Chapter 3

Scanning the Marketing environment,

forecasting demand, and conducting
Marketing

Marketing Management
Course Instructor : Hadiqa Riaz
Business Studies Department, BUKC
1
Collecting Information & Forecasting
Demand
• Customer Insights – Fresh understandings of customers and the marketplace derived from
marketing information that become the basis for creating customer value and relationships.
• The real value of marketing information lies in how it is used- in the customer insights that it
provides.
• Now companies have created customer insight teams whose job it is to develop actionable
insights from marketing information and work strategically with marketing decision makers to
apply those insights.
• The teams continually evaluate new methods for uncovering consumer truths to predict market
behavior.
Collecting Information & Forecasting
Demand
• To create value for customers and build meaningful relationships with them, marketers must
first gain fresh, deep insights into what customers need and want. Such customer insights come
from good marketing information. Companies use these customer insights to develop a
competitive advantage.
• Customer needs and buying motives are often anything but obvious- consumers themselves
usually can’t tell you exactly what they need and why they buy.
Collecting Information & Forecasting
Demand
A marketing information system (MIS) consists of people and procedures dedicated to
assessing information needs, developing the needed information and helping decisionmakers use
the information to generate and validate customer and market insights.
• It interacts with the marketing environment to develop needed information through internal
company databases, marketing intelligence activities and marketing research.
• MIS balances information users would like to have vs. what they need and what is feasible to
offer.
• Monitor the marketing environment to provide information important to better understand
customers and make decisions.
Collecting Information & Forecasting
Demand
A marketing information system (MIS) consists of three components:
1. an internal records system, which includes information about the order-to-payment cycle and
sales information systems.
2. a marketing intelligence system, a set of procedures to obtain everyday information about the
marketing environment.
3. a marketing research system that allows for the systematic design, collection, analysis, and
reporting of data and findings relevant to a specific marketing situation.
Collecting Information & Forecasting
Demand
INTERNAL RECORDS : Internal reports of orders, sales, prices, costs, inventory levels,
receivables and payables
Key Components
1. Order-to-payment Cycle- 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
2. Sales Information Systems- Sales information systems provide managers with up-to- date
information on the current sales of individual products.
3. Database- Database store and organize information that can be retrieved based on a few
criteria such as purchase history, product preferences, and can even contain demographic and
psychographic information on customers.
Collecting Information & Forecasting
Demand
MARKETING INTELLIGENCE: The systematic collection and analysis of publicly available
information about consumers, competitors, and developments in the marketing environment. Good
marketing intelligence helps marketers gain insights into how consumers interact with the brand.
Marketing Intelligence & the Internet : here are five places to find competitor’s product
strengths and weaknesses online.
1. Independent customer goods and service review forums
2. Distributor or sales agent feedback sites
3. Combo sites offering customer reviews and expert opinions
4. Customer complaint sites
5. Public blogs
Collecting Information & Forecasting
Demand
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.
• These include things such:
1. Demographic Economic
2. Socio-cultural
3. Natural
4. Technological
5. Political-legal
Collecting Information & Forecasting
Demand
ANALYZING THE MACROENVIRONMENT
Collecting Information & Forecasting
Demand
Demographic Environment: Demography is the study of human populations in terms of size,
density, location, age, sex, race, occupation and other statistics. Marketers are keenly interested in
studying the demography ethnic mix, educational level and standard of living of different cities,
regions and nations because changes in demographic characteristics have a bearing on the way
people live, spend their money and consume.
The Changing Age Structure of the Population:
The Baby Boomers
Generation X
Generation Y
Generation Z
Collecting Information & Forecasting
Demand
Economic Environment: It consist of factors that affect consumer purchasing power and
spending patterns. The Economic Environment can offer both opportunities and threats. The
economic system is a very important determinant of the scope of private business and is therefore
a very important external constraint on business.
Natural Environment: The physical environment or natural environment involves the natural
resources that are needed as inputs by marketers or those that are affected by marketing activities.
Now companies are developing environmentally sustainable strategies in an effort to create a
world economy that the planet can support indefinitely.
Collecting Information & Forecasting
Demand
The Technological Environment: Forces that create new technologies, creating new products
and market opportunities. It is perhaps the most dramatic force now facing our destiny.
Technological discoveries and developments create opportunities and threats in the market. The
marketer should watch the trends in technology. Technology has brought innumerable changes in
human lives, be it in the field of science, medicine, entertainment, communication, and travel or
office equipment.
Disney is taking RFID technology to new levels with its cool Magicband RFID wristband.
Smart Ag, USA based company, has announced its driverless tractor technology in the form
of “AutoCart” software. Apparently this software will fully automate a grain cart tractor.
Collecting Information & Forecasting
Demand
Political and Social Environment: Marketing decisions are strongly affected by developments
in the political environment. The political environment consists of laws, government agencies
and pressure groups that influence or limit various organizations and individuals in a given
society. Some Governments prohibit the marketing of certain products. In most nations,
promotional activities are subject to various types of controls. System works best with at least
some regulations. But beyond regulation, most companies want to be socially responsible.
Socially Responsible Behavior: Companies encourage their managers to look beyond what the
regulatory system allows and simply “do the right thing”. These socially responsible firms
actively seek out ways to protect the long run interests of their consumers and the environment.
Collecting Information & Forecasting
Demand
 Sociocultural Environment: The Sociocultural Environment impacts consumption trends and
behavior, including: views of ourselves, others, organizations, society, nature and of the universe.
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.
Collecting Information & Forecasting
Demand
 FORECASTING AND DEMAND MEASUREMENT: Understanding a market potential
involves more than just research and analysis.
• Companies must also determine market size, growth, and profit potential.
• Sales forecasts are used by finance to raise cash for investment and operations, by
manufacturing to establish capacity and output, by purchasing to acquire the right amount of
supplies, by human resources to hire the needed workers.
Measures of Market Demand:
Potential market: Sufficient interest in market offer (becomes a market if sufficient income and
access)
Available market: Interest, income and access to a particular offer.
Qualified available market: Interest, income, access and qualifications for the market offer.
Conducting Marketing Research

Marketing Research: Systematic design, collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization.

-Nielsen Media Research attaches people meters to television sets in selected homes to record
who watches which programs. Retailers use checkout scanners to record shoppers’ purchases.
Other marketers use mobile phone GPS technologies to track consumer movements in and near
their stores. Still other researchers apply neuromarketing, using EEG and MRI technologies to
track brain electrical activity to learn how consumers feel and respond.
Conducting Marketing Research
Conducting Marketing Research
The Marketing Research Process

Define the Problem, the Decision Alternatives, and the Research Objectives: Manager understands
the decision for which info is needed and the researcher understands how to obtain the info.
Objectives
Exploratory Research – Gather preliminary information to define the problem and suggest
hypotheses.
Descriptive Research – Describe things such as market potential or demographics.
Causal Research – Test hypotheses about cause-and-effect relationships.
Conducting Marketing Research
The Marketing Research Process

Develop the Research Plan: Outlines sources of existing data and the methods of obtaining new
data.
• Objectives are translated into specific information needs.
• i.e. Demographics, economic, lifestyle characteristics of customers, usage patterns of broader
population, retailer reactions, forecasts of sales.
Written Proposal – Present the research plan by covering management problems addressed,
research objectives, info to be obtained, and how results will help management decision making,
as well as estimated research costs.
Conducting Marketing Research
The Marketing Research Process
Calls for gathering data
• Secondary Data – Info that exists somewhere, collected for another purpose.
• Primary Data – Info collected for the specific purpose at hand.
Research approaches for gathering primary data include observation, surveys, and experiments,
behavioral data and focus groups.
Observational Research – Gathering primary data by observing relevant people, actions, and
situations.
• Best for exploratory research.
Conducting Marketing Research
The Marketing Research Process
• Marketers observe consumer behaviour – what they are doing, saying.
• Obtains info people are unwilling to provide, such as feelings and attitudes.
• Difficult to interpret.
Ethnographic Research – Sending trained observers to watch and interact with consumers in
their “Natural Environments.”
Netnography Research – Observe consumers naturally on the internet.
Conducting Marketing Research
The Marketing Research Process
Survey Research – Gathering primary data by asking people questions about their knowledge,
attitudes preferences, and buying behavior.
• Best for descriptive research.
• Flexible, can obtain many kinds of information in many different situations.
• However, people may be unwilling to respond for private info or give truthful answers.
Experimental Research – Gathering primary data by selecting matched groups of subjects,
giving them different treatments, controlling related factors, and checking for differences in
group responses.
• Best for causal information, as it tries to explain cause-and-effect relationships
Conducting Marketing Research
The Marketing Research Process
Behavioral Targeting:
Information about what consumers do while trolling the vast digital expanse—what searches they
make, the online and mobile sites they visit, how they shop, and what they buy—is pure gold to
marketers.
And today’s marketers are busy mining that gold. Then, in a practice called behavioral targeting,
marketers use the online data to target ads and offers to specific consumers.
Social Targeting: Whereas behavioral targeting tracks consumer movements across online sites,
social targeting also mines individual online social connections and conversations from social
networking sites.
Conducting Marketing Research
The Marketing Research Process
Sampling Plan: A sample is a segment of the population selected for marketing research to
represent the population as a whole.
The sample should be representative so that the researcher can make accurate estimates of the
thoughts and behaviors of the larger population.
Large samples give more reliable results than small samples. However, larger samples usually
cost more, and it is not necessary to sample the entire target market or even a large portion to get
reliable results.
Types Of Sample:
1. Probability Sample
2. Non-Probability Sample
Conducting Marketing Research
The Marketing Research Process
Research Instrument: In collecting primary data, marketing researchers have a choice of two
main research instruments: questionnaires and mechanical devices.
Questionnaires:
A questionnaire is a research instrument that consists of a set of questions or other types of
prompts that aims to collect information from a respondent. A research questionnaire is typically
a mix of close-ended questions and open-ended questions.
Mechanical Instrument:
Some marketing research techniques collect information as research participants complete a task
or go through a process. The research instruments in these research activities may involve some
type of mechanical device and/or activity for data collection.
Conducting Marketing Research
The Marketing Research Process
Collect the Information:
• The data collection phase of marketing research is generally the most expensive and error-
prone.
• Some respondents will be away from home, offline, or otherwise inaccessible.
• They must be contacted again or replaced.
• One of the biggest obstacles to collecting data is the need to achieve consistency.
Conducting Marketing Research
The Marketing Research Process
Analyse the Information:
• Extract findings by tabulating the data and developing summary measures
• Test hypotheses and theories,
• Applying sensitivity analysis to test assumptions/strength of conclusions
Present the Findings:
• Transform raw data into insight
• Present information in clear and compelling fashion
Make the Decision: Research should guide decisions, not be used to support decisions already
made.