CHAPTER 3
COLLECTING INFORMATION
AND FORECASTING DEMAND
Presented by: Florante M. Elan, Jr. Facilitated by: Dr. Juan A. Asuncion, Jr.
In this Chapter,
we will address
the following
questions:
1. What are the
components of a
modern marketing
information system?
2. What are useful
internal records for
such a system?
3. What makes up a
marketing intelligence
system?
4. What are some
influential
macroenvironment
developments?
5. How can companies
accurately measure
and forecast demand?
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. It relies on internal company records,
marketing intelligence activities, and marketing research.
The company’s marketing information system should be a mixture of
what managers think they need, what they really need, and what is
economically feasible.
INTERNAL RECORDS
A – are internal reports of orders, sales, prices,
costs, inventory levels, receivables, and
G
payables.
eir
ct,
en
mer
er’s
nd
nd
ts,
THE SALES DATABASES, DATA
ORDER-TO-PAYMENT INFORMATION WAREHOUSING,
CYCLE SYSTEMS AND DATA MINING
- is the heart of the internal - is a tool that collects, - Companies organize their
records system. It includes all the summarizes, and evaluates information into customer, product,
steps from when a customer business data related to sales and and salesperson databases—and then
places an order to when the distribution. It provides information combine their data. The customer
to sales and management teams to database will contain every customer’s
company receives payment
name, address, past transactions, and
help them make decisions and
sometimes even demographics and
control sales. psychographics (activities, interests,
and opinions).
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.
MARKETING INTELLIGENCE
b. Collecting Marketing Intelligence on
the Internet
- thanks to the explosion of outlets available on the
Internet, online customer review boards, discussion
forums, chat rooms, and blogs can distribute one
customer’s experiences or evaluation to other
potential buyers and, of course, to marketers
seeking information about the consumers and the
competition.
MARKETING INTELLIGENCE
c. Communicating and Acting on
Marketing Intelligence
- In some companies, the staff scans the Internet
and major publications, abstracts relevant news,
and disseminates a news bulletin to marketing
managers. The competitive intelligence function
works best when it is closely coordinated with the
decision-making process.
- refers to the key external and
uncontrolled elements that
impact an organization’s decision
making and effect its
performance and strategy. This
MACROENVIRONMENT includes economic variables,
demography, legal, political, and
a. NEEDS AND TRENDS social influences, technological
developments, and
1. FAD environmental factors.
2. TREND
MACROENVIRONMENT
A. NEEDS AND TRENDS - Enterprising individuals and
companies manage to create new
1. FAD solutions to unmet needs.
2. TREND
3. MEGATREND
MACROENVIRONMENT
a. NEEDS AND TRENDS
1. FAD - is “unpredictable, short-lived,
and without social, economic,
2. TREND and political significance.”
3. MEGATREND
MACROENVIRONMENT
a. NEEDS AND TRENDS
1. FAD
2. TREND - is more predictable and durable
than a fad; trends reveal the
3. MEGATREND shape of the future and can
provide strategic direction.
a. NEEDS AND TRENDS
1. FAD
2. TREND
3. MEGATREND - is a “large social, economic,
political, and technological
change that is slow to form, and
once in place, influences us for
some time—between seven and
ten years, or longer.”
6
5
SIX MAJOR FORCES
4
IN THE BROAD
3
ENVIRONMENT
2
1
6
5 Demographic Environment B. SIX
4 - the characteristics of the
people who make up a
MAJOR FORCES
IN THE BROAD
3 population, such as age,
gender, race, and family size. ENVIRONMENT
2
1
6
5 Economic Environment
B. SIX
MAJOR FORCES
4 - the state of the economy,
including inflation, interest IN THE BROAD
3 rates, job growth, and
consumer spending.
ENVIRONMENT
2
1
6 B. SIX
MAJOR FORCES
5 Sociocultural Environment IN THE BROAD
4 - the culture and values of a
society, including consumer
ENVIRONMENT
attitudes, ethnic and religious
trends, and living standards.
3
2
1
B. SIX
6 MAJOR FORCES
IN THE BROAD
5 Natural Environment ENVIRONMENT
- the state of the environment,
including the impact of
4
climate change and other
environmental factors.
3
2
1
6
Technological Environment 5 B. SIX
- the state of technology,
including the development of 4 MAJOR FORCES
IN THE
new technologies and their
impact on business. 3 BROAD
ENVIRONMENT
2
1
6
Political-Legal Environment 5 B. SIX
- the political and legal
systems of a country, 4 MAJOR FORCES
IN THE
including government policies,
laws, and regulations. 3 BROAD
ENVIRONMENT
2
1
D
FORECASTING AND
DEMAND MEASUREMENT
ed
ers
a. The Measures of Market Demand
.
POTENTIAL AVAILABLE TARGET PENETRATED
MARKET MARKET MARKET MARKET
- is the set of consumers - is the set of consumers - is the part of the qualified - is the set of consumers
with a sufficient level of who have interest, available market the who are buying the
interest in a market offer. income, and access to a company decides to company’s product.
However, their interest is particular offer. pursue.
not enough to define a
market unless they also
have sufficient income
and access to the product.
D
FORECASTING AND
DEMAND MEASUREMENT
ed
ers
b. A Vocabulary for Demand Measurement
.
- for a product is the total volume that
MARKET
would be bought by a defined customer
group in a defined geographical area in a
DEMAND
defined time period in a defined marketing
environment under a defined marketing
program.
- is the company’s estimated share of
COMPANY
market demand at alternative levels of
company marketing effort in a given
DEMAND
time period. It depends on how the
company’s products, services, prices,
and communications are perceived
relative to the competitors.’
- for a product is the total volume that
MARKET would be bought by a defined customer
group in a defined geographical area in a
DEMAND
defined time period in a defined marketing
environment under a defined marketing
program.
- is the company’s estimated share of
market demand at alternative levels of
company marketing effort in a given COMPANY
DEMAND
time period. It depends on how the
company’s products, services, prices,
and communications are perceived
relative to the competitors.’
MARKET
- is the limit approached by market
demand as industry marketing
POTENTIAL
expenditures approach infinity for a
given marketing environment.
COMPANY
- is the sales limit approached by
SALES
company demand as company
marketing effort increases
relative to that of competitors.
POTENTIAL
MARKET - is the limit approached by market
demand as industry marketing
POTENTIAL expenditures approach infinity for a
given marketing environment.
- is the sales limit approached by COMPANY
SALES
company demand as company
marketing effort increases
relative to that of competitors.
POTENTIAL
MARKET
- Only one level of industry
marketing expenditure will actually
occur. The market demand
FORECAST
corresponding to this level is called
the market forecast.
COMPANY
- The company sales forecast is
the expected level of company
SALES
sales based on a chosen
marketing plan and an assumed
FORECAST
marketing environment.
MARKET - Only one level of industry
marketing expenditure will actually
occur. The market demand
FORECAST corresponding to this level is called
the market forecast.
- The company sales forecast is
the expected level of company
COMPANY
sales based on a chosen
marketing plan and an assumed
SALES
marketing environment.
FORECAST
Two other
concepts are
important in
company sales
forecast
A sales quota is the sales goal set
for a product line, company division,
or sales representative. It is primarily
a managerial device for defining and
stimulating sales effort, often set
slightly higher than estimated sales
to stretch the sales force’s effort.
A sales budget is a conservative
estimate of the expected volume of
sales, primarily for making current
purchasing, production, and cash
flow decisions. It’s based on the
need to avoid excessive risk and is
generally set slightly lower than the
sales forecast.
D
FORECASTING AND
DEMAND MEASUREMENT
ed
ers
c. Estimating Current Demand
.
Practical Methods for
Estimating Current Market Demand
a. Total Market Potential
- is the maximum sales available to all firms in an
industry during a given period, under a given level of
industry marketing effort and environmental
conditions. A common way to estimate total market
potential is to multiply the potential number of buyers
by the average quantity each buyer purchases, times
the price.
Practical Methods for
Estimating Current Market Demand
b. Area Market Potential
- because companies must allocate their marketing
budget optimally among their best territories, they
need to estimate the market potential of different
cities, states, and nations.
Practical Methods for
Estimating Current Market Demand
c. Industry Sales and Market Shares
- Besides estimating total potential and area potential,
a company needs to know the actual industry sales
taking place in its market. This means identifying
competitors and estimating their sales.
FORECASTING AND
DEMAND MEASUREMENT
d. Estimating Future Demand
ESTIMATING FUTURE DEMAND
In most markets, good forecasting is a key factor in success.
All forecasts are built on one of three information bases: what
people say, what people do, or what people have done. Using
what people say requires surveying buyers’ intentions,
composites of sales force opinions, and expert opinion.
Building a forecast on what people do means putting the
product into a test market to measure buyer response. To use
the final basis—what people have done—firms analyze
records of past buying behavior or use time-series analysis or
statistical demand analysis.
THANK YOU!
Source:
1. Philip Kotler and Kevin Lane Keller, “Marketing Management,” pp. 66-90
2. Order-to-Cash Defined | NetSuite
3. Sales information system | SpringerLink
4. The Macro Environment in Marketing – Why is it important and how to work with it? – Eightception
5. PESTEL Analysis - Industry Research - LibGuides at Washington State University
