chapter # 3 key notes and points of whole chapter
- 1. Chapter 3
- 2. TABLE OF CONTENTS • Summary • Components of a Modern Marketing Information System • Internal Records • Marketing Intelligence • Analyzing the Macroenvironment • Forecasting and Demand Measurement • The Scope Of Marketing Research • The Marketing Research Process • Measuring Marketing Productivity
- 3. LEARNING OBJECTIVES In this chapter, we will address the following questions: • What are the components of a modern marketing information system? • What are useful internal records for such a system? • What makes up a marketing intelligence system? • What are some influential macroeconomic developments? • How can companies accurately measure and forecast demand? • What constitutes good marketing research? • What are the best metrics for measuring marketing productivity? • How can marketers access their return on investment of marketing expenditures?
- 4. COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM Section 1
- 5. COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM MarketersResponsibility • Marketers are responsible for identifying significant marketplace changes • Marketers are in position to collect information from • customers, • competitors, and • other external factors/group • Some companies have marketing information system that provide details on buyer wants, preferences and behavior Source of Information Customer Competitors Other External Groups or Factors
- 6. COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM MarketingInformationSystem • What is a marketing information system? • A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute information that is needed, timely and accurate. Component of a Marketing Information System People Equipment Procedures
- 7. COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM MarketingInformationSystem • Three major sources of Marketing Information • Internal company records • Marketing intelligence activities • Marketing research Sources of Marketing Information Internal company records Marketing intelligence activities Marketing research
- 9. INTERNAL RECORDS • Internal reports of orders, sales, prices, costs, inventory levels, receivables and payables • Key Components • Order-to-payment Cycle • Sales Information Systems • Database Order-to- payment Cycle Sales Information Systems Database
- 10. INTERNAL RECORDS • The order-to-payment cycle entails the process that orders go through once they are received by the company. Includes invoices and shipping documents. Customers prefer firms that can get orders processed quickly and accurately. Order-to- payment Cycle Sales Information Systems Database
- 11. INTERNAL RECORDS • Sales information systems provide managers with up-to- date information on the current sales of individual products. Order-to- payment Cycle Sales Information Systems Database
- 12. INTERNAL RECORDS • Databases store and organize information that can be retrieved based on a number of criteria such as purchase history, product preferences, and can even contain demographic and psychographic information on customers. Order-to- payment Cycle Sales Information Systems Database
- 14. • A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. MARKETING INTELLIGENCE WhatisMarketingIntelligenceSystem?
- 15. MARKETING INTELLIGENCE WhatisMarketingIntelligenceSystem? • It reports “happenings” data from books, newspapers, trade publications; customers, suppliers, distributors, and managers; and social media monitoring. • Marketing intelligence gathering must be legal and ethical Source of Happening Data Books, newspapers, trade publications; Meeting customers, suppliers, distributors, and managers; Social media monitoring
- 16. MARKETING INTELLIGENCE ImprovingMarketIntelligence • Companies can improve marketing intelligence through the methods listed on the slide as well as through channel members, government data sources, and the purchase of information through secondary data sources. • Eight actions to improve the quantity and quality of its marketing intelligence Train and motivate the sales force to spot and report new developments. Motivate distributors, retailers, and other intermediaries to pass along important intelligence. Hire external experts to collect intelligence. Network internally and externally. Set up a customer advisory panel. Take advantage of government-related data resources. Purchase information from outside research firms and vendors. Collect marketing intelligence on the Internet
- 17. MARKETING INTELLIGENCE MarketingIntelligence&theInternet • Five Sources of Intelligence on the Internet Independent customer goods and service review forums Distributor or sales agent feedback sites Combo sites offering customer reviews and expert opinions Customer complaint sites Public blogs
- 18. MARKETING INTELLIGENCE UsingMarketingIntelligence Communicating and Acting on Marketing Intelligence: • Competitive intelligence works best when it is closely coordinated with decision-making process Marketing Intelligence Coordinated with Decision Making
- 19. MARKETING INTELLIGENCE VideoTime –“Howstorestrackyourshoppingbehavior” “Why are companies so intent on using technology to track our behavior? Our actions reveal what we desire, how we shop, and why we buy.” • Prof. Dr. Raymond R. Burke • Raymond R. Burke (Bloomington, IN USA) is the E.W. Kelley Professor of Business Administration at Indiana University’s Kelley School of Business, and founding director of the School’s Customer Interface Laboratory, a state-of-the-art facility for investigating how customers interact with new retail environments and technologies.
- 21. ANALYZING THE MACROENVIRONMENT • Where the microenvironment refers to those elements closest to the company, customers, competitors, suppliers, etc., • The microenvironment refers to those elements that can impact a company, but cannot be controlled. Can impact a company But cannot be controlled
- 22. ANALYZING THE MACROENVIRONMENT • These include things such: Demographic Economic Socio-cultural Natural Technological Political-legal
- 23. ANALYZING THE MACROENVIRONMENT NeedandTrends • Analyze the macroenvironment with intention to find and create new solutions to similarly unmet needs. Some become fad, trend or megatrend. A fad is an unpredictable, short- lived, and without social, economic and political significance 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 time
- 24. ANALYZING THE MACROENVIRONMENT NeedandTrends Fad Wham-0 sold 25 million Hula Hoops in its first 4 months. Pet rocks were launched in the mid-1970’s and sold 1 million units in a matter of months. Five month’s later sales were almost non-existent. Megatrend Electric Automobiles Trend Diet and Exercise
- 25. ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces • These include things such: Demographic Economic Socio-cultural Natural Technological Political-legal
- 26. The Demographic Environment • Worldwide population growth • 6.8 billion in 2010; will grow to 9 billion in 2040 • Population age mix • Mexico young population; Italy old • By 2011 in the US, those 65 and older will grow faster than the entire US population. • Ethnic and other markets • 25 million people in the US were born in another country • Hispanic’s accounted for 11 percent of the US population in the 2000 census. By 2020 Hispanics are expected to account for 18.9 percent of the population. • Educational Groups • Illiterates • High school dropouts • High school diplomas • College degrees • Professional degrees • Household patterns • 20% of households “Married with Children”; • 27% single live-alones; • Single-parent families (8%); living with nonrelatives only (5%); and other family structures (8%) ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces
- 27. THE WORLD AS A VILLAGE • If the world were a village of 100 people: • 61 – Asian (20 Chinese, 17 Indian) • 18 – Unable to read (33 have cell phones) • 18 – Under 10 years of age (11 over 60 years old) • 18 – Cars in the village • 63 – Inadequate sanitation • 67 – Non-Christian • 30 – Unemployed or underemployed • 53 – Live on less than $2 a day • 26 – Smoke • 14 – Obese • 01 – Have AIDS Source: David J. Smith and Shelagh Armstrong, If the World Were a Village: A Book About the World’s People, 2nd ed. (Tonawanda, NY: Kids Can Press, 2002)
- 28. The Economic Environment • Purchasing power: is the amount of goods/services one unit of currency will purchase. • Purchasing power is determined by income, prices, savings, credit availability, and debt. • Consumers have been shaken by the recession, have more debt and less savings, and feel it will change their behavior, to be more risk averse, going forward • The income distribution of a country can influence the decision to enter a specific market. • Subsistence economies • Raw-material-exporting economies • Industrializing economies • Industrial economies • Five income-distribution patterns • Very low incomes • Mostly low incomes • Very low, very high incomes • Low, medium, high incomes • Mostly medium incomes ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces
- 29. ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces Sociocultural Environment • The Sociocultural Environment impacts consumption trends and behavior, including: views of ourselves, others, organizations, society, nature and of the universe. Ourselves Others Universe Organizations Society Nature Sociocultural Environment
- 30. Sociocultural Environment • Core Cultural Values • Core beliefs and values are passed from parents to children and reinforced by social institutions • Secondary beliefs and values are more open to change • Subcultures are groups with shared values, beliefs, preferences and behaviors emerging from their special life experiences or circumstances • Examples of subcultures include: Gothic, Metalhead, punk, Trekkies, biker, etc. ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces
- 31. The Natural Environment • Companies must be cognizant of the effects of their business on the environment and how regulations can influence its competitive position. • Changes in regulations can also provide opportunities for companies, but these opportunities may only be recognized if the company includes this aspect into their strategic planning. ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces
- 32. The Technological Environment • Innovation’s long-run consequences are not fully foreseeable • Trends include: • Accelerating pace of change • Unlimited opportunities for innovation • Varying R&D budgets • Increased regulation of technological change ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces
- 33. The Political-Legal Environment • Laws, government agencies and pressure groups that influence organizations and individuals create business opportunities or uncertainty/confusion • Two major trends: • Increased business legislation • Growth of special interest groups (including the consumerist movement) • The personal data economy worries consumers • Opportunities can arise due to changes in the political-legal environment. But so too can threats. ANALYZING THE MACROENVIRONMENT IdentifyingtheMajorForces
- 34. THE SCOPE OF MARKETING RESEARCH Section 6
- 35. • Marketing research is the function that links the consumer, customer, and public to the marketer through information • The information is used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. • Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications. THE SCOPE OF MARKETING RESEARCH WhatisMarketingResearch
- 36. THE SCOPE OF MARKETING RESEARCH WhatisMarketingResearch Insight Market Research
- 37. • Marketing insights provide diagnostic information about • how consumers and markets behave, • why we observe certain effects in the marketplace and • what that means to marketers • Marketing insights can form the basis for successful marketing programs, and gaining insights is crucial for marketing success THE SCOPE OF MARKETING RESEARCH ImportanceofMarketingInsights
- 38. THE SCOPE OF MARKETING RESEARCH WhoDoesMarketingResearch? • Most large companies have their own marketing research departments, which often play crucial roles within the organization. • Smaller companies use everyone to carry out marketing research, including customers, and they hire research firms or use affordable methods like: • Engaging students or professors to design and carry out projects • Using the Internet • Checking out rivals • Tapping into marketing partner expertise • Tapping into employee creativity and wisdom
- 39. THE MARKETING RESEARCH PROCESS Section 7
- 40. • Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives • Step 2: Develop the Research Plan • Step 3: Collect the Information • Step 4: Analyze the Information • Step 5: Present the Findings • Step 6: Make the Decision Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives Step 2: Develop the Research Plan Step 3: Collect the Information Step 4: Analyze the Information Step 5: Present the Findings Step 6: Make the Decision THE MARKETING RESEARCH PROCESS
- 41. THE MARKETING RESEARCH PROCESS Step1:DefinetheProblem,theDecisionAlternatives,andthe ResearchObjectives • Do not define the problem too broadly or too narrowly. Trying to find out everything about first-class travellers needs is too broad, while trying to determine if enough passengers will pay $25 on a direct flight between Chicago and Tokyo to break even is too narrow. • Some research is exploratory – the goal is to identify the problem and to suggest possible solutions • Some research is descriptive – it seeks to quantify demand • Some research is causal – it tests a cause-and-effect relationship
- 42. THE MARKETING RESEARCH PROCESS Step2:DeveloptheResearchPlan • Develop the most efficient plan for gathering needed information • Discover what it will cost to execute the plan • Consider data sources • Secondary data – collected for another purpose; already exists • Primary data – freshly gathered for a specific purpose or project
- 43. THE MARKETING RESEARCH PROCESS Step2:DeveloptheResearchPlan • Consider research approaches • Observational research • Ethnographic research • Focus group research • Survey research • Behavioral research
- 44. THE MARKETING RESEARCH PROCESS Step2:DeveloptheResearchPlan –ChooseResearch Instruments • Questionnaires • Closed-end questions specify all possible answers • Dichotomous • Multiple choice • Likert • Semantic differential • Importance scale • Rating scale • Intention-to-buy scale • Open-end questions allow respondents to answer in their own words • Completely unstructured • Word association • Sentence completion • Story completion • Picture • Qualitative measures • ZMET • Projective techniques • Visualization • Brand personification • Laddering • Technological devices • Galvanometers • Tachistoscopes • Eye tracking • Skin sensors • Brain wave scanners • Full-body scanners • EEG • fMRI • Audiometers • GPS
- 45. THE MARKETING RESEARCH PROCESS Step2:DeveloptheResearchPlan Choose a sampling plan • Sampling unit: whom should we survey? • Sample size: How many people should we survey? • Sampling procedure: How should we choose the respondents? Choose a contact method • Mail contacts • Telephone contacts • Personal contacts • Online contacts
- 46. THE MARKETING RESEARCH PROCESS Step3:CollecttheInformation • Most expensive and error-prone phase • Need to achieve consistency is one of the biggest obstacles
- 47. THE MARKETING RESEARCH PROCESS Step4:AnalyzetheInformation • Extract findings by tabulating the data and developing summary measures • Test hypotheses and theories, applying sensitivity analysis to test assumptions/strength of conclusions
- 48. THE MARKETING RESEARCH PROCESS Step5:PresenttheFindings • Transform raw data into insight • Present information in clear and compelling fashion
- 49. THE MARKETING RESEARCH PROCESS Step6:MaketheDecision • Research should guide decisions, not be used to support decisions already made.
- 50. THE MARKETING RESEARCH PROCESS Step6:MaketheDecision Research Decisions
- 51. THE MARKETING RESEARCH PROCESS CharacteristicsofGoodmarketingresearch 1. Uses the principles of the scientific method 2. Is creative 3. Does not rely on one method; uses two or three to increase confidence in the results 4. Recognizes that data are interpreted from underlying models that guide information sought 5. Balances cost and value of information 6. Avoids glib assumptions/has a healthy skepticism 7. Is Ethical
Editor's Notes
- #36: Managers use market research to help them better understand the customers and markets. These insights are the how’s and why’s certain things happen in the market. The text gives an example of how Gillette conducted market research on the woman’s shaver market and how this research led the company to develop the Venus razor, which now has more than 50% of the global market.