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Chapter Two

Analyzing Marketing
Opportunities

PART 1
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Analyze Market
Opportunities
 Information measures and
measures of market demand.

 Marketing information system and

environmental analysis.

 Analyze customer and market

behavior of buyers.

 Analyze the market and buying

behavior of business organizations.

 Handle competition.

 Identify market segments and

choose the target market.
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MARKETING
INFORMATION SYSTEM
AND ENVIRONMENTAL
ANALYSIS
 Marketing decisions can be described as
art and science.
 Designing a marketing plan involves
decision-making which requires
marketers to have complete and current
information about what effects their
business.
 A marketing information system can help
marketers assess information develop
the needed information and distribute
that information in a timely manners.
 System developers must examine what
managers do and what information do
they need for decision making.
 Marketing intelligence system helps
marketers to obtain important
information about the environmental
that influence their business.
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What is Marketing
Information System (MIS)
 As a system that consist of people,
equipment and procedure to gather, sort,
analyze, evaluate and distribute needed,
timely and accurate information to
marketing decision makers.
 MIS is built based on 3 main sources:
internal company records, marketing
intelligence activities and marketing
research.
 MIS bring together all data into logical
body of information.
 Marketers need marketing information
system to carry out analysis, planning
implementation and control
responsibilities. This information must be
accurate and up to date for effective
decision making.
 MIS is part of a computer system and
manual system is time consuming and
inflexible.
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Assessing Information
Needs
 Managers must be aware of the kind of
information needed. Often managers
don’t know the kind of information they
need and end up having only information
they would like to have.
 Most of the time, managers don’t use all
the information that is needed and are
available due to time factors.
 Example: A manager of a company wish
to introduce new product. Among the
information needed are the competitor’s
offers in the current market and volume
of sales. However the manager also need
the consumer reactions to the new
product line through the competitor’s
performance. This can be used as a
guideline to the new product.
 Since the cost of gathering, processing,
storing and distributing information
increase rapidly, the MIS should help the
company choose information that is
valuable and worthwhile.
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Developing Information
Developing the needed information can be
done through the four elements of MIS:
 Internal Record System
 Marketing Intelligence
 Marketing Research
 Information Analysis
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Internal Records
System
 Records are created from data that
provide information to marketers to
make decision. However what the
difference between data and
information?
 Data are facts and statistics collected on
regular basis which normally store in a
system that forms database.
 Information can be define as data
presented in a way that is useful for
making decisions.
 The internal records that are immediate
value to marketing decisions are such as
order received, stockholdings and sales
invoices. These data although it look
simple, it is capable of generating a great
deal of information.
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Internal Records
System
 Some main sources of the internal
records are:
 Order-to-payment cycle
 Sales information system
 Database, data warehouse and data
mining
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Marketing
Intelligence System
 A marketing intelligence system is a set
of procedures and data sources used by
marketing managers to sift information
from the environment that they can use
in their decision making.
 It is a process of scanning the economics
and business environment which can be
undertaken in variety ways such
through newspaper, magazines, business
reports etc.
 There are several types of market
intelligence scanning:
 Unfocused scanning
 Semi-focused scanning
 Informal search
 Formal search
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Marketing
Intelligence System
 Organization can take several steps to
improve the quality of market
intelligence:
 Train and motivate the sales force
 Motivate distributors, retailers and
intermediaries
 Establish an external network
 Set up customer advisory panel
 Take advantage of government data
resources
 Purchase information from external
suppliers
 Use online customer feedback systems to
collect competitive intelligence
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Information Analysis
 Interpret information in order to give
direction to decision.
 Information analysis is a collection of
analytical models that will help
marketers make better decisions.
 Marketing analysis have developed
numerous models to help marketers
make better marketing decisions such as
design sales territories, sales call plans,
select sites for retails outlet etc.
 Take Nike for example:
 Internal database – Nike would look at
their past’s year sales of running shoes.
 Marketing intelligence – Nike would
attend trade shows, read industry trade
journals and talk to retailers to determine
changes in the market place
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Information Analysis
 Marketing research – Nike would conduct
surveys or run experiments to determine
customer demands and interests. Nike
might use email, telephone calls, interview
etc to gather data from its customers.
 Information analysis – Nike would
analyse sales or retail data from its
database and mine the data to see how
factors such as price, colour or material
affect the sale.
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Distributing And Using

Marketing Information
 Marketing information obtained from
marketing research have no value until
it is used to make better marketing
decision.
 The marketing information system must
be accessible to managers and others
decision makers at the right time.
 Many firm use intranet to provide ready
access information such as research
data, stored reports, shared work
documents, contact information for
employees and other stakeholders.
 Modern technology has allowed
managers to access information from
virtually anywhere, analyse it using
statistical software, prepare reports and
presentations and communicate directly
with others on the network.
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Marketing
Environmental Force
 Marketing environmental forces
involves 6 major macro-environment
forces: demographic, economic,
social-cultural, natural, technological
and political-legal.
 In managing the challenges of the
forces, marketers need to know how to
conduct environmental scanning.
 Environmental Scanning: Is the
process of acquiring information to
identify and interpret the potential
trends of the various marketing
macro-environmental
 However not all needs are worth
investing in due to short terms
demands.
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Marketing
Environmental Force
 This can be categorized into trend,
fad and megatrend:
 Trend: is a duration of sequence of
event that have momentum and
durability.
 Fad: is an unpredictable and short-
lived direction of sequence of events.
 Megatrend: is the probable future or is
what we know with great confidence
about the future.
 In identifying changes in the market,
that includes development of fads,
trends and megatrends, marketers
need to scan macro-environmental
forces.
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Demographic
Environment
 Demographic trends are highly reliable
for the short and intermediate run.
 The factor are related to:
 Worldwide population growth
 Population age mix
 Ethnic and other markets
 Educational group
 Household patterns
 Geographical shift in population
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Economic
Environment
 The purchasing power of population
depends on economy parameters like:
 Income distribution
 Savings, debt and credit availability
 Outsourcing and free trade

 Marketers must have the information on

the factors affecting purchasing power
due to its impact on business.
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Social-cultural
Environment
 Society forms beliefs, values and norms
that are largely adopted by population
which reflect it taste and preferences.
 Culture outlines the ways of life of
people of a society according to
sociology.
 Marketers must know the implications
of any changes with regards to social
and cultural and absorb worldviews.
 The factors for social-cultural:
 High persistence of core cultural value
 Existence of subcultures
 Shift of secondary cultural values through
time
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Natural Environment

 There are four important trends in the

natural environment that need attention
from organizations:
 Shortage of raw materials
 Increased energy cost
 Anti-pollution pressures
 Changing role of government

 The environment threats have been a

major global concern such as air and
water pollution.
 Green environment and products have a
great demand in recent times.
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Technological
Environment
 The economy’s growth rate is affected
by the new technologies are discovered
and adopted by the population.
 The role of the government is to assure
public safe technologies.
 New technologies also create major long-
run consequences that are not always
foreseeable.
 The factors of technological
environment:
 Accelerating pace of change
 Unlimited opportunities for innovation
 Varying R&D budgets
 Increased regulation of technological
change
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Political-Legal
Environment
 Firms are strongly affected by the
political and legal environment which
involves laws, government agencies and
pressure groups
 The factors of political-legal
environment:
 Increase in business legislation
 Growth of special interest groups
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CONSUMER MARKET
ANALYSIS
 Firm need to investigate what, where,
when and how consumers make
purchases.
 Firm can better predict how consumers
will react to their marketing strategies.
 Firm must have an understanding of how
consumers and organizations make
decision in purchasing product, as well as
the roles they play in buying decision.
 Firm must analyse why consumer make
the purchase that they make, what
factors influence their purchases, and
what factor cause change in their
opinion.
 Consumer behaviour is influenced by
cultural, social and personal factors
which marketers need to further
understand.
 Psychological aspects also affect
consumer behaviour through four main
influences: motivation, perception,
learning and memory.
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Understanding Consumer
Behaviour
 Buying behaviour is define as the
decision processes and acts of people
involved in buying and using product.
 Consumer buying behaviour refers to the
buying behaviour of the ultimate
consumer.
 Stimulus Response Model: This is a model
that well-developed and tested in
understanding buyer behaviour.
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Factor Influencing
Consumer Buying
Behaviour
 A consumer’s buying behaviour is
influenced by consumer characteristics
and consumer psychology.
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Consumer Characteristics

 A consumer’s buying behaviour is

influenced by cultural, social and
personal factors.
 Each of these factors, affects consumers’
behaviour in many ways depends on
individual backgrounds and environment.
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Cultural Factors

Consumer behaviour is greatly influenced by

cultural factors such as buyer culture,
subculture and social
 Culture: is a set of basic values
perceptions, wants and behaviour
learned by a member of society from
family and other important institutions.
 Subculture: Each culture contains
different subcultures such as religions,
nationalities, geographic regions and
racial groups.
 Social Class: is relatively homogenous
and enduring divisions in a society that
are hierarchically ordered and whose
members share similar values, interests
and behaviour.
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Social Factors

A consumer’s behaviour is also influenced

by social factors such as reference groups,
family, roles and status.
 Reference Groups: Expose an individual
to new behaviour and lifestyles,
influencing attitudes and self-concept.
 Family: Can strongly influence buyer
behaviour in terms of brand or product
choice.
 Roles and Status: A role consist of the
activities people are expected to perform
according to the persons around them.
Each role carries a status. Marketers
must be aware of the status symbol of
each product.
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Personal Factors

A buyer decision also are influenced by

personal characteristics such as the buyer’s
age and life-cycle stage, occupation,
economics, situation, lifestyle and
personality and self-concept.
 Age and life-cycle stage: Over lifetimes,
people demand different goods and
services they buy. For instance car which
highly depending on age factor.
 Occupation and economic situation: A
person’s occupation affects the goods and
services he/she buys and used. For
instance chef would buy kitchen utensils.
 Lifestyle and value: Lifestyle is a person’s
pattern of living as expressed in his or her
psychographics.
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Personal Factors

 Personality and self-concept: Personality

refers to the unique psychological
characteristics that lead to relatively
consistent and lasting responses to one’s
own environment.
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Psychological
Factors
A person’s buying choices are influenced by
four major psychological factors;
motivations, perception, belief and attitudes.
 Motivations: Individual consumers have
various needs such as psychological
needs, biological needs, social needs.
 Perception: Is the process by which
people select, organize and interpret
information to form a meaningful
picture of the world.
 Learning: Describe changes in an
individual’s behaviour arising from
experience.
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Psychological
Factors
 Belief and attitudes: Belief is a
descriptive thought that a person has
about something. While attitudes
describe a person’s relatively consistent
evaluations, feelings and tendencies
towards an object or ideas.
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Consumer Psychology

 Marketers’ task is to understand what

happens in the consumer’s consciousness
between the arrival of the outside
marketing stimuli and the ultimate
purchase decision.
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Freudian Motivation
Theory
 According to Sigmund Freud,
psychological forces shaping people’s
behaviour are largely unconscious and
that a person cannot fully understand
his/her own motivations.
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Maslow’s Hierarchy
of Needs
 Abraham Maslow sought to explain why
people are driven by particular needs at
particular times.
 Maslow’s answer is that human needs
are arranged in a hierarchy from the
most pressing to the least pressing.
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Herzberg ‘s
Motivation Theory
 Frederick Herzberg proposed a two-
factor theory that distinguished
dissatisfiers (factors that cause
dissatisfaction) from satisfier (factors
that cause satisfaction).
 The absence of dissatisfiers in not
enough: satisfiers must be present to
motivate a purchase.
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Theory of Perception

 Perception is the process by which an

individual selects, organizes and
interprets information inputs to create a
meaningful picture of the world.
 Perception depends on the physical
stimuli as well as the stimuli’s relation to
surrounding field and on conditions
within the individual.
 Perception normally occurs in four main
conditions: selective attention, selective
distortion, selective retention, subliminal
perception.
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Learning

 Learning involves changes in an

individual’s behaviour arising from
experience.
 Learning occurs faster and is retained
longer when more reinforcement is
received during learning.
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Memory

All information and experiences individuals

encounters as they go through life can end
up in their long-term memory.
 Memory processes encoding: refers to
how and where information gets into
memory.
 Memory processes retrieval: refers to
how information gets out of memory.
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The Buying Decision

Process: The 5 stage
model
 These basic psychological process play
an important role in understanding how
consumers actually make their buying
decision.
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BUSINESS MARKET
ANALYSIS
 This section will explore the type of
organizations that make up the business
market, their nature which is distinctive
from the consumer market and the
buying unit which exist in the business
market.
 This section will also discuss the buying
decision process which is more complex
than the consumer’s the factor that
influence business market buying
behaviour and the type of buying found
in business market.
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The Business Buyers

 Who are the business buyers? Business

buyers are sometimes describe as
business-to-business buyers or industrial
buyers or organizational buyers by
various marketing author
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The Nature of the

Business Market and
Consumer Market
 There are main difference between the
nature of the consumer market and
business market.
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Participants in a Business
Buying Process
 The decision-making unit of buying
organization is known as its buying
centre.
 The buying centre incudes all member in
the organization that are involve in
purchase decisions.
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The Business Buying

Decision-Making Process
 There are three main stages in the
business buying decision-making
process.
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Factor Affecting Business

Buyer Behaviour
Just as in consumer buying, the buying
process is affected by several factors. The
influence of the factors differ strongly from
one organization to another.
 Environmental Factors: Business buyers
are greatly affected by current and
expected environmental factors.
 Organizational Factors: Business buying
decisions are affected by the
organizations’ objectives, policies and
procedures, structures and purchasing
system.
 Interpersonal Factors: There are many
people involved in the buying centre and
they tend to influence each member of
the organization. These interactions
involve group and individual force into
buying process.
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Buying Situations

There are types of buying behaviour when

business make their purchases.
 New Purchase
 Straight Rebuy
 Modified Rebuy
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Managing Relationships
for the Business Market
Transactional marketing refers to dealing
between buyers and seller in the business
market, where both parties only buy and sell
product.
 Business Market Relationship in a Value
Chain
 Business Market Relationship for the
Global Market
 Business Market Relationship Through
Technology.