company marketing effort at a given time period.ESTIMATING CURRENT DEMAND: Total Market PotentialCalculationsPotential number of buyers Average quantity each purchases Price

Chain-ratio method Market potential for ice cream among urban adults= urban population above 18 yearsX Personal discretionary income per capitaX Average percentage of discretionary income spent on foodX Average percentage of amount spent on food that is spent on dairy products

X Expected percentage of Amount spent on dairy products that will be spent on ice cream

40ESTIMATING CURRENT DEMAND: Area Market PotentialMARKET-BUILDUP (Business Goods Firms)The market-buildup method calls for identifying all the potential buyers in each market and estimating their potential purchases. 41Market Factor Index Method (Consumer Goods Firms)

A forecasting method that identifies market factors that correlate with market potential and combines them into a weighted index.Income , sales, Population, Buying PowerESTIMATING FUTURE DEMANDSurvey of Buyers IntentionsComposite of Sales Force OpinionsExpert OpinionPast-Sales AnalysisMarket-Test Method

How do firms develop their forecasts? They may create their own or buy forecasts from outside sources such as marketing research firms, which interview customers, distributors, and other knowledgeable parties.Forecasting is the art of anticipating what buyers are likely to do under a given set of conditions. For major consumer durables such as appliances, research organizations conduct periodic surveys of consumer buying intentions, ask questions like Do you intend to buy an automobile within the next six months?When buyer interviewing is impractical, the company may ask its sales representatives to estimate their future sales. Companies can also obtain forecasts from experts, including dealers, distributors, suppliers, marketing consultants, and trade associations. Firms can develop sales forecasts on the basis of past sales. Time-series analysis breaks past time series into four components (trend, cycle, seasonal, and erratic) and projects them into the future. Exponential smoothing projects the next periods sales by combining an average of past sales and the most recent sales, giving more weight to the latter.Statistical demand analysis measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. Finally, econometric analysis builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. When buyers dont plan their purchases carefully, or experts are unavailable or unreliable, a direct-market test can help forecast new-product sales or established product sales in a new distribution channel or territory.43WHAT 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.

Need For Marketing Research

To undertake marketing effectivelyChanges in technology Changes in consumer tastes / demand Changes in the product ranges of competitors

THE MARKETING RESEARCH PROCESSDefine the problemDevelop research planCollect informationAnalyze informationPresent findingsMakedecision1.Define The Problem And Research Objectives

A well-defined problem provides direction and maintains uniformity in research work. It also helps in developing alternatives and setting priorities.A problem well-defined is half solved

2. Develop A Research Plan

A research plan helps in estimating the time, cost and human resources required for a research work. A research plan determines five vital aspects. Data sources Research approachesResearch instrumentsSampling planContact method

3. Collect The Information

This is the most expensive stage of research. Collecting primary data by interviewing, observing, and/or experimenting can be done by people or machines

4. Analyze The Information

The value of research is determined by its results. Thus, data collected have to be analyzed and interpreted. The researcher tabulates the data. Averages and measures of dispersion are calculated for major variables.

5. Present The Findings

The researcher should present findings that are relevant to research objective. It has to help management in taking decisions. A research report is an effective tool used to present research findings.

6. Make the DecisionManager decision to decide whether to use, discard or carry out more research.

MEASURING MAKETING PRODUCTIVITY

RATIONALE FOR MARKETING MEASUREMENT Marketers are facing substantiative pressures in order to deliver quantifiable evidence to senior managementThe marketing strategy corresponds to the increase in the efficiency and effectiveness in marketing activitiesThe investment of firms are based on quantiafiable terms like Broad Band Awareness, customer staisfaction, and future prospects for the company

53GUCCI

54COMPLEMENTARY APPROACHES TO MEASURING MARKETING PRODUCTIVITYWHAT IS MARKETING MATRICS?Marketing metrics is the set of measures that helps marketers quantify, compare, and interpret marketing performance.ExternalAwarenessMarket shareRelative priceNumber of complaintsCustomer satisfactionDistributionTotal number of customersLoyalty

InternalAwareness of goalsCommitment to goalsActive supportResource adequacyStaffing levelsDesire to learnWillingness to changeFreedom to failAutonomyWHAT IS MARKETING MIX MODELING?Marketing-mix models analyze data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities.

However, Marketing Mix Modeling fails to incorporate metrics associated to competitors advertising, and trade promotions.

WHAT IS MARKETING DASHBOARDS?The management can indulge an assembly of summary set of related to internal and external measures by using Marketing Dashboards for synthesis and interpretation.

A customer-performance scorecard records how well the company is doing year after year on customer-based measures.

A stakeholder-performance scorecard tracks the satisfaction of various constituencies who have a critical interest in and impact on the companys performance including employees, suppliers, banks, distributors, retailers, and stockholders.

58Table for Sample Customer-Performance Scorecard Measures% of new customers to average #% of lost customers to average #% of win-back customers to average #% of customers in various levels of satisfaction% of customers who would repurchase% of target market members with brand recall% of customers who say brand is most preferredMARKETING DASHBOARDS TO IMPROVE EFFECTIVENESS AND EFFICIENCY