Chapter 3

Summary

Good marketers need insights to help them analyze customer needs, interpret past performance and trends, and plan future activities.  Every successful company must have a marketing information system to communicate to its marketing managers.  This system consists of people, equipment and procedures to gather, analyze and distribute information.  Review of marketing intelligence and research will help a company to use forecast and demand measurements to evaluate performance and future growth opportunities.  There are six major environmental forces to measure: demographic, economic, socio-cultural, natural, technological, and political-legal.  All of these different forces can have a profound effect on a marketer’s success or failure.

A.      The Marketing Information System and Marketing Intelligence

1.      A marketing information system is a system used to organize and distribute information and marketing intelligence to its marketing managers.  Marketing intelligence is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment.

2.      Kimberly Clark is a great example of a company that has used a series of marketing innovations through the years to develop successful products that provide real value to consumers through its studies and research of what consumers really needed.  Their marketing intelligence research of what parents went through in a simple diaper change helped them create a better diaper.

3.      Marketing managers rely on information from internal reports and databases of all sorts.  The order-to-payment cycle helps the track how quickly sales orders from customers are filled, shipped and then an invoice is paid by the customer. Marketing managers must track what consumers are buying and carefully interpret the buying trends.  Databases help managers keep track of customer information, purchase histories and other key information that can then be “mined” to gather fresh insights into neglected customer segments. 

B.      The Marketing Research System

1.      The marketing research system giving market insights that provide diagnostic information about how and why we observe certain effects in the marketplace and what it means to marketers.

2.      The success of Gillette’s Venus razor is due to insightful research that led to the product design, packaging and advertising cues.

3.      Most firms have their own market research departments to find, analyze and report significant data important to a company’s product development.  Companies study their competitors, industries and audiences to channel strategies and to budget money towards marketing.  Marketing research follows six steps: define the problem and research objectives, develop the research plan, collect the information, analyze the information, present the findings and make the decision.

C.      Forecasting and Demand Measurement

1.      Information gathered from conducting market research is used to measure and forecast the size, growth and profit potential of each new opportunity.

2.      When evaluating opportunities, firms can look at the potential market, which is the set of consumers with a sufficient level of interest, or the available market that have both the interest and access to the offer, or the qualified available market which has interest, income, access, and qualifications for the offer.  The firm pursues the target market and the penetrated market is the set of consumers who actually buy the product.  The company must next estimate the total market demand.  It is not a fixed number, but a function of the stated conditions, which is why it is called the market demand function.  Companies also want to estimate current demand by researching total market potential and area market potential as well as industry sales and market shares.  Estimating future demand is called forecasting, to anticipate what buyers are likely to do under certain conditions.

D.     Analyzing the Macroenvironment

1.      Analyzing the macroenvironment involves identifying trends, which have momentum and durability, and identifying fads which are unpredictable and of short duration.

2.      Apple has been able to successfully identify trends and respond quickly by analyzing downloads from customers from sites such as iTunes, the App Store and iBooks.  This has allowed them to lead in the very popular touch screen technology.

3.      Companies must monitor the six major forces that affect the broad marketing environment: demographic, economic, sociocultural, natural, technological and political-legal. Population growth, age mix, diversity within the market, educational groups and household patterns are some of the most important areas for marketing managers to watch.  An economy’s purchasing power depends on incomes, pricing, savings, debts and the availability of credit. Consumers have changing and evolving views of the sociocultural environment and what is acceptable and what is rejected based on core values and beliefs.  Concern about the health of the environment and pollution drives many companies to strive for more environmental friendly products.  Technology is ever changing and a company can quickly grow stagnant if their technology is not kept current.  Laws, government agencies and pressure groups influence organizations in ways that sometimes leads to new business opportunities.  Regulations that protect companies from unfair practices of competitors as well as the design of safer consumer products have created growth potential for companies willing able to take advantage and grow.  The power and demands of special interest groups have changed the political-legal environment by demanding that business executives respect the rights of consumers.