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Marketing Management
Chapter 3 – Collecting Information and
Forecasting Demand

Dr. Manoochehr Najmi

Graduate School of Management and Economics
Sharif University of Technology
1399-00 (2)
Chapter Questions
 What are the components of a modern
marketing information system?
 What are useful internal records?
 What makes up a marketing intelligence
system?
 What are some influential macro
environment developments?
 How can companies accurately measure
and forecast demand?

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 What is a
Marketing Information System?

A marketing information system

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

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Marketing Information System
(MKIS)

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 Assessing Information Needs
1. What decisions do you regularly make?
2. What information do you need to make these decisions?
3. What information do you regularly get?
4. What special studies do you periodically request?
5. What information would you want that you are not getting now?
6. What information would you want daily? Weekly? Monthly? Yearly?
7. What online or offline newsletters, briefings, blogs, reports, or
magazines would you like to see on a regular basis?
8. What topics would you like to be kept informed of?
9. What data analysis and reporting programs would you want?
10. What are the four most helpful improvements that could be made in
the present marketing information system?

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Internal Records
 Internal reports of orders
 Sales
 Prices
 Costs
 Inventory levels
 Receivables
 Payables

Advantages Vs Disadvantages?
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Marketing Intelligence System?

A marketing intelligence system is a

set of procedures and sources that
managers use to obtain everyday
information about developments in the
marketing environment. (happenings
data)

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Steps to Quality Marketing Intelligence

 Motivate sales force to report new developments

 Motivate intermediaries to pass along intelligence
 Hire external experts to collect intelligence
 Network internally and externally
 Set up a customer advisory panel
 Take advantage of government-related data
 Purchase information from outside research vendors
 Collect marketing intelligence on Internet

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 Marketing Intelligence on the internet

 Independent customer goods and service

review forums
 Distributor or sales agent feedback sites
 Combination sites offering customer reviews
and expert opinions: ZDNet.com
 Customer complaint sites
 Public blogs

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Analyzing Macro Environment
Needs and Trends

Fad: unpredictable, short-lived, and without

social, economic, and political significance.

Trend: more predictable

Megatrend: large social, economic,

political, and technological change

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 Major Forces in the Environment
Natural Technological

Economic Political-legal

Demographic Socio-cultural

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 Population and Demographics

 Population growth
 Population age mix
 Ethnic markets
 Educational groups
 Household patterns

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Perspective on the Global
Demographic Environment

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Economic Environment

Consumer Psychology

Income Distribution

Income, Savings, Debt, Credit

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 Income Distribution

 Subsistence economies
 Raw-material-exporting economies
 Industrializing economies
 Industrial economies

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Social-Cultural Environment
Table 3.4 Most Popular
American Leisure Activities

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 Natural Environment

 Shortage of raw materials

 Increased energy costs
 Anti-pollution pressures
 Governmental protections

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 Technological Environment

 Pace of change
 Opportunities for innovation
 Varying R&D budgets
 Increased regulation of Technological change

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The Political-Legal Environment

Business Legislation

Growth of Special Interest Groups

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 Forecasting and
Demand Measurement
 How can we measure market demand?
 Potential market (sufficient level of interest)

 Available market (have interest, income and access and if

qualified, will be called qualified available market)
 Target market (part of the qualified available market)
 Penetrated market (those who are buying)

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 A Vocabulary for
Demand Measurement
Market Demand: Total Volume that would be bought by a defined
customer group. A function of the stated conditions.

Market Potential: Is the limit approached by market demand

Market Forecast: Expected market demand

Company Demand: company’s estimated share of market

demand at alternative levels of company marketing effort

Company Sales Potential: sales limit

Company Sales Forecast: expected level of sales
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Market Demand Functions

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 Estimating Current Demand:
Total Market Potential
Total market potential is the maximum sales available to all firms in an
industry during a given period, under a given level of industry marketing
effort and environmental conditions.

 Calculations
 Multiply the potential number of buyers by the
average quantity each purchases, times price
 Chain-ratio method: A*B*C*D*…

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Estimating Current Demand:
Area Market Potential
Market-Buildup for business markets
The market-buildup method calls for identifying all the potential
buyers in each market and estimating their potential purchases. It
produces accurate results if we have a list of all potential buyers
and a good estimate of what each will buy. Unfortunately, this
information is not always easy to gather.

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 Estimating Current Demand:
Area Market Potential
Multi-Factor Index method consumer markets

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 Estimating Future Demand

 Survey of Buyers’ Intentions

 Composite of Sales Force Opinions
 Expert Opinion
 Past-Sales Analysis
 Market-Test Method

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 For Review

 What are the components of a modern

marketing information system?
 What are useful internal records?
 What makes up a marketing intelligence
system?
 What are some influential macro environment
developments?
 How can companies accurately measure and
forecast demand?

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