Gathering Information and Scanning the Environment 3 Gathering Information and Scanning the Environment Marketing Management, 13th ed

Chapter Questions What are the components of a modern marketing information system? What are useful internal records? What is involved in a marketing intelligence system? What are the key methods for tracking and identifying opportunities in the macro environment? What are some important macro environment developments? 3-2

What is a Marketing Information System (MIS)? A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. 3-3

Components of the Marketing-Information Systems Internal Data Marketing Intelligence Marketing Science Marketing Research Accounting Records Sales Costs Inventories Cash flows Accounts receivable and payable Observation Sales Force Dealers and distributors Suppliers Executive awareness Outside Data Census Trade association data Trade press Syndicated awareness Analytical Systems Statistical analysis Model building Quantitative Survey research Telephone Mail Personal observation Experiment Qualitative Projective tests Focus groups

Marketing MIS Supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness

Marketing MIS Manufacturing DSS Transaction processing systems Databases of internal data Databases of external data Manufacturing DSS Databases of valid transactions for each TPS Marketing applications databases Transaction processing systems Marketing MIS Business transactions Sales by customer Operational databases Manufacturing ES Sales by salesperson Sales by product Pricing report Total service calls Customer satisfaction

Inputs to Marketing MIS Strategic plan and corporate policies The Transaction Processing Systems External sources: The competition The market

Marketing MIS Subsystems and Outputs Marketing research Product development Promotion and advertising Product pricing

Information Needs Probes What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What special studies do you periodically request? What information would you want that you are not getting now? What are the four most helpful improvements that could be made in the present marketing information system? 3-9

Internal Records & Marketing Intelligence Marketing Managers rely on internal reports of orders ,sales ,prices,cost etc By analyzing this information they can spot important opportunities and problems

The order Payment Cycle Heart of Internal Record System

Internal Records and Marketing Intelligence Order-to-payment cycle—send orders, prepares invoices, transmit copies to various departments, and back-orders out-of-stock items Sales information system—timely and accurate reports on current sales Databases, warehousing, data mining--customer, product, and salesperson and combine data from the different databases. Marketing intelligence system—a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. 3-12

Now Now (days) improved order payment cycle is required Customers favor firms that can promise timely delivery. Order-Pay can also be done online. This process is called as EDI-Electronic Data Interface. E.G., Cisco, Dell, Ebay

Data Mining It is the process of analyzing data from different perspectives and summarizing it into useful information - information that can be used to increase revenue, cuts costs, or both. It allows users to analyze data from many different dimensions or angles, categorize it, and summarize the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases.

Example of Data Mining One Midwest grocery chain used the data mining capacity of Oracle software to analyze local buying patterns. They discovered that when men bought diapers on Thursdays and Saturdays, they also tended to buy beer. Further analysis showed that these shoppers typically did their weekly grocery shopping on Saturdays. On Thursdays, however, they only bought a few items. The retailer concluded that they purchased the beer to have it available for the upcoming weekend. The grocery chain could use this newly discovered information in various ways to increase revenue. For example, they could move the beer display closer to the diaper display. And, they could make sure beer and diapers were sold at full price on Thursdays

Marketing Intelligence System It is a process of acquiring and analyzing information in order to: understand the market; determine the current and future needs and preferences, attitudes and behavior of the market; assess changes in the business environment that may affect the size and nature of the market in the future. A set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment

Steps to Improve Marketing Intelligence Train sales force to scan for new developments (make intelligence gathering important to salespeople) Motivate channel members to share intelligence (hire specialists to gather marketing intelligence—mystery shoppers) Network externally (purchase competitors’ products; attend open houses and trade shows; read competitors’ published reports; etc.) Utilize a customer advisory panel (representative customers or company’s largest customers) Utilize government data sources (U.S. Census data, etc.) Collect customer feedback online (online customer review boards, discussion forums, chat rooms, and blogs) Purchase information (A.C. Nielsen Company and other information sources) 3-17

Secondary Commercial Data Sources Nielsen—tracks sales of consumer package goods and brands, gathered at the point of sale in retail stores of all types (e.g., supermarkets through scanner data, television audiences). MRCA (Medium Resolution Coverage Area)—data on weekly family purchases of consumer products, and home food consumption. Information Resources—supermarket scanner data and data on the impact of supermarket promotions. SAMI/Burke—reports on warehouse withdrawals to food store in selected market areas and supermarket scan data. Simmons—annual reports covering television markets, television markets, sporting goods, and proprietary drugs with demographic data by sex, income, age, and brand preferences. Arbitron—selling data to subscribers. By clicking on the video icon, you can launch a short video clip about Burke’s research process. 3-18

Sources of Competitive Information Independent customer goods and service review forums Distributor or sales agent feedback sites Combination sites offering customer reviews and expert opinions Customer complaint sites Public blogs 3-19

Needs and Trends Fads—short-lived and without social, economic, and political significance. Trends—direction or sequence of events that has some momentum and durability. Megatrends—large social, economic, political, and technological changes 3-20

Trends Shaping the Business Landscape Profound shifts in centers of economic activity (Asia (excluding Japan)—13% of World GDP; Western Europe > 30%) Increases in public-sector activity (aging of population new levels of efficiency and creativity from public sector) Change in consumer landscape (billion new consumers to enter global marketplace in next decade and U.S. Latinos 2015 spending power equivalent to 60% of Chinese consumers. Technological connectivity (change way people live) Scarcity of well-trained talent (33 mm university-educated young professionals in developing countries is more than double the number in developed ones Increase in demand for natural resources (Oil demand projected to grow by 50% in next two decades and water shortages may constraint growth in many countries) Emergence of new global industry structures (barbell-like structure—few large, narrow middle, lot of smaller companies) Ubiquitous access to information (open source approach) Management shifts from art to science (algorithmic decision-making techniques and sophisticated software) Increase in scrutiny of big business practices (be able to argue and demonstrate intellectual, social, and economic case for business) 3-21

Environmental Forces Demographic Economic Socio-cultural Natural Technological Political-legal 3-22

What is Demographic environment? The demographic environment includes the study of human populations in terms of: size, density, location, age, sex, race, occupation, other statistical information.

Population and Demographics Population growth Population age mix Ethnic markets Educational groups Household patterns Geographical shifts 3-24

World Population Growth World population shows explosive growth, in 2000 it was 6.1 billon and it is projected to exceed 7.9 billon by 2025 Explosive population growth has major implication for business. For Example--GOLDMAN SCAHS report has projected that India in next 30 year might grow up to 3rd largest economy in world

Population Age Mix In population age mix marketers are increasingly recognizing the potential of youth segment (marketers are focused on youth ) For example--Titan the well-known watch marketer Introduced a range of Sunglasses which is call “Eye Gear” under the brand Fast Track

Literacy Of Population Literacy of Population is mainly divided into: A) Literate B) illiterate C)Educated D)Uneducated

Household Patterns

ECONOMIC ENVIRONMENT Market requires purchasing power as well as people. Purchasing power depends upon current income, prices, debt, credit, saving etc. Marketers must pay careful attention to trends affecting purchasing power.

INDIAN SOFTWARE GIANTS WARY OF ECONOMIC SLOWDOWN 20 JAN 2008 (Economic times)

INCOME DISTRIBUTION Macroeconomic indicators provides overall health of economy as well as direction of economic growth. Marketers needs to understand the distribution of income to make more meaningful conclusions.

Types of Industrial Structures economies Industrializing economies Raw-material- exporting economies Subsistence economies

India – An Industrializing Economy

Saudi Arabia – A Raw-Material Exporting Economy

SOCIAL –CULTURAL ENVIRONMENT Purchasing power is directed towards certain goods &services. People absorb, unconsciously a worldview that defines relationship to organization, to themselves, to society, to nature, and to universe.

Microsoft steps up on search R&D IN EUROPE This is because maximum usage is in European countries.

Social-Cultural Environment Views of themselves (pleasure seeker, self-realization, etc.) Views of others (concern about homeless, crime, victims, social surrogates—television, home video games, etc.) Views of organizations (company downsizing and corporate accounting scandals, etc.) Views of society (defend society—preservers; run it—makers; can get from—takers; change it—changers; looking for something deeper—seekers; leave it--escapers Views of nature (nature’s fragility and finiteness) Views of the universe (religious, etc.) 3-37

Most Popular American Leisure Activities Reading TV Watching Spending time with family Going to movies Fishing Computer activities Gardening Renting movies Walking Exercise Listening to music 3-38

Natural Environment Shortage of raw materials Increased energy costs Anti-pollution pressures Governmental protections

NATURAL ENVIRONMENT Deterioration of natural environment is major concern. Cities like Mumbai, Bangalore etc. reached dangerous levels. Some regulation hit industries very hard--Steel industry

Microsoft’s environmental contribution Microsoft announces a new green wireless mouse. This is environment friendly because it uses six month long battery.

Keys to Avoiding Green Marketing Myopia Consumer Value Positioning (design environmental products to perform as well as alternatives; products that have health benefits; fixed price for renewable energy products) Calibration of Consumer Knowledge (connect environmental products attributes with desired consumer value—pesticide-free; solar powered); use of internet. Credibility of Product Claims (environmental product and consumer benefit claims) 3-42

TECHNOLOGICAL ENVIRONMENT Technology has released such wonders like open heart surgery It has also released hazards like hydrogen bomb, nuclear bomb etc.

Technological Environment Pace of change Unlimited Opportunities for innovation Varying R&D budgets Increased regulation of change

POLITICAL- LEGAL ENVIRONMENT Marketing decisions are strongly affected by development in political and legal environment. Increase in business legislation Protecting the welfare of consumers

Political-Legal Environment Increase in business legislation (e.g., unfair competition, protect society) Growth of special interest groups (e.g., consumerist movement)

Unit Pricing on Store Shelves

Study Question 1 ________ consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to Marketing decision makers.     A.  A marketing information system B.  A marketing research system C.  A marketing intelligence system D.  A promotional campaign E.  A marketing database 3-48

Study Question 2 All of the following would be considered to be steps to improve the quality of marketing intelligence in a company EXCEPT ________.   A.  training and motivating the sales force to spot and report new developments B.  using guerrilla tactics such as going through a competitor’s trash C.  motivating intermediaries to pass along important information D.  networking externally E.  purchasing information from outside suppliers 3-49

Study Question 3 A ________ is “unpredictable, short-lived, and without social, economic, and political significance.”   A.  fad B.  fashion C.  trend D.  megatrend E.  style 3-50

Study Question 4 ________ have been described as “large social, economic, political and technological changes [that] are slow to form, and once in place, they influence us for some time—between seven and ten years, or longer.   A.  Fads B.  Fashions C.  Trends D.  Megatrends E.  Styles   3-51

Study Question 5 In which of the following economies would we expect to find the fewest opportunities for marketers?   A.  Industrializing economies B.  Land-locked economies C.  Raw-material-exporting economies D.  Industrial economies E.  Subsistence economies 3-52