CHAPTER – TWO

CAPTURING MARKETING
INSIGHTS
 INTRODUCTION
• To provide context, insight, and inspiration for marketing
decision making, companies must possess comprehensive
and up-to-date information about macro trends, as well as
about micro effects particular to their business.

• Holistic marketers recognize that the marketing environment

is constantly presenting new opportunities and threats, and
they understand the importance of continuously monitoring,
forecasting, and adapting to that environment.
 The Importance of Information

Understand
Marketing
Environment

Why
Information Competition
Identify Is
Customer Needed
Needs
Develop
Strategic
Planning
 Part I

Information Systems &

Marketing Research
Information system and marketing research
• Some firms have marketing information systems that
provide rich detail about buyer wants, preferences, and
behavior

• Companies with superior information can choose their

markets better, develop better offerings, and execute
better marketing planning

• Thus, every firm must organize and distribute a

continuous flow of information to its marketing
managers
What is Marketing Information System (MkIS)?
• A marketing information system (MIS) consists of people,
equipment, and procedures to gather, sort, analyze, evaluate,
and distribute needed, timely, and accurate information to
marketing decision makers, i.e
co
nsi • People, equipment, and procedures
sts
of
Pr • Gather, sort, analyze, evaluate and distribute
oc
ess
w • Needed, timely, and accurate information
ha
t

To • Marketing decision makers.

whom
 Cont’d
• Sources of Marketing information system:
– internal company records,
– marketing intelligence activities, and
– marketing research

• Function: Assess, Develop and Distribute Information

• The company’s MKIS should be a mixture of :

– what managers think they need,
– what they really need, and
– what is economically feasible.
 The Marketing Information System
Marketing Managers
Marketing Information System
Marketing Decisions and Communications

Distributing Assessing Information

Information Needs
Developing Information

Information Internal
Analysis Data

Marketing Marketing
Research Intelligence

Marketing
MarketingEnvironment
Environment
Functions of a MkIS: Assessing Information Needs

MKIS committee Conduct Interviews and Determine

What Information is
Desired, Needed, and Feasible to Obtain.

Monitors
Monitors Environment
Environment for
for Examine
Examine Cost/
Cost/ Benefit
Benefit of
of
Information
Information Managers
Managers Desired
Desired Information
Information
Functions of MkIS: Developing Information

Obtains
ObtainsNeeded
NeededInformation
Informationfor
for Marketing
MarketingManagers
Managers
From
From the
theFollowing
FollowingSources
Sources

A.
A. Internal
InternalData
Data
Collection
Collectionof
ofInformation
Informationfrom
fromData
DataSources
SourcesWithin
Withinthe
theCompany
Company

From:
From:Accounting,
Accounting,Sales
SalesForce,
Force,Marketing,
Marketing,Manufacturing,
Manufacturing,Sales
Sales
B.
[Link]
MarketingIntelligence
Intelligence
Collection
Collectionand
andAnalysis
AnalysisofofPublicly
PubliclyAvailable
AvailableInformation
Informationabout
about
Competitors and the Marketing Environment
Competitors and the Marketing Environment
From:
From:Employees,
Employees,Suppliers,
Suppliers,Customers,
Customers,
Competitors,
Competitors,Marketing
MarketingResearch
ResearchCompanies
Companies

C.
[Link]
MarketingResearch
Research
Design,
Design,Collection,
Collection,Analysis,
Analysis,and
andReporting
Reportingof
ofData
Dataabout
aboutaa Situation
Situation
Functions of MkIS: Distributing Information

Information Must be Distributed

to the Right Managers at the Right Time.

Distributes
Distributes Routine
Routine Distributes
Distributes Nonroutine
Nonroutine
Information
Information for
for Information
Information for
for Special
Special
Decision
Decision Making
Making Situations
Situations
 Components of a Modern
Marketing Information System
• The major responsibility for identifying significant
marketplace changes falls to the company’s marketers.

• Marketers have advantages for the task:

– Disciplined methods for collecting information, and
– Time spent interacting with customers and observing
competitors and other outside groups.
– Marketers also have extensive information about how
consumption patterns vary across and within countries.

• The three components that modern MKIS cover are

briefly discussed below:
 A. Internal Records:
• To spot important opportunities and potential problems,
marketing managers rely on internal reports of: orders, sales,
prices, costs, inventory levels, receivables, and payables.

• The Order-to-Payment Cycle

– The heart of the internal records system is the order-to-payment cycle.
• Sales Information Systems
– Marketing managers need timely and accurate reports on current
sales. Companies must carefully interpret the sales data.
• Databases, Data Warehousing, and Data Mining
– Companies organize their information into customer, product, and
salesperson databases—and then combine their data.
– Companies make these data easily accessible to their decision makers.
 B. 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.

• The internal records system supplies results data, but the

marketing intelligence system supplies happenings data.
• Marketing managers collect marketing intelligence in a variety
of ways, such as:
– by reading books, newspapers, and trade publications;
– by talking to customers, suppliers, and distributors;
– by monitoring social media on the Internet; and
– by meeting with other company managers .
NB: Marketing intelligence gathering must be legal and ethical
 Cont’d
• A company can take some possible actions to improve
the quantity & quality of its marketing intelligence.

1. Train and motivate the sales force to spot and report new
developments.

2. Motivate distributors, retailers, and other intermediaries to

pass along important intelligence. Marketing intermediaries are
often closer to the customer and competition and can offer
helpful insights.

3. Hire external experts to collect intelligence: many companies hire

specialists to gather marketing intelligence
 Cont’d
4. Network internally and externally. The firm can:
– purchase competitors’ products,
– read competitors’ published reports,
– attend stockholders’ meetings,
– talk to employees, collect competitors’ ads,
– consult with suppliers, and look up news stories about competitors.
5. Set up a customer advisory panel.
• Members including:
– the company’s largest customers.,
– most outspoken customers. ,
– most sophisticated customers. , or
– most representative customers.

6. Purchase information from outside research firms and vendors.

7. Take advantage of government-related data resources.

 C. Conducting Market Research
• It is applicable When we do not have answers through own
Market Information and Intelligence System

• It is the systematic gathering, recording and analysing of data

about problems related to the marketing of goods and services.

• Marketing research
– Is a process
– Use data available from different sources
– Is conducted to aid decision making
– Findings should be communicated to the appropriate decision
maker
 What to find out?
• What does the customer need?
• Who is the target audience?
• What is the competition?
• Are there any gaps in the market?
• Would the product be acceptable in the market?
• Why customer traffic is reduced?
• Why is profitability decreased?
• Do our sales have any association with some given variables?
• Which internal or external factor is contributing more?
The Marketing Research Process

Defining
Defining the
the Problem
Problem and
and the
the Research
Research Objectives
Objectives

Developing
Developing the
the Research
Research Plan
Plan

Implementing
Implementing the
the Research
Research Plan
Plan

Interpreting
Interpreting and
and Reporting
Reporting the
the Findings
Findings
Marketing Research Process
Step 1. Defining the Problem & Research Objectives

• In this step the researcher Defines the Problem, the

Decision Alternatives, and the Research Objectives.

• Marketing managers must be careful not to define the

problem too broadly or too narrowly for the marketing
researcher.(See some examples on pp-99 of your text).

• Then Set specific objectives in line with the defined

problem
Marketing Research Process
Step 2. Develop the Research Plan
Determine
Determine the
the Specific
Specific Information
Information Needed
Needed

Secondary Primary

Information Information
Informationcollected
Informationthat
thathas
has for
collected
been
beenpreviously
previously forthe
thespecific
specificpurpose
purpose
collected. at
athand.
hand.
collected.

Both
BothMust
MustBe:
Be:
Relevant
Relevant
Accurate
Accurate
Current
Current
Impartial
Impartial
I. Primary Data Collection Process
A. Research Approaches
Observational
ObservationalResearch
Research

Gathering
Gatheringdata
databy
byobserving
observingpeople,
people,
actions and situations
actions and situations
(Exploratory)
(Exploratory)

Survey
SurveyResearch
Research
Asking
Askingindividuals
individualsabout
about
attitudes,
attitudes,preferences
preferencesor
or
buying behaviors
buying behaviors
(Descriptive)
(Descriptive)

Associational
AssociationalResearch
Research
Using
Usinggroups
groupsof
ofpeople
peopleto
to
determine
determinecause-and-effect
cause-and-effect
relationships
relationships
(Causal)
(Causal)
Primary Data Collection Process
B. Developing a Sampling Plan

Probability
Probabilityor
or
Who
Whoisisto
tobe
be Non-probability
surveyed? Non-probability
surveyed? sampling?
sampling?
(target
(targetpopulation)
population)

Sample -
representative
segment of the
population

How
Howshould
shouldthe How
sample
the Howmany
many
samplebebe should
shouldbe
be
chosen?
chosen? surveyed?
(techniques) surveyed?
(techniques) (sample
(samplesize)
size)
Primary Data Collection Process
C. Research Instruments
Research
ResearchInstruments
Instruments

Questionnaire
Questionnaire Mechanical
MechanicalDevices
Devices
••What
Whatto
toask? ••Grocery
••Form
ask? GroceryScanners
Scanners
Formof
ofeach
eachquestion?
question? ••People Meters
People Meters
••Wording?
Wording? ••measuring
••Ordering? measuringdevices
devices
Ordering? •• Balances
Balances
 II. Secondary Data sources
• Reference Library
• Directories of Products/Companies
• The commodity exchange
• Industry/Trade Journals
• Trade fairs and Exhibitions
• Company Annual Reports
• Internet
Marketing Research Process
Step 3. Implementing the Research Plan

Collection
Collection
of
of Data
Data

Converting
Converting the
the
Research
Research Processing
Processing of
of
Plan
Plan into…
into… Data
Data

Analyzing
Analyzing the
the
Data
Data
Marketing Research Process
Step 4. Interpreting and Reporting Findings

Interpret
Interpretthe
theFindings
Findings

Draw
DrawConclusions
Conclusions

Report
Report to
toManagement
Management
 Part II
Analyzing The Marketing
Environment
 Components of Marketing Environment

• The external environment consists of:

– Macro environment that are broad forces which shape the
character of opportunities and threats
– Micro environment consist of the actors in the immediate
environment

• Internal environment consist of:

- forces and actors in side the firm that affect the marketing
operation; composed of internal stakeholders and the other
functional areas with in the business organization.
 Controllability
• The organization has no control over the macro environment, it
can only respond to changes taking place

• The organization has some degree of influence over the

microenvironment but by no means complete control.

• The organization controls its own internal environment although

this does not mean the marketing department or marketing
manager has control
 Why is it important?
• It is essential for planning

• Assists in the identification of opportunities and threats

• Enables an organization to take advantage of emerging strategic

opportunities

• It helps a business to compete more effectively against its rivals

 The Internal Or Organizational Environment

• This refers to the other internal functions that impact

on the marketing functions

• It comprises of:
– The human resources dept.
– The operations dept.
– The accounting and finance dept.
– The research and development dept.
– The information systems dept.
– Others functional and support units in the organization
 Cont’d

• Marketing is affected by
– Allocation of authority and responsibilities within the
organization

– Resource availability

– The extent to which major functional areas work together

supporting the marketing function to be customer oriented

– The attitude of internal stakeholder

 The Micro environment
• Refers to the environment most closely linked to the organization
• It comprises all those organizations and individuals who directly
affect the activities of the company

• The actors in the immediate environment that affect the firm’s

capability to operate effectively in its chosen market

Elements In The Micro Environment

• Customers • Local community
• Suppliers • Local government
• Intermediaries • Cooperators (partner firms in
• Competitors alliance)
 The Macro-environment
• Comprises general forces and trends rather than specific
organizations-the big issues that affect all businesses active in
the market
• The macro-environment refers to the general environmental
factors that influence the organization
• Factors outside the area of marketing which impact on but
which cannot be influenced by the marketing effort

Elements Of Macro-economic Environment

• Political and Legal environment
• Socio-cultural and demographic environment
• Technological environment
Analysis approaches to the Marketing Environment

• SWOT analysis
• PEST/STEP analysis
• Five forces analysis
 I. SWOT analysis
Strengths Internal Like experience in the sector, competitive
. advantage, financial capacity

Weaknesses Internal Structural problem , lack of proper

management system, lack adequate resources,
lack of adequate information….

Opportunities external Good government support, demographic

changes, technological change, lack some
resources in the community….

Threats external Political instability, free market entry, the

continuously increasing number of competitors
 II. PEST analysis
Poli • Political stability , Environmental protection laws
tica • Taxation policy, Employment laws
l • Government policy
fact
ors
Eco •Inflation, Disposable income, Employment
no •Energy availability and cost
mic •Level of economic development
fact
ors • Demographics (population size and growth)
Soci
o- • The culture, beliefs and values of the community
cult • Lifestyle changes, Levels of education
ural
Tec
fact
hno • New discoveries and innovations
ors • Speed of technology transfer
logi
cal • Rates of obsolescence, Internet (Information technology)
fact
ors
 III. Competitive Analysis Using Five forces
• The competitive environment (industry environment) comprises those
factors with which the organization comes into closest contact, factors
that have a rather obvious and immediate impact on its success.

• The competitive environment is usually subdivided in to five forces (M.

E. Porter, 1980):
– Direct competitive rivals

– The threat from new entry competition

– The threat of substitute products

– Bargaining power of Buyers

– Bargaining power of Suppliers

• Profitability and the achievement of objectives will be affected by the

combination of five forces.
 Responding to the Marketing Environment

• Reactive: Passive Acceptance and Adaptation

– Companies design strategies that avoid threats and
capitalize upon opportunities.

• Proactive: Environmental Management

– Use of lobbyists, lawsuits, complaints, and contractual
agreements to influence environmental forces.
 2.3 Measuring And Forecasting Demand

• DEFINITION of 'Forecasting'
– The use of historic data to determine the direction of future trends.
– Forecasting is used by companies to determine how to allocate their
budgets for an upcoming period of time.

• Forecasting is a decision-making tool used by many

businesses to help in budgeting, planning, and estimating
future growth.

• Forecast may include, sales / demand forecast, economic

forecast, technological forecast, political forecast,
demographic forecast cultural forecast etc.
 Importance of forecasting demand
It provides a basis:
For setting and maintaining a production schedule –
manufacturing.
For setting the objectives of the sales department.
For task assignments to various segments of the marketing
and other areas.
It helps in getting information about sales figures for the
organization in future.
It helps in understanding the business trends from time to
time.
Common Features to All Forecasts
• A wide variety of forecasting techniques are in use. Nonetheless,
certain features are common to all, and it is important to recognize
them.

– 1. Assumption- things existed in the past will continue to

exist in the future.
– 2. Forecasts are rarely perfect; actual results usually differ
from predicted values.
– 3. Forecasts for groups of items tend to be more accurate
than forecasts for individual items.
– 4. Forecast accuracy decreases as the time period covered by the forecast—
the time horizon—increases. Hence, flexible business organizations require a shorter
Basic Approaches to Forecasting
• There are two general approaches to forecasting
 Qualitative methods consist mainly of subjective inputs, which
often challenge precise numerical description.
 Quantitative methods involve either:

– the extension of historical data or

– the development of associative models that attempt to utilize
causal (determinant) variables to make a forecast.
 A. Qualitative Forecasting Techniques

• I. Forecasts Based on Judgment and Opinion

• II. Executive Opinions
• III. Sales force Opinions
• IV. Consumer Surveys
• V. Delphi method.
 B. Quantitative Forecasting Technique
• Averaging techniques
– Moving average- takes the average of previous observations
in the demand
– Weighted moving average - takes the average of previous
observations in the demand by giving weight. (0 - 1)
– Exponential smoothing - based on the previous forecast (Ft-1)
plus a percentage of the difference between that forecast
and the actual value (At-1).

• Associational techniques
– Regression and correlation analysis
CHAPTER END
 Marketing Debate
• Take a position:
• Business-to-business marketing requires a
special, unique set of marketing concepts and
principles versus Business-to-business
marketing is really not that different, and the
basic marketing concepts and principles
apply.