Marketing Management • 15e

Marketing Management • 15e
Kotler • Keller Chapter 3 Gathering Information & scanning the Environment Dr. Rushdy A. Wady

Discussion Questions What are the components of a modern marketing information system? What are useful internal records for such a system? What makes up a marketing intelligence system? What are some influential macroeconomic developments?

Collecting Information
Customers Marketers are in position to collect information from customers, competitors, and other external factors/group that can help to identify market changes. External Factors Competitors Marketers are in position to collect information that can help to identify market changes.

Marketing Information System
People Procedures Equipment A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute information that is needed, timely and accurate. To gather, sort, analyze, evaluate, and distribute information that is needed, timely and accurate.

Marketing Information System
Internal Records Insight Marketing Research A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute information that is needed, timely and accurate. Marketing Intelligence

Internal Records Order-to-Payment Cycle Sales Information Systems
Databases / Data Mining 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. Sales information systems provide managers with up-to-date information on the current sales of individual products. Databases store and organize information that can be retrieved based on a number of criteria such as purchase history, product preferences, and can even contain demographic and psychographic information on customers.

Order-to-Payment Cycle 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. Sales information systems provide managers with up-to-date information on the current sales of individual products. Databases store and organize information that can be retrieved based on a number of criteria such as purchase history, product preferences, and can even contain demographic and psychographic information on customers.

Marketing Intelligence
News and Trade Publications A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. This information can come from reading books and trade journals; talking to customers, distributors, suppliers, etc; monitoring social media; and talking to other managers in the company. Meet with customers, suppliers, distributors, and other managers Monitor social media sites

Marketing Intelligence
A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. This information can come from reading books and trade journals; talking to customers, distributors, suppliers, etc; monitoring social media; and talking to other managers in the company.

Improving Marketing Intelligence
Sales Force Establish industry network Customer Advisory Panel External Experts Companies can improve marketing intelligence through the methods listed on the slide as well as through channel members, government data sources, and the purchase of information through secondary data sources. Companies can improve marketing intelligence through channel members, government data sources, and the purchase of information through secondary data sources.

Marketing Intelligence & the Internet
Independent Online Forums Distributor or sales agents feedback sites Customer review and expert opinion sites Customer complaint sites Epinions.com, Bizrate.com, or ConsumerReview.com Epinions.com, Bizrate.com, or ConsumerReview.com

Using Marketing Intelligence
Share Information Quickly Marketing intelligence should be gathered and shared with decision makers quickly in order to effectively use the information. Marketing intelligence should be gathered and shared with decision makers quickly in order to effectively use the information.

But, the Business World is like an Orange...
you’ve got to peel away a few layers to get to the good stuff!

Peeling the “Orange” Peeling the “Orange” Demographic Economic
Technological Natural Intermediaries Logistics R&D Marketing Product Finance Target Consumers Place Price Suppliers Publics Production Promotion Accounting The “Orange” depicts the total marketing environment in which all firms and consumers operate and interact. Macroenvironmental questions address demographic, economic, natural, technological, political, and cultural questions that affect the companies marketing efforts, over which the company has no control. Microenvironmental questions address markets, customers, competitors, channels, suppliers, and publics in relation to how the company interacts and responds to them, and over which the company has some control. The Internal Environment describes the various departments within an organization, all of which must work in harmony for the organization to be successful. A marketing orientation implies that the marketing department drives the strategic direction of the company, and all departments must work to subordinate individual departmental goals for the good of the consumer. The 4 P’s of Marketing -- Product, Price, Promotion, and Place, are the only things the marketer can truly control. These “Marketing Mix” elements must work in harmony in order for the product to be successful. Target Customers -- the “juiciest, sweetest part of the orange,” I.e. where we want to end up after “peeling” away the layers of understanding about the macro- and micro-environments, internal organization, and the marketing mix. The target customers are the focus of all our analysis, and offering products/services desired by the target customers is the ultimate goal of the marketing-driven organization. Purchasing Engineering Political Legal Social Cultural Competitors © Bruce C. Bailey 1998

Marketing Environment
Consists of the actors and forces outside marketing that affect marketing management ability to develop and mention successful relationships with its target customer. Include:- Microenvironment: forces close to the company that affect its ability to serve its customer. Macroenvironment: larger societal forces that affect the whole Microenvironment. But Business world is like an orange. You get to peal away a few layers to get the good stuff.

Marketing Environment
Marketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. Includes: Microenvironment - forces close to the company that affect its ability to serve its customers. Macroenvironment - larger societal forces that affect the whole microenvironment.

The Marketing Environment
Demographic Company Economic Cultural Company Publics Suppliers Competitors Customers Natural Political Intermediaries Technological

The Microenvironment Company Publics Competitors Intermediaries
Suppliers Forces Affecting a Company’s Ability to Serve Its Customers Competitors Intermediaries Customers

The Company’s Microenvironment
Company’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc. Suppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”. Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.

Customers - five types of markets that purchase a company’s goods and services. Competitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage. Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.

Top management Finance R&D Purchasing Operations Accounting Note to Instructor Discussion Questions What types of collaboration does there need to be between the departments? How might projects be integrated between marketing and finance? How might projects be integrated between marketing and information systems? This question on finance could lead to a discussion about budgeting for marketing. The collaboration between marketing and IS could lead to discussions of market research, ordering systems, and customer relationship management systems.

Suppliers Provide the resources to produce goods and services Suppliers problems can affect marketing. Marketing managers must watch supply availability and costs, supply shortages or delays, labor strikes can cause sales in the short run and damage customer satisfaction in the long run

Treated as partners to provide customer value
Suppliers Rising supply costs may force price increases than can harm the company’s sales volume. Treated as partners to provide customer value

Marketing Intermediaries Help the company to promote, sell and distribute its products to final buyers Note to Instructor The text explains how Coke delivers value for their marketing intermediaries: They understand each retailer partner’s business The conduct consumer research and share with partners They develop marketing programs and merchandising for partners

Types of Marketing Intermediaries Resellers Physical distribution firms Marketing services agencies Financial intermediaries

customers Customers are the most important actors in the company’s microenvironment. The aim of the entire system is to serve target customers and create strong relationships with them There are five types of customer markets

Types of Customer Markets
International Markets Consumer Markets Company Government Markets Business Markets Reseller Markets

Customers Consumer markets: consist of individuals and households that buy goods and services for personal consumption Business markets: buy goods and services for further processing or for use in the production process Reseller markets: buy goods and services to resell at a profit

Customers Government markets: are made up of government agencies that buy goods and services to produce public services or transfer good and services to others who need them International markets: consist of these buyers in other countries, including consumers, producers, sellers and governments

Types of Publics Financial i.e. Banks Media i.e. Newspapers
Government i.e. Regulations Citizen-Action i.e. Consumer Groups Local i.e. Neighborhood Residents General Public Internal i.e. Employees

Publics Financial publics: this group influences the company’s ability to obtain funds, banks, investment houses, and stockholders Media publics: this group carries news, features. It includes newspapers, magazines, radio and television stations

Publics Government publics: management must take government developments into account, marketers must consult the company’s lawyers on issues of product safety, truth in advertising Citizen action publics: a company’s marketing decisions maybe questioned by consumer organizations , environmental groups and others

Publics Local publics: this group includes neighborhood residents and community organizations. Large companies appoint a community relations officer to deal with the community, attend meetings, answer questions and contribute to the worthwhile causes

Publics General public: a company needs to be concerned about the general public’s attitude towards its products and activities Internal publics: this group includes workers, managers, volunteers and the board of directors.

Competitors The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors do. Firms must gain strategic advantage by positioning their offerings against competitors’ offerings Note to Instructor Students should note that the competition is just a click away with online purchasing. This link goes to Bizrate—one of many comparison shopping sites online. Enter a product like coffee makers to see the competing products and retailers for this category.

Competitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage.

Analyzing the Macroenvironment
Where the microenvironment refers to those elements closest to the company, customers, competitors, suppliers, etc., the macroenvrionment refers to those elements that can impact a company, but cannot be controlled. These include things such as the economy, culture, demographics, politics, technology, and the natural environment. Where the microenvironment refers to those elements closest to the company, customers, competitors, suppliers, etc., the macroenvrionment refers to those elements that can impact a company, but cannot be controlled. These include things such as the economy, culture, demographics, politics, technology, and the natural environment.

The Macroenvironment Demographic Cultural Economic Political Natural
Forces that Shape Opportunities and Pose Threats to a Company Political Natural Technological

The Company’s Macroenvironment
Demographic - studies populations in terms of age, gender, race, occupation, location and other statistics. Economic - factors that affect consumer purchasing power and spending patterns. Natural - natural resources needed as inputs by marketers or that are affected by marketing activities.

Key U.S. Demographic Trends
Changing Age Structure Population is getting older Changing Family Structure Marrying later, fewer children, working women, and nonfamily households Geographic Shifts Moving to the Sunbelt and suburbs (MSA’s) Increased Education Increased college attendance and white-collar workers Growing Ethnic and Racial Diversity 72% Caucasian, 13% African-American, 11% Hispanic & 3% Asian

Demographic Environment
Worldwide Population Growth Population Age Mix Ethnic Markets Household Patterns Educational Groups Geographical Shifts in Population Shift from Mass to Micromarkets

Demographic Environment Changing age structure of the population _ The post world war II baby boom produced 78 million Baby boomers include people born between 1946 and 1964 Most affluent Americans The baby boomers have been one of the Most powerful forces shaping the marketing Environment Note to Instructor There are many Web sites targeted to boomers including this link to Boomers International. Before following the link it might be interesting to ask the following: Discussion Questions What type of information boomers might be seeking?

Demographic Environment Generation X includes people born between 1965 and 1976 High parental divorce rates Cautious economic outlook as they grown up during time of recession & corporate downsizing

Demographic Environment Less materialistic “ they prize experience not acquisition “ Family comes first, career second Lag behind on retirement savings

Demographic Environment Millennials (gen Y or echo boomers) include those born between 1977 and 2000 Comfortable with technology Includes Tweens (ages 8–12) Teens (13–19) Young adults (20’s)

Demographic Environment Generational marketing is important in segmenting people by lifestyle of life state instead of age. some experts warn marketers to be careful about turning off one generation each time they craft a product or message that appeals effectively to another

Demographic Environment More people are: Divorcing or separating Choosing not to marry Choosing to marry later Marrying without intending to have children Increased number of working women Stay-at-home dads

Demographic Environment Growth in U.S. West and South and decline in Midwest and Northeast Moving from rural to metropolitan areas Changes in where people work Telecommuting “ work at home or in a remote office to conduct the business by phone, fax or internet” Home office Divorcing or separating

Demographic Environment Changes in the Workforce More educated, the increased number of educated people will increase the demand for quality products, books , magazines, and personal computers More white collar Note to Instructor Students are probably very familiar with job search sites such as this link to monster.com. It might be interesting to compare the listings for white collar versus blue collar job opportunities including the associated pay and benefits.

Demographic Environment Increased Diversity Markets are becoming more diverse International National Includes: Ethnicity Gay and lesbian Disabled

Economic Environment Inflation and Recession Key Economic Concerns for
Changes in Income Economic Development Key Economic Concerns for Marketers Inflation and Recession Changing Consumer Spending Patterns

Economic Environment Economic environment consists of factors that affect consumer purchasing power and spending patterns Nations vary greatly in their levels and distribution of income, some countries have the industrial economies which constitute rich markets for many different kinds of goods

Economic Environment Subsistence economies consume most of their own agriculture and industrial output and offer few market opportunities In between are developing economies which can offer outstanding marketing opportunities for the right kinds of products

Economic Environment Changes in income Value marketing involves ways to offer financially cautious buyers greater value—the right combination of quality and service at a fair price Note to Instructor This graphic highlights a car targeted to India’s growing middle class. Discussion Questions What changes might there be in U.S. income over the next year? What are positioned as “value cars.” The students might quote current economic declines or rises. The “value cars” will probably include some of the smaller cars by Kia, Ford, Honda, and Toyota.

Economic Environment Changes in Consumer Spending Patterns Ernst Engel—Engel’s Law Differences noted over a century ago by Ernst Engel in how people shift their spending across food, housing, transportation, health care, and other goods and services categories as family income rises

Economic Environment Changes in Consumer Spending Patterns As income rises: The percentage spent on food declines The percentage spent on housing remains constant The percentage spent on savings increases

Technological Environment Forces that create new technologies, creating new products and market opportunities

Technological Environment Most dramatic force in changing the marketplace Creates new products and opportunities Safety of new product always a concern Note to Instructor Discussion Question Ask students what changes they have seen in technology in the past four years including medical products, communications, and media. They will most likely talk about the use of artificial organs and stem cell research, the growth of PDA’s like the iPod, and the use of new media products including DVR or TiVo.

Raw-material-exporting economies Industrializing economies
Economic Environment Income Distribution Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies Savings, Debt, & Credit Availability

Economic Environment Consumer Psychology Income Distribution
Purchasing power: Is the amount of goods/services one unit of currency will purchase. Income Distribution Purchasing power: is the amount of goods/services one unit of currency will purchase. Purchasing power is determined by income, prices, savings, credit availability, and debt. The financial crisis in may have permanently changed consumer buying habits. The income distribution of a country can influence the decision to enter a specific market. The income distribution of a country can influence the decision to enter a specific market.

Raw-material-exporting economies Industrializing economies
Economic Environment Income Distribution Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies Savings, Debt, & Credit Availability

Inflation Prices rise with no wage increase Purchasing Power decreases Increase profit margins by increasing efficiency Consumers reaction: Search for lowest prices Rely on coupons and sales Prices

Recession Income, production and employment fall
Reduced demand for goods and services

Recession Marketing Strategies
Improve existing products Maintain customer services Introduce new products Emphasize top-of -the line products

Natural Environment Shortages of Raw Materials Factors Affecting the
Increased Pollution Governmental Intervention

Environmental Regulations
Natural Environment Companies must be cognizant of the effects of their business on the environment and how regulations can influence its competitive position. Changes in regulations can also provide opportunities for companies, but these opportunities may only be recognized if the company includes this aspect into their strategic planning. Environmental Regulations Companies must be cognizant of the effects of their business on the environment and how regulations can influence its competitive position. Changes in regulations can also provide opportunities for companies, but these opportunities may only be recognized if the company includes this aspect into their strategic planning.

Natural Environment Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends Shortages of raw materials Increased pollution Increase government intervention Environmentally sustainable strategies Note to Instructor This Web link connects to greenbiz.com. There are several Web sites like this that provide information on business as to how to practice green strategies including green marketing.

Natural Environment Environmental sustainability: Developing strategies and practices that create a world economy that the planet can support indefinitely, they are responding to consumer demands with more environmentally responsible products.

Technological Environment
Rapid Pace of Change Unlimited Opportunities Technological Environment Issues in the Technological Environment Increased Regulation Practical, Affordable Products

Technological & Resource Factors
New technology helps firm cope with other environmental factors New technology helps firm carrying out and easuapply of research Information technology helps economic growth

Political Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society

Political Environment
Some Trends in the Political Environment Include: Increasing Legislation Designed to Protect Groups Changing Government Agency Enforcement Increasing Emphasis on Ethics and Socially Responsible Actions

Political-Legal Environment
Regional Groupings European Union (EU) NAFTA Consumerism & environmental groups Ethics & Social Responsibility Increased Legislation & Enforcement

Political-Legal Environment
Laws Government Agencies Special Interest Groups Opportunities can arise due to changes in the political-legal environment. But so too can threats. Opportunities can arise due to changes in the political-legal environment. But so too can threats.

Political Environment Legislation regulating business Increased legislation Business legislation has been enacted for two reasons: To protect companies from each other To protect consumers from unfair business practices such as telling lies in the advertisement

Political Environment _ Changing government agency enforcement * International marketers will encounter dozens, or even hundreds of agencies set up to enforce trade policies and regulations. * Marketers need to know about major laws protecting competition, consumers and society. They need to understand these laws at local, national and international levels

Political Environment Increased emphasis on ethics Socially responsible behavior” companies encourage their managers to look beyond the regulatory system allows and simply “ do the right things “ these socially responsible firms seek out ways to protect the long run interests of their consumers and the environment”

Political Environment Cause-related marketing: To exercise the social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. These days, every product seems to be tied to some cause. This concept link the purchases of the company products and services with fundraising for worthwhile causes or charitable organizations. But this concept can be a more strategy for selling than a strategy for giving

Cultural Environment Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors

Sociocultural: The influence that both society and culture have on the views of individuals.
A subculture: is a group that shares a distinct culture different from the larger culture that they belong. Examples of subcultures include: Gothic, Metalhead, punk, Trekkies, biker, etc.

Cultural Environment Persistence of Cultural Values Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, churches, businesses, and government Secondary beliefs and values are more open to change and include people’s views of themselves, others, organization, society, nature, and the universe

Cultural Environment Of Organizations Nature Oneself Society
the Universe Others Cultural Values of a

Cultural Environment Shifts in Secondary Cultural Values People’s view of themselves Yankelovich Monitor’s consumer segments: Do-it-yourselfers—recent movers “ embodying the whole do-it-yourself attitude” Adventurers “ They like to view themselves as doing things others wouldn’t dare to do” Note to Instructor Do-It-Yourselfers—Recent Movers: Active consumers also view the experience as a form of self-expression. They view their homes as their havens View their projects as personal victories over the high-priced marketplace. Adventurers: Rarely follow a single path or do the same thing twice. View the experience as far more exciting than the entertainment value. They are more likely to engage in activities most think are too dangerous.

Cultural Environment Shifts in Secondary Cultural Values People’s view of others More “cocooning” : in which people are going out less with others and are staying home more to enjoy the creature comforts of home and hearth – from the networked home office to home entertainment centers.

Cultural Environment Shifts in Secondary Cultural Values People’s view of organizations “people vary in their attitudes towards corporations, government agencies , universities and trade unions” People’s view of society Patriots defend it Reformers want to change it Malcontents want to leave it

Cultural Environment Shifts in Secondary Cultural Values People’s view of nature Some feel ruled by it Some feel in harmony with it Some seek to master it People’s view of the universe Renewed interest in spirituality “ concerned with the meaning of life and issues of soul and spirit”

Responding to the Marketing Environment
Views on Responding Uncontrollable React and adapt to forces in the environment and don’t try to change it Proactive Aggressive actions to affect forces in the environment Reactive Watching and reacting to forces in the environment

Responding to the Marketing Environment
Environmental Management Perspective Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment. How? Hire lobbyists , run “advertorials”, file law suits and complaints, and form agreements.

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Marketing Management • 15e

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