Understanding Markets, Understanding Markets, Market Demand, and the Market Demand, and the

Marketing EnvironmentMarketing Environment

Concepts

Marketing Information System (MIS)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.

MIS ResourcesMIS Resources

Internal recordsMarketing intelligenceMarketing research

Marketing Insights vs. Marketing ResearchMarketing 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.

Marketing Research ProcessMarketing Research Process

Define the problem and research objectives

Develop the research planCollect the informationAnalyze the informationPresent the findingsMake the decision

Step 1: Define the Problem and Step 1: Define the Problem and Research ObjectivesResearch Objectives

Define the problemSpecify decision alternativesState research objectives

Step 2: Develop the Research PlanStep 2: Develop the Research Plan

Identify data sourcesDesign research approachDevelop research instrumentsDesign sampling planSelect contact methods

Data SourcesData Sources

Secondary data—collected for another purpose and already exist somewhere.

Primary data—freshly gathered for a specific purpose or a specific research project.

Research ApproachesResearch Approaches

Observational researchFocus-group researchSurvey researchBehavioral dataExperimental research

Research InstrumentsResearch Instruments

QuestionnairesQualitative research techniquesTechnological devices

Sampling PlanSampling Plan

Sampling unit—Who should we survey?Sample size—How many people should

we survey?Sampling procedure—How should we

choose the respondents?

Contact MethodsContact Methods

Mail questionnaireTelephone interviewPersonal interviewOnline interview

Forecasting and Demand MeasurementForecasting 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.

Demand MeasurementDemand 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.

Company Demand and Sales ForecastCompany 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.

Estimating Current DemandEstimating 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

Estimating Future DemandEstimating Future Demand

Survey of buyers’ intentionsComposite of sales force opinionsExpert opinionPast-sales analysisMarket-test method

Macroenvironmental Trends and ForcesMacroenvironmental Trends and Forces

DemographicEconomicPolitical-legalNaturalSocial-culturalTechnological

Demographic EnvironmentDemographic Environment

Worldwide population growth

Population age mixEthnic markets

Educational groupsHousehold patternsGeographical shifts

in population

Economic EnvironmentEconomic Environment

Income distributionSavings, debt, and credit availability

Social-Cultural EnvironmentSocial-Cultural Environment

Views of themselvesViews of othersViews of organizationsViews of societyViews of natureViews of the universe

Natural EnvironmentNatural Environment

Shortage of raw materialsIncreased cost of energyIncreased pollution levelsChanging role of governments

Technological EnvironmentTechnological Environment

Accelerating pace of technological changeUnlimited opportunities for innovationVarying R & D budgetsIncreased regulation of technological

change

Political-Legal EnvironmentPolitical-Legal Environment

Increase in business legislationGrowth of special-interest groups