Understanding Markets, Market Demand, and the Marketing Environment

To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 5©2003 Prentice Hall, Inc.

Chapter 5Chapter 5

Understanding Markets, Understanding Markets, Market Demand, and the Market Demand, and the Marketing EnvironmentMarketing Environment

PowerPoint by Karen E. JamesPowerPoint by Karen E. JamesLouisiana State University - ShreveportLouisiana State University - Shreveport

To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 5©2003 Prentice Hall, Inc.

ObjectivesObjectives

Identify the major components of a marketing system.

Understand how marketers can improve marketing decisions through intelligence systems, marketing research, and marketing decision support systems.

To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 5©2003 Prentice Hall, Inc.

ObjectivesObjectives

Learn how demand can be more accurately measured and forecasted.

Understand key demographic, economic, natural, technological, political-legal, and socio-cultural developments.

To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

A Marketing Information System is defined as . . .

“people, equipment, and procedures that gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.”

To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

Marketing Information Systems compile information from:

– Internal records systems

– Marketing intelligence systems

– Marketing research

– Marketing decision support analysis

To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

Internal Records Systems

– Order-to-payment cycle is key

– Timely sales reports help to better manage inventory

– Customer, product, salesperson and other databases can be mined for fresh insights

To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

Improving the Quality of Marketing Intelligence System Data Requires:

– Training and motivating sales force to report developments

– Motivating channel members to share important intelligence

– Collecting competitive intelligence

To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

Improving the Quality of Marketing Intelligence System Data Requires:

– Developing a customer advisory panel

– Purchasing information from commercial data sources

– Establishing a marketing information center within the company

To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

The Marketing Research Process:

– Defining the problem and research objectives

– Developing the research plan– Collecting the information– Analyzing the information– Presenting the findings– Making the decision

To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

Developing the Research Plan Involves:

– Gathering secondary and primary data– Selecting one or more research

approaches for primary data collection– Using the appropriate research instrument– Developing a sampling plan– Determining subject contact methods

To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

Approaches for primary data collection include:

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

To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 5©2003 Prentice Hall, Inc.

Supporting Marketing Supporting Marketing DecisionsDecisions

A Marketing Decision Support System is defined as a . . .

“coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets information from business and the environment and turns it into a basis for marketing action.”

To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 5©2003 Prentice Hall, Inc.

Forecasting and Forecasting and Demand MeasurementDemand Measurement

Essential Aspects

The market

Market demand

Company demand and sales forecasts

Current demand

Future demand

Market

Potential market

Available market

Target market (served market)

Qualified available market

Penetrated market

To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 5©2003 Prentice Hall, Inc.

Forecasting and Forecasting and Demand MeasurementDemand Measurement

Essential Aspects

The market

Measuring demand

Company demand and sales forecasts

Current demand

Future demand

Market demand– Market minimum– Market forecast– Market potential– Nonexpansible vs.

expansible markets– Primary vs.

secondary demand Market forecast

Market potential

To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 5©2003 Prentice Hall, Inc.

Forecasting and Forecasting and Demand MeasurementDemand Measurement

Essential Aspects

The market

Measuring demand

Company demand and sales forecasts

Current demand

Future demand

Company demand

Company sales forecast

Sales quota

Sales budget

Company sales potential

To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 5©2003 Prentice Hall, Inc.

Forecasting and Forecasting and Demand MeasurementDemand Measurement

Essential Aspects

The market

Measuring demand

Company demand and sales forecasts

Current demand

Future demand

Total market potential

Area market potential

– Market-buildup method

To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 5©2003 Prentice Hall, Inc.

Forecasting and Forecasting and Demand MeasurementDemand Measurement

Essential Aspects

The market

Measuring demand

Company demand and sales forecasts

Current demand

Future demand

Many Forecasting Methods:

– Buyer intentions survey

– Composite of sales force opinions

– Expert opinion– Past-sales analysis– Market-test method

To accompany A Framework for Marketing Management, 2nd Edition Slide 18 in Chapter 5©2003 Prentice Hall, Inc.

Macroenvironmental Macroenvironmental Trends and ForcesTrends and Forces

Demographic Environment

– Worldwide population growth– Population age mix– Ethnic markets– Educational groups– Household patterns– Geographic population shifts– Rise of micromarkets

To accompany A Framework for Marketing Management, 2nd Edition Slide 19 in Chapter 5©2003 Prentice Hall, Inc.

Macroenvironmental Macroenvironmental Trends and ForcesTrends and Forces

Economic Environment

– Income distribution

– Savings, debt, and credit availability

To accompany A Framework for Marketing Management, 2nd Edition Slide 20 in Chapter 5©2003 Prentice Hall, Inc.

Macroenvironmental Macroenvironmental Trends and ForcesTrends and Forces

Natural Environment

– Shortage of raw materials

– Increased energy costs

– Anti-pollution pressures

– Changing role of governments

To accompany A Framework for Marketing Management, 2nd Edition Slide 21 in Chapter 5©2003 Prentice Hall, Inc.

Macroenvironmental Macroenvironmental Trends and ForcesTrends and Forces

Technological Environment

– Accelerating pace of technological change

– Unlimited opportunities for innovation

– Varying R&D budgets– Increased regulation of

technological change

To accompany A Framework for Marketing Management, 2nd Edition Slide 22 in Chapter 5©2003 Prentice Hall, Inc.

Macroenvironmental Macroenvironmental Trends and ForcesTrends and Forces

Political-Legal Environment

– Legislation regulating business

– Growth of special interest groups

To accompany A Framework for Marketing Management, 2nd Edition Slide 23 in Chapter 5©2003 Prentice Hall, Inc.

Macroenvironmental Macroenvironmental Trends and ForcesTrends and Forces

Socio-Cultural Environment

– World views that consumers hold of themselves, others, society, organizations, nature, and the universe

– High persistence of core values

– Existence of subcultures