Gathering Information and Scanning the Environment

1. Gathering Information and Scanning the Environment Chapter 3

2. What is a Marketing Information System ? “ It is a system that consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers”

3. What does the MIS consist of ? • Internal company records • Marketing intelligence activities • Marketing Research

4. Internal Records – The Order to Payment Cycle & Sales information system • When sales force, dealers and customers send orders to the firm, the sales dept prepares invoices and sends copies to different departments and the orders and quickly processed • Timely and accurate reports about current sales

5. The Marketing Intelligence System “ It is a set of procedures and sources , a manager uses to obtain everyday information about development in the marketing environment

6. How is it done ?? • Reading books, newspapers and magazines • Talking to customers, suppliers, distributors and company managers

7. How to improve the MIS ?? • Train and motivate sales force to spot a development • Motivate intermediaries • Network externally • Set up a customer advisory panel • Take advtg. of govt. data resources • Purchase information from outside suppliers

8. Analysing the macro-environment • Fad: “ Unpredictable, short lived and without any social, economic and political significance. E.g. Shaktimaan costumes • Trend: Sequence of events that has some momentum and durability E.g. Health awareness – diet and exercise • Megatrend : Large social, economic, political and technological changes that influence us for a longer period. E.g. Indian students going abroad for studies

9. Major Environmental forces • Demographic environment – characteristics of the population – age, gender, income, education and occupation • Economic environment • Socio-cultural environment • Natural environment • Technological environment • Political –Legal environment

10. Conducting Marketing research and Forecasting Demand Chapter : 4

11. What is Marketing Research ? “ It is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company”

12. Types of Marketing Research firms 1. Syndicated service research 2. Custom marketing research 3. Speciality line marketing research

13. The marketing research process Step 1: Define the problem, the decision alternatives and research objectives – what is to be researched and why is it to be researched

14. The marketing research process Step 2: Develop the research plan : • Data sources: a. Secondary data b. Primary data b. Research approaches: a. Observational research b. Focus group research c. Survey research d. Experimental research e. Behavioral research c. Research instruments: a. Questionnaire : open ended/close ended questions b. Qualitative measures – unstructured – shadowing, behavior mapping, consumer journey, story telling, unfocused interview c. Mechanical devices: e.g. tachistoscope

15. The marketing research process Sampling plan: Who is the sample, how large is the sample and what shall be the sampling procedure Contact methods: a. Mail Interview b. Telephonic Interview c. Personal interview d. Online interview

16. The marketing research process Step 3: Collect the information Step 4: Analyze the information Step 5: Present the findings Step 6: Make the decision

17. Marketing Metrics “ It is the set of measures that helps firms to quantify, compare and interpret their marketing performance” It helps managers design marketing programs and assists senior managers to decide financial allocations

18. Types of Marketing Metrics • Sales Analysis • Market share Analysis • Marketing expense to sales Analysis • Financial Analysis

19. Sales analysis It consists of measuring and evaluating actual sales in relation to goals. For this purpose two tools are used a. Sales variance analysis – relative contribution of different factors to a gap in sales performance b. Micro sales analysis : looks at specific territories, products and so on that failed to produce expected sales

20. Market Share analysis It is measured in three ways: • Overall market share: company’s sales expressed as a % of total market sales • Served market share – which is sales expressed as a % of total sales to its served market (served market is all the buyers who are able and willing to buy its product) • Relative market share: Market share in relation to its competitor

21. Marketing Expense to sales analysis It helps managers know that the company is not overspending to achieve sales goal It can have components like • Sales force to sales • Advertising to sales • Sales promotion to sales • Marketing research to sales • Sales administration to sales

22. Financial Analysis • It is used to identify the factors that affect the company’s rate of return on net worth • The return on net worth is the product of two ratios – the company’s return on assets and its financial leverage • Return on assets = net profits/total assets • Financial leverage = total assets/net worth

23. Forecasting demand Measures of demand: • Potential market is set of consumers who have a sufficient level of interest in the market • Available market is the set of consumers who have interest, income and access to a particular market • Target market is the part of available market that the company decides to pursue • Penetrated market is the set of consumers who are buying the company’s product

24. Market demand “ It is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program”

25. Market Demand Market potential Market demand In a specific period Market Minimum Industry marketing expenditure

26. Company Demand “ It is the company’s estimated share of market demand at alternative levels of company marketing effort in a given period” Company sales forecast: It is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment

27. Company Demand Sales quota: It is a sales goal set for a product line, company division or sales representative Sales budget: It is a conservative estimate of the expected volume of sales and is used for making current purchasing, production and cash flow decisions Company sales potential: It is the sales limit approached by company demand as company marketing effort increases relative to that of competitors

28. Estimating current demand Total market potential: Potential number of buyers * Average quantity of purchased by a buyer * The price Area market potential: Market buildup method: It requires identifying all the potential buyers in each market and estimating their potential purchases

29. Estimating future demand • Econometric models • Survey of buyers intentions • Composite of sales force opinions • Expert opinion • Past sales analysis: Time series analysis, exponential smoothing • Market test method