Chapter 3 Gathering Information and Measuring Market Demand by Ung Veasna, DBA candidate

Kotler on Marketing Marketing is becoming a battle based more on information than on sales power.

Why Research? The primary job of marketing managers is the design and execution of marketing programme Before programmes can be designed, the market situation must be understood In order to understand the market, the manager must have information Before the marketing manager can have information, there must be data

Interpreting the information Determining what action should be taken Managers face three important problems in making more effective marketing decisions: Obtaining the information they need for the flood of data that is available. Interpreting the information Determining what action should be taken

The Importance of Information Companies need information about their: Marketing environment Competition Customer needs Managers don’t need more information, they need better information.

The Importance of Information Why Information Is Needed Marketing Environment Strategic Planning Customer Needs Competition

Research and Intelligence provide information necessary to clarify the “unknown.”

The Benefit of Research Discovering useful information about your customers, competition and environment Reduces risk and uncertainty when making decisions The “eyes” and “ears” of the corporation Helps you get close to your customers

What is a Marketing Information System (MIS)? A MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely, and accurate information to marketing decision makers. The MIS helps managers to: Assess Information Needs, Develop Needed Information, Distribute Information.

The MIS and DATA DATA INTERNAL EXTERNAL PRIMARY SECONDARY Data obtained from sources within the firm EXTERNAL Data obtained from sources outside of the firm DATA PRIMARY Data collected for the first time SECONDARY Pre-existing data

Marketing Information System Components Internal Records Marketing Intelligence Marketing Decision Support Systems Marketing Research

Internal Record Systems The Order-to-Payment Cycle Sales Information Systems Databases, Data Warehouses And Data-Mining Customer records Financial statements Inventory records Research reports Credit data

The Marketing Intelligence System A Marketing Intelligence System is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. Intelligence: ongoing information

Marketing Decision Support System Marketing Decision Support System (MDSS) A computer program - an interface - between the manager and the MIS Makes it easy to obtain needed information Makes it easy to analyse the information May involve marketing models - to show the relationships among different marketing variables

See text for complete table Table 3-1: Quantitative Tools Used in Marketing Decision Support Systems Statistical Tools 1. Multiple regression: A statistical technique for estimating a “best fitting” equation showing how the value of a dependent variable varies with changing values in a number of independent variables. Example: A company can estimate how unit sales are influenced by changes in the level of company advertising expenditures, sales force size, and price. 2. Discriminant analysis: A statistical technique for classifying an object or persons into two or more categories. Example: A large retail chain store can determine the variables that discriminate between successful and unsuccessful store locations. 3. Factor analysis: A statistical technique used to determine the few underlying dimensions of a larger set of intercorrelated variables. Example: A broadcast network can reduce a large set of TV programs down to a small set of basic program types. See text for complete table

Marketing Research is : a collection, processing and analysis of information on topics relevant to marketing. It begins with problem definition and ends with a reports and action recommendations (Lehmann, Gupta and Steckel 1998)

A Model of Marketing Research Problem Definition Research Design Secondary Data Primary Data Qualitative Quantitative Data Analysis Create Conclusions & Present

Figure 3-2: The Marketing Research Process

The Marketing Research Process Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives Step 2: Develop the Research Plan Data Sources Research Approaches Observational research Focus group research Survey research Behavioral data Experimental research

Gathering Information Secondary Both Must Be: Relevant Accurate Current Impartial Primary Information That Already Exists Somewhere. + Obtained More Quickly, Lower Cost. - Might Not be Usable Data. Information Collected for the Specific Purpose at Hand.

Observational Research Experimental Research Planning Primary Data Collection Research Approaches Observational Research Gathering data by observing people, actions and situations (Exploratory) Survey Research Asking individuals about attitudes, preferences or buying behaviors (Descriptive) Experimental Research Using groups of people to determine cause-and-effect relationships (Causal)

Sampling Plan Sampling unit Sample size Sampling procedure

Sample representative Sampling Plans Who is to be surveyed? (What Sampling Unit?) How many should be How should the sample be chosen? Probability or Non-probability sampling? Sample representative segment of the population

Research Instruments Mechanical Devices People Meters Supermarket Scanners Eye Cameras Questionnaire What questions to ask? Form of each question? Closed-end Open-end Wording? Ordering?

Table 5-2: Types of Questions 1_____ 2 _____ 3_____ 4_____ 5_____ Small airlines generally give better service than large ones. Strongly Disagree Neither agree Agree Strongly disagree nor disagree agree A statement with which the respondent shows the amount of agreement/ disagreement. Likert scale An organized tour group Spouse and children Business associates/friends/relatives Spouse Children only No one With whom are you traveling on this flight? A question with three or more answers. Multiple Choice In arranging this trip, did you personally phone American? Yes No A question with two possible answers. Dichotomous Example Description Name A. Closed-end Questions

Step 3. Implementing the Research Plan Collecting the Data Processing the Analyzing the Research Plan

Step 1. Interpret the Findings Step 3. Report to Management Step 4. Interpreting & Reporting Findings Researcher Should Present Important Findings that are Useful in the Major Decisions Faced by Management. Step 1. Interpret the Findings Step 2. Draw Conclusions Step 3. Report to Management

Market Demand Definition Market demand for a product 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

Forecasting and Demand Measurement The Measures of Market Demand Figure 3-3: Ninety Types of Demand Measurement (6X5X3)

Sales Forecasting Methods Executive Opinion Customer Survey Analysis of market factors Sales Force Composite Trend Projection

Estimating Current Demand Total Market Potential 100 mil buyers X 3 books X $10/book Area Market Potential Above estimate by city,state,nation Industry Sales Market Build-up Method Market Share % of industry sales you expect to do.