CHAPTER 3 CHAPTER OUTLINE

How firms can develop processes to track trends Identification of number of important macro environment trends. WHY MIS NEEDED 1.Rise in global market 2.New emphasis on buyer want 3.Trend towards nonprice competition

MARKETING INFORMATION SYSTEM

MIS is needed to carry out analysis, planning, implementation and control responsibilities by the Marketing managers. An MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely and accurate information to marketing decision makers. It is developed from internal company records, marketing intelligence activities, and marketing research.

Components of Modern Marketing Information System

Internal records and Marketing Intelligence includes information on the order to payment cycle &sales reporting system Marketing intelligence system a set of procedures & sources used by managers to obtain marketing information Marketing research system systematic design,collection,analysis and reporting of data and findings relevant to specific marketing situation

INTERNAL RECORDS AND MARKETING INTELLIGENCE

By analyzing the internal reports on orders, sales, prices, costs, inventory levels, receivables, payables and other information etc, the marketing managers can spot important opportunities and problems. 1.The Order to Payment Cycle 2.Sales Information Systems 3.Data Base, Data Warehousing, and Data Mining.

The Order to Payment Cycle

The heart of internal records system Orders are received from sales representative, dealers and customers The sales department processes these orders, prepares invoices and transmit copies to various department. Out of stock items are back ordered and documents of shipped orders are sent to different departments. Today the customers favor the organization which can promise timely delivery. The companies have to be speedy , accurate and efficient to the order to payment cycle.

Sales Information Systems

The Marketing managers need timely and accurate reports on current sales. The companies must carefully interpret the sales data so as not to get the wrong signals. The technological gadgets like bar coding , internet connections have made it easy to collect the needed information timely and accurately.

Database, Data Warehousing , and Data Mining.

Customer Database, product Database, sales persons data base, the companies use to organize these data bases and combine data from different databases For example the customer data base will contain names, addresses past transactions, interests, activities and opinion. Companies warehouse these data and make it accessible to decision makers. Further by using modern research methods and techniques they can mine the data to explore the new market segments and opportunities.

The Marketing Intelligence System

1. It is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. 2. The Marketing Managers collect marketing intelligence by reading books, newspapers, and trade publications, talking to customers, suppliers, and distributors and meeting with other company managers.

How can a company improve the quality of its marketing intelligence system
1.A COMPANY CAN TRAIN AND MOTIVATE THE SALES FORCE TO SPOT AND REPORT NEW DEVELOPMENTS.
a) Company must sell its sales force on their importance as intelligence gatherers. b) Sales persons must know which information is to be passed on to which manager 2. A company can motivate distributors, retailers, and other intermediaries to pass along important intelligence. a)Use of services of specialists to gather the marketing intelligence b)The specialists use mystery shoppers to assess how the employees treat customers. 3. A COMPANY CAN NET WORK EXTERNALLY.(COMPETITOR INTELLIGENCE) The company can purchase competitors products, attend shows, read reports published by the competitors, collect their ads and look up new stories. The competitors intelligence must be done ethically and legally. 4. A COMPANY CAN SET UP A CUSTOMER ADVISORY PANEL. Members might include representative customers. Many organizations have advisory panels made up of alumni and recruiters who provide useful feed back on the curriculum. 5 A company can take advantage of government data resources > Use of census data like population swing, changing family structure, per capita income, education etc. > Use of telephone directory to select and purchase mailing lists with specific clusters. 6. A company can purchase information from outside suppliers (SURVEYORS). A.C. Nielson Company and information resources, Aftab Associates

These research firms gather consumer panel data at a much lower cost than the companies could manage at their own. 7. A company can use online customer feedback systems to collect competitive intelligence. Online customer feed back facilities, collection and dissemination of information. Message board, customer discussion forum and chat rooms.

ANALYZING THE MACROENVIRONMENT

Successful companies recognize and respond profitably to unmet needs and trends Enterprising individuals and companies manage to create new solutions to unmet needs.

FAD, TREND AND MEGA TREND

FAD:- is unpredictable, short lived, and without social, economic, and political significance. TREND:- is a direction or sequence of events that has some momentum and durability. Trends reveal the shape of the future. MEGA TRENDS: Large social, economic, political and technological changes that are slow to form, and once in place, they influence us for some time, between 7 to 10 years or even longer.

IDENTIFYING THE MAJOR FORCES

DEMOGRAPHIC ECONOMIC SOCIAL-CULTURAL NATURAL TECHNOLOGICAL POLITICAL-LEGAL

THE DEMOGRAPHIC ENVIRONMENT

Demographic trends are highly reliable for the short and intermediate run. (Singer Company) Population is the main demographic force . Marketers are keenly interested in the size and growth of population in cities, regions, and nations, age distribution and ethnic mix; educational levels, household patterns, and regional characteristics and movements. WORLD WIDE POPULATION GROWTH: Explosive population growth has major implications for business. A growing population does not mean growing markets unless these markets have sufficient purchasing power. But companies carefully analyzing their markets can find major opportunities. POPULATION AGE MIX. Pakistan with a very young population and growing rapidly (Milk, school Supplies, Diapers, and toys are important products) and Japan with the oldest population would consume many more adults products. A population can be subdivided into six age groups: Pre School, school age, teens, young adults age 25 to 40, middle aged 40 to65 and older adults aged 65 and above. For marketers the most populous group shapes the marketing environment. ETHNIC AND OTHER GROUPS: In Japan, every one is Japanese whereas in America people come from all nations.

Ethnic groups have certain want, buying habits. Several companies have directed their productions and promotion to one ore more of these groups. Diversity goes beyond ethnic and racial market. More than 50 Millions American are disable and they constitute the market for home delivery companies. EDUCATIONAL GROUPS: The population in any society falls into five educational groups, illiterate, high school dropouts, high school diplomas, college degrees, and professional degrees USA has one of the highest rate of college graduates in its population, around 36% which spells a high demand for quality books, magazines, travel and high supply of skills. House Hold Patterns. The traditional house hold consists of Husband, wife, children and grand parents. Joint family system. House holds trends are changing and so the distinctive need and buying habits.( small families need small apartments, appliances, furniture, and furnishing. Marketer must consider the needs of non traditional house holds

GEOGRAPHICAL SHIFT IN POPULATION:

Migratory movement between and within the countries. From rural to urban areas. The urban areas account for the sale of expensive items like perfumes, luxury cars, expensive furniture, jewelry etc The rural area leads to more casual life, greater neighbor interaction, buy vans, workshop equipment, outdoor furniture, etc.

Other Major Macro Environment

Economic Environment Social Cultural Environment Natural Environment Technological Environment Political and Legal Environment

Economic Environment
Markets require people with purchasing power. The Marketer must pay special attention to the factors and trends affecting the Purchasing power, The available purchasing power depends upon the following. Income Distribution Saving, Debt and Credit Availability Outsourcing and Free Trade
Income Distribution: Nations Vary in income distribution and industrial Structure:

There are four types of industrial structure

> Subsistence economies (few opportunities) Raw Material Exporting Economies (Middle Eastern Countries with good opportunities for supplies, luxury goods Industrializing Economies: India, Egypt, Philippines where demand for new types of goods because of emergence of new middle class. Industrial Economies: Rich markets for all sorts of goods.

INCOME DISTRIBUTION (CONTINUED)

1)Very Low Income

2)Mostly Low Incomes 3)Very Low very High Incomes 4)Low, Medium, high incomes 5)Mostly Medium Incomes. Example: Lamborghinis in Portugal USA: 65% growth in income of top 5% and only 11% growth in mostly medium incomes group

SAVINGS, DEBT AND CREDIT AVAILABILITY.

Consumers expenditures are affected by Savings, Debt and Credit availability. A High debt to income ratio slows down the expenditures on long term fixed investment. High rates of profits offered on savings also reduces the quantum of expenditures

Outsourcing and Free Trade

An important economic issue is the migration of manufacturers and service jobs offshore Outsourcing has become a competitive necessity. But on the cost of the unemployment of domestic workers.

Social Cultural Environment.

Purchasing power is directed towards certain goods and services according to the tastes and preferences. Society shapes the norms, values and beliefs which affect the preferences and tastes. People unconsciously absorb the world view that defines their relationship to themselves, to others, to organizations, to society, to nature and to universe. Details on next slide. Views of Themselves: People vary in the relative emphasis they place on self-gratification. Marketer must consider that people think about themselves differently. View of others: Concern about homeless , crimes, victims, social needs, Hunger for lasting relationship, These things attract marketers to bring the products and services accordingly. Views of Organization:- People differ in attitude towards corporation, agencies and trade unions. Organizational loyalty also different from person to person. Some people think the job as source of satisfaction and also as required chore to earn money. Views of society:-People vary in their attitude towards society. Some make it (makers) some take what they can from it (takers) and some want to change it (changers), some are looking for some thing deeper (seeker), and some want to leave it (escaper) Views of nature: People differ their attitude toward nature. Some feel subjugated, some feel in harmony with it and some seek mastery over it. The man has got the mastery over nature through technology but growing concern is developing about the natures fragility that the nature can be destroyed by human mastery. This has given an increased trend to hiking, boating and camping etc.

Views of the Universe: People vary in their beliefs about the origin of the universe and their place in it. There is world wide rise in religious fundamentalism.

Social Cultural Environment. Characteristics

High persistence of core cultural values:

Core beliefs are passed on from parents to children and reinforced by institutions like, school, mosques, businesses and government. These are less open to change. Secondary beliefs are more open to change. (Marriage is core belief and people also believe in to marry in early age , this is secondary belief.

Existence of sub cultures. Each society contains subcultures The groups with shared values emerging from their special life experiences or circumstances. Marketers can chose different subcultures as target markets.
SHIFTS OF SECONDARY CULTURAL VALUES THROUGH TIME Core values and beliefs persists but some time cultural swings do take place. The young generation is greatly influenced by the styles and activities of sports, show biz heroes.

NATURAL ENVIRONMENT.
Marketers need to be aware of the threats and opportunities associated with four trends in the natural environment The shortage of raw material Increased energy costs The increased cost of energy Increased pollution level Changing role of governments.

The shortage of raw material:

The earth raw material consists of :>Infinite Resources: Air and Water. Finite Renewable Resources: Forests and Foods must be used wisely. Finite Nonrenewable resources: Oil, Coal, gold, silver and other precious minerals.

INCREASED ENERGY COSTS:

The continuous usage and depletion of non renewable resources have caused a serious price shoot up. The companies and countries are looking for alternative energy resources. ANTI POLLUTION PRESSURES:- The concern for environmental pollution is increasing. This is affecting many industries responsible for major pollutions. Research is being made in pollution control solutions.

Changing role of Government.

Government vary in their concern for neat and clean environment. Many poor countries are doing little about environmental pollution due to lack of resources or political will.

TECHNOLOGICAL ENVIRONMENT.
Every new technology is creative destructor. The economy growth is affected by the change in technology.

The marketer should consider the following trends in technology.

ACCELERATING PACE OF CHANGE THE OPPORTUNITIES FOR INNOVATION VARYING R&D BUDGETS INCREASED REGULATIONS.

Accelerating Pace of Change:- The time between new ideas and implementation is diminishing. Many common products of today were not available few years back and these are being replaced with new things every day month, and year UNLIMITED OPPORTUNITES FOR INNOVATION:- Besides bringing the new products the scientists are working on fantasy like flying cars, space colonies and three dimensional T.Vs VARYING R&D BUDGETS:- The Growing expenditures on R&D has affected the profitability of the organizations. The research directed towards major breakthroughs is being done by consortiums of companies rather by single company. INCREASED REGULATION OF TECHNOLOGICAL CHANGE. Marketers must be aware of the regulations when proposing, developing, and launching new products.

POLITICAL LEGAL ENVIRONMENT.

Marketing decisions are greatly affected by developments in the political and legal environment. These are composed of laws, government agencies and pressure groups that influence various organizations and individuals. Some times these laws also create business (mandatory recycling) Two major trends deal with the increase in business legislation and the growth of special interest groups

INCREASE IN BUSINESS LEGISLATION

Business legislation has three purposes. To protect companies from unhealthy competition. To protect consumers from unhealthy business practices. To protect the interests of the society from un bridled business behavior.

GROWTH OF SPECIAL INTEREST GROUPS.

The number and power of special interest groups has increased over the years The political parties, governments and business executives to pay more attention to consumers rights, womens rights, senior citizens rights. The companies are establishing public relation department to solve this issue.