Chapter 3Chapter 3Gathering Information and Gathering Information and Measuring Market DemandMeasuring Market Demand

byby

Ung Veasna, DBA candidateUng Veasna, DBA candidate

Kotler on Marketing

Marketing is becoming a battle based more on information than on sales power.

Why Research?•The primary job of marketing managers is the design and execution of marketing programme

•Before programmes can be designed, the market situation must be understood

•In order to understand the market, the manager must have information

•Before the marketing manager can have information, there must be data

Managers face three important problems in

making more effective marketing decisions:

Obtaining the information they need for the flood of data that is available.

Interpreting the information

Determining what action should be taken

The Importance of InformationThe Importance of Information

• Companies need information about their:– Marketing environment– Competition– Customer needs

• Managers don’t need more information, they need better information.

The Importance of InformationThe Importance of Information

WhyInformation

IsNeeded

MarketingEnvironment

StrategicPlanning

Cu

sto

mer

Nee

ds

Co

mp

etition

Research and Intelligence provide information necessary to clarify the “unknown.”

The Benefit of ResearchThe Benefit of Research

• Discovering useful information about your customers, competition and environment

• Reduces risk and uncertainty when making decisions

• The “eyes” and “ears” of the corporation

• Helps you get close to your customers

What is a Marketing Information System (MIS)?What is a Marketing Information System (MIS)?

• A MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely, and accurate information to marketing decision makers.

• The MIS helps managers to: Assess Information Needs, Develop Needed Information, Distribute Information.

The MIS and DATA The MIS and DATA

PRIMARYData collected for

the first time

SECONDARYPre-existing data

INTERNALData obtained from

sources within the firm

EXTERNALData obtained from

sources outside of the firm

DATA

Marketing Information System ComponentsMarketing Information System Components

• Internal Records

• Marketing Intelligence

• Marketing Decision Support Systems

• Marketing Research

Internal Record Systems

• The Order-to-Payment Cycle• Sales Information Systems• Databases, Data Warehouses And Data-

Mining• Customer records• Financial statements• Inventory records• Research reports• Credit data

The Marketing Intelligence System

• A Marketing Intelligence System is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment.

• Intelligence:Intelligence: ongoing ongoing informationinformation

Marketing Decision Support System

Marketing Decision Support System (MDSS)• A computer program - an interface - between the

manager and the MIS

• Makes it easy to obtain needed information

• Makes it easy to analyse the information

• May involve marketing models - to show the relationships among different marketing variables

Table 3-1: Quantitative Tools Used in Marketing Decision Support Systems

Statistical Tools

1. Multiple regression:

A statistical technique for estimating a “best fitting” equation showing how the value of a dependent variable varies with changing values in a number of independent variables. Example: A company can estimate how unit sales are influenced by changes in the level of company advertising expenditures, sales force size, and price.

2. Discriminant analysis:

A statistical technique for classifying an object or persons into two or more categories. Example: A large retail chain store can determine the variables that discriminate between successful and unsuccessful store locations.

3. Factor analysis:

A statistical technique used to determine the few underlying dimensions of a larger set of intercorrelated variables. Example: A broadcast network can reduce a large set of TV programs down to a small set of basic program types.

See text for complete table

Marketing Research is :

a collection, processing and analysis of information on topics relevant to marketing. It begins with problem definition and ends with a reports and action recommendations (Lehmann, Gupta and Steckel 1998)

A Model of Marketing ResearchA Model of Marketing Research

Problem Definition

Research Design

Create Conclusions & Present

Quantitative

Secondary Data

Qualitative

Data Analysis

Primary Data

Figure 3-2: The

Marketing Research Process

• The Marketing Research Process– Step 1: Define the Problem, the Decision

Alternatives, and the Research Objectives

– Step 2: Develop the

Research Plan• Data Sources• Research Approaches

– Observational research– Focus group research– Survey research– Behavioral data– Experimental research

Information That Already Exists Somewhere.

+ Obtained More Quickly, Lower Cost.

- Might Not be Usable Data.

Gathering InformationGathering Information

Both Must Be:

Relevant

Accurate

Current

Impartial

Information Collected for the Specific Purpose at Hand.

Observational Research

Gathering data by

observing people,

actions and situations

(Exploratory)

Planning Primary Data Collection Planning Primary Data Collection

Survey Research

Asking individuals

about attitudes,

preferences or buying

behaviors (Descriptive)

Research Approaches

Experimental Research

Using groups of people to determine cause-and-

effectrelationships

(Causal)

Sampling Plan

–Sampling unit

–Sample size

–Sampling procedure

Who is to be surveyed?

(What Sampling Unit?)

Who is to be surveyed?

(What Sampling Unit?)

How many should besurveyed?

How many should besurveyed?

How should thesample be

chosen?

How should thesample be

chosen?

Probability orNon-probability

sampling?

Probability orNon-probability

sampling?Sample

representative segment of the

population

Sampling Plans

Mechanical Devices

• People Meters• Supermarket Scanners• Eye Cameras

Questionnaire

• What questions to ask?• Form of each question?

•Closed-end•Open-end

• Wording?• Ordering?

Research Instruments

Table 5-2: Types of Questions

1_____ 2 _____ 3_____ 4_____ 5_____

Small airlines generally give better service than large ones.

Strongly Disagree Neither agree Agree Strongly

disagree nor disagree agree

A statement with which the respondent shows the amount of agreement/ disagreement.

Likert scale

An organized tour groupSpouse and children

Business associates/friends/relativesSpouse

Children onlyNo one

With whom are you traveling on this flight?A question with three or more answers.Multiple Choice

In arranging this trip, did you personally phone American?

Yes No

A question with two possible answers.Dichotomous

ExampleDescriptionName

A. Closed-end Questions

Collecting the Data

Processing theData

Analyzing theData

Research Plan

Step 3. Implementing the Research PlanStep 3. Implementing the Research Plan

Step 4. Interpreting & Reporting Findings

Researcher Should Present Important Findings that are Useful in the Major Decisions Faced by

Management.

Step 1. Interpret the FindingsStep 1. Interpret the Findings

Step 2. Draw ConclusionsStep 2. Draw Conclusions

Step 3. Report to ManagementStep 3. Report to Management

• Market demand for a product 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 Demand DefinitionMarket Demand Definition

Forecasting and Demand Measurement• The Measures of Market Demand

Figure 3-3: Ninety Types of Demand Measurement (6X5X3)

Sales Forecasting MethodsSales Forecasting Methods

Executive OpinionExecutive Opinion

Sales ForceSales ForceCompositeComposite Trend ProjectionTrend Projection

Customer SurveyCustomer SurveyAnalysis ofAnalysis of

market factorsmarket factors

• Total Market Potential– 100 mil buyers X 3 books X $10/book

• Area Market Potential– Above estimate by city,state,nation

• Industry Sales– Market Build-up Method

• Market Share– % of industry sales you expect to do.

Estimating Current DemandEstimating Current Demand