CHAPTER

3 GATHERING
INFORMATION AND
SCANNING THE
ENVIRONMENT
LEARNING OBJECTIVES
After reading this chapter, students should:
 Know the components of a modern marketing information system
 Know what are useful internal records
 Know what is involved with a marketing intelligence system
 Know what are the key methods for tracking and identifying opportunities in the
macroenvironment
 Know what are some important macroenvironment developments

CHAPTER SUMMARY
To carry out their analysis, planning, implementation, and control responsibilities,
marketing managers need a marketing information system (MIS). The role of the MIS is
to assess the managers’ information needs, develop the needed information, and
distribute that information in a timely manner.

An MIS has three components: (a) an internal records system, which includes
information on the order-to-payment cycle and sales information systems; (b) a
marketing intelligence system, a set of procedures and sources used by managers to
obtain everyday information about pertinent developments in the marketing environment;
and (c) a marketing research system that allows for the systematic design, collection,
analysis, and reporting of data and findings relevant to a specific marketing situation.

Marketers find many opportunities by identifying trends (directions or sequences of

events that have some momentum and durability) and megatrends (major social,
economic, political, and technological changes that have long-lasting influence). Within
the rapidly changing global picture, marketers must monitor six major environmental
forces: demographic, economic, social-cultural, natural, technological, and political-legal.
In the demographic environment, marketers must be aware of worldwide population
growth; changing mixes of age, ethnic composition, and educational levels; the rise of
nontraditional families; and large geographic shifts in population.

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In the economic arena, marketers need to focus on income distribution and levels of
savings, debt, and credit availability.

In the social-cultural arena, marketers must understand people’s views of themselves,

others, organizations, society, nature, and the universe. They must market products that
correspond to society’s core and secondary values, and address the needs of different
subcultures within a society.

In the natural environment, marketers need to be aware of the public’s increased concern
about the health of the environment. Many marketers are now embracing sustainability
and green marketing programs that provide better environmental solutions as a result.
In the technological arena, marketers should take account of the accelerating pace of
technological change, opportunities for innovation, varying R&D budgets, and the
increased governmental regulation brought about by technological change.

In the political-legal environment, marketers must work within the many laws regulating
business practices and with various special-interest groups.

OPENING THOUGHT
Students new to the discipline of marketing will probably be surprised at the level of
marketing information, intelligence, and arenas that marketing managers must operate within.
The instructor is encouraged to stress that the marketing of products/services and the processes
of making marketing decisions do not operate without careful consideration to the
environments identified in this chapter. Today, marketers must be cognizant of “how” their
product or service is perceived as much as “how” it functions.
In many cases, the chief marketing executive of the firm can sometimes see himself/herself as
a player in the game of chess. Each move must be carefully chosen for subsequent moves by
competition and public scrutiny for acceptance or rejection. Products marketed must meet
both the consumers’ needs as well as the publics’ acceptances of the product.
The instructor’s challenge for this chapter is to communicate to the students the complexity of
and sometimes the conflicting forces impacting marketing managers in the 21st century.

TEACHING STRATEGY AND CLASS ORGANIZATION

PROJECTS
1. Semester-long marketing plan: Competitive information and environmental scanning
project(s) completed and presented for instructor’s review

2. Commission a marketing research study on topic(s) of interest to the students at your

institution. During the course of the semester (15–16 week), have the students develop the
questionnaire, collection method, conduct the survey, and tabulate the results. The
students can be divided into groups for this project. Suggested topics can include the
school or university students’ opinions of campus issues such as the athletic program, sale

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of alcohol, use of and availability of technology, or students’ perceptions of their current

education experiences.

3. Sonic PDA Marketing Plan Marketing information systems, marketing intelligence

systems, and marketing research systems are used to gather and analyze data for various
parts of the marketing plan. These systems help marketers examine changes and trends in
markets, competition, customer needs, product usage, and distribution channels. Some
changes and trends may turn up evidence of opportunities or threats.

Sonic has developed information about the competition and competitive situation, but Jane
Melody believes more information is needed in preparation for launching the first PDA.
Based on the marketing plan contents discussed in Chapter 2, how can you use MIS and
marketing research to support the marketing planning for the new PDA.

 For which sections of the plan will you need secondary data? Primary data? Why do
you need information for each section?
 Where can you find secondary data that will be useful? Identify two Internet sources
and two non-Internet sources. Describe what you plan to draw from each source, and
indicate how you will use the data in your marketing plan.
 What primary research will Sonic need to support its marketing strategy, including
product management, pricing, distribution, and marketing communication? What
questions or issues should Sonic seek to resolve using primary data?
 What technological, demographic, and/or economic changes can potentially affect
PDA development, buyer acceptance of PDAs, and development of substitute or
enhanced products?

Enter your answers about Sonic’s use of marketing research in a written marketing plan or in
the Marketing Research, Market Analysis, Market Trends, and Macroenvironment sections of
Marketing Plan Pro.

ASSIGNMENTS
Using information from the web like FEDSTATS and the U.S. Census Bureau, have the
student’s predict the population of the U.S. for the years 2020, and 2060 and specifically
answer the following questions: a) What is the demographic makeup of the US in these years?
b) What is the age dispersion in the US in these years and c) What industries do you see
benefiting/losing within the US because of these population figures.

Obesity has been officially called an epidemic as cited in the opening vignette of the chapter.
In small groups, have the students collect, from the university or college administrators,
information about the students eating habits (on campus students would be one group;
commuting students another group), exercise, and lifestyle. For example, how many students
(as a percentage of the total student population) regularly take advantage of the available
exercise facilities? How many students presently on campus are clinically obese? This is a
very good project to demonstrate the skill of data mining and the use of secondary data.

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Select or suggest a current “fad” or “trend” exhibited by students on campus. Each student is
to select either a fad or trend and then research this fad and trend in light of the marketing
opportunities present. Would a firm be successful in capitalizing on this “fad”? If so, why?
Should companies capitalize on this “trend”—What are the “upsides” for producing products
that are currently “trendy”? What are the “downsides”? What generation do these fads and
trends appeal to? How large is the potential market for the fad and/or trend? Students should
prepare a report with as much detail into the specific characteristics of these markets as is
available. This is a good secondary data and data mining assignment.

Each student is a member of an identifiable ethic and demographic segment of society. As an

individual assignment, ask each student to describe their sub-segment in terms of population,
age distribution, growth potential, income, education levels, and other demographic
characteristics. The conclusion of their report should explain the marketing implications of
their findings in terms of potential market, over-saturated market, declining market, or hidden
or ignored market with potential.

Global forces and macroenvironment factors continually challenge marketers. Selecting one
of the macroenvironmental factors from Table 3.3 challenge the students to prepare a report
on how they see that global force affecting, influencing, and limiting marketers in the near
future. For example, point # 2 states that “the movement of manufacturing capacity and skills
to lower-cost countries” is one of the forces affecting marketing. How will this statement
affect multi-nationals in their marketing plans for the future? Suggested responses might point
out that the multi-nationals must consider the low cost of wages in these countries when
pricing their products; that the increase in manufacturing in lower-cost countries may increase
the countries resident’s standard of living, thus open up markets for new products such as time
saving and labor saving devices. Open up the class for discussion regarding how these global
forces will affect (positively and negatively) marketing practices in the 21st century.

MARKETING INSIGHT The Big Dig, shows how Best Buy uses data to profile its
customers into highly differentiated categories with code names like “Buzz”, “Barry” and
“Jill”. Ask the class whether or not such use constitutes discrimination and whether or not
retailers should curtail their “profiling” tactics.

“Green Marketing” has been a challenge to firms producing environmentally friendly

products. The obstacles stated range from overexposure and lack of credibility, to the
consumer not willing to pay a premium prices for “green” products, to poor implementation
on the part of companies engaged in the practice. Question: When faced with a decision to
market its products as “environmentally safe” or to market its products along conventional
lines (matching competitive positioning), does the company have a responsibility to choose
the more socially responsible manner or should the dictates of the marketplace (i.e. consumer)
decide its marketing strategy?

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END-OF-CHAPTER SUPPORT
MARKETING DEBATE—Is Consumer Behavior More of a Function of a Person’s
Age or Generation?

One of the widely debated issues in developing marketing programs that target certain age
groups is how much consumers change over time. Some marketers maintain that age
differences are critical and that the needs and wants of a 25-year-old in 2002 are not that
different from those of a 25-year-old in 1972. Others dispute that contention and argue that
cohort and generational effects are critical and that marketing programs must therefore suit the
times.

Take a position: Age differences are fundamentally more important than cohort effects versus
cohort effects can dominate age differences.

Suggested Response
Pro: People are the “age” they think they are. We have experienced some fundamental
changes in consumer lifestyles and the definition of “family.” These changes suggest that
people are and can adapt to different products regardless of their chronological age. Today a
vast number of aging baby boomers, for example, do not think of themselves as approaching
middle age; as a result represent a growing market for age defeating products. This is true with
other age groups, as the advances in medicine, technology, and income have redefined what
the “age” number really means to people. In marketing today, the marketing of a product or
service can be designed to fit differing age groups by its positioning and advertising. Key
examples include cruise line advertising and marketing to “active adults” encompassing a
wide range of activities and locations previously thought of for the “youth” market.

Conversely, with the delay in child bearing and child rearing by some generations, activities
that were once thought of as for middle age or empty nesters can be remarketed to appeal to
these groups as well. Some generations have decided to explore the world before settling
down with children and a mortgage. All of these changes open up vast amounts of marketing
opportunities to enterprising firms and individuals. Marketing to one’s perception of “age”
rather than to the physical definition of age is an exciting new arena for marketers.

Con: Age and cohorts are more important than age differences. People still pass through life
as part of a “group” and experience the newness of life through cohort experiences and relate
to others within their identifiable group. Marketing to cohorts extends the ability of the
marketer to capitalize on share emotions, experiences, trends, and fads that have or had made
lasting impressions on the cohort. Technology has changed so much in the last few decades
and has influenced subsequent generations about expectations and potential, that one must
market to the cohorts in order to identify with their experiences. People within a particular
cohort seek information for purchase decisions from influencers within their cohort. Marketers
must identify these influencers and tailor messages that affect their review of products and
gain favor with them.

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MARKETING DISCUSSION
What brands and products do you feel successfully “speak to you” and effectively target your
age groups? Why? Which ones do not? What could they do better?

Suggested Response
Individual student answers will depend upon the products chosen, however these answers
should refer to and include some of the key concepts presented in the chapter.

DETAILED CHAPTER OUTLINE

Developing and implementing marketing plans requires a number of decisions. Making
those decisions is both an art and a science. To provide insight into and inspiration for
marketing decision making, companies must possess comprehensive, 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 and adapting to that environment.

COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM

The major responsibility for identifying significant marketplace changes falls to the
company’s marketers. More than any other group in the company, they must be the trend
trackers and opportunity seekers. Although every manager in an organization needs to observe
the outside environment, marketers have the following advantages: They have disciplined
methods for collecting information and they spend more time interacting with customers and
observing competition.

A) A marketing information system is developed from:

1) Internal company records.
2) Marketing intelligence activities.
3) Marketing research.
B) The company’s marketing information system should be a cross between what
managers think they need, what managers really need, and what is economically
feasible.
INTERNAL RECORDS AND MARKETING INTELLIGENCE
Marketing mangers rely on internal reports on orders, prices, costs, inventory levels,
receivables, payables, and so on. By analyzing this information, they can spot important
opportunities and problems.
Order-to-Payment Cycle
The heart of the internal records systems is the order-to-payment cycle.
Sales Information Systems
Marketing managers need timely and accurate reports on current sales.
A) Companies must carefully interpret the sales data so as not to get the wrong signals.

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B) Technological gadgets are revolutionizing sales information systems and allowing

representatives to have up-to-the second information.
Databases, Data Warehouses, and Data-Mining
Today companies organize information in databases—customer databases, product databases,
salesperson databases—and then combine data from the different databases.
A) Companies warehouse these data for easy accessibly to decision makers.
B) By hiring analysts skilled in sophisticated statistical methods, companies can “mine”
the data and garner fresh insights into:
1) Neglected customer segments.
2) Recent customer trends.
3) Other useful information.
C) The customer information can be cross-tabbed with product and salesperson
information to yield still deeper insights.
Marketing Insight: The Big Dig
Best Buy’s “Buzz”, “Jill”, “Barry”, and “Ray” system of customer segmentation and the
resulting in growing sales.
Marketing Intelligence System
The internal records systems supplies results data, but the marketing intelligence system
supplies happenings data.
A) A marketing intelligence system is a set of procedures and sources managers use to
obtain everyday information about developments in the marketing environment.
B) Marketing managers collect marketing intelligence by:
1) Reading books, newspapers, and trade publications.
2) Talking to customers, suppliers, and distributors.
3) Meeting with other company managers.
C) A company can take several steps to improve the quality of its marketing
intelligence:
1) A company can train and motivate the sales force to sport and report new
developments.
2) A company can motivate distributors, retailers, and other intermediaries to pass
along important intelligence.
3) A company can network externally.
4) A company can set up a customer advisory panel.
5) A company can take advantage of government data resources.
6) A company can purchase information from outside suppliers.

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7) A company can use online customer feedback systems to collect competitive

intelligence.
Marketing Memo: Clicking on the competition

There are four main ways marketers can find relevant online information about competitors’
product strengths and weaknesses: independent customer goods and service review forums;
distributor or sales agent feedback sites; combo-sites offering customer reviews and expert
opinions; customer complaint sites; public blogs.

ANALYZING THE MACROENVIRONMENT

Successful companies recognize and respond profitably to unmet needs and trends.
Needs and Trends
Enterprising individuals and companies manage to create new solutions to unmet needs.
A) A fad is “unpredictable, short-lived, and without social, economic, and political
significance.”
B) A trend is a direction or sequence of events that has some momentum and durability.
C) Trends are more predictable and durable than fads.
1) A trend reveals the shape of the future and provides many opportunities.
D) Megatrends 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.
E) Trends and megatrends merit close attention.
F) To help marketers’ spot cultural shifts that might bring new opportunities or threats,
several firms offer social-cultural forecasts.
Marketing Memo: Trends shaping the business landscape

Management consulting firm McKinsey believes that macroeconomic factors, environmental

and social issues, as well as business and industry developments, will profoundly shape the
business landscape in the coming years

Identifying the Major Forces

Companies and their suppliers, marketing intermediaries, customers, competitors, and publics,
all operate in an macroenvironment of forces and trends that shape opportunities and pose
threats.
A) These forces represent “non-controllables” to which the company must monitor and
respond. Within the rapidly changing global picture, the firm must monitor six major
forces:
1) Demographic.
2) Economic.
3) Social-cultural.

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4) Natural.
5) Technological.
6) Political-legal.
B) Marketers must pay attention to the interactions of these forces, as these will lead to
new opportunities and threats.
Breakthrough Marketing: Google
Relates how Google has become the major source for information on the web through is
augmented search capabilities and optimization models.
DEMOGRAPHIC ENVIRONMENT
The main demographic force that marketers monitor is population because people make up
markets.
A) Marketers are keenly interested in the:
1) Size and growth rate of populations in cities, regions, and nations.
2) Age distribution and ethnic mix.
3) Educational levels.
4) Household patterns.
5) Regional characteristics and movements.
Worldwide Population Growth
The world’s population is showing explosive growth: It totaled 6.1 billion in 2000 and will
exceed 7.9 billion by the year 2025.
A) The population explosion has been a source of major concern.
B) Explosive population growth has major implications for business.
C) A growing population does not mean growing markets unless these markets have
sufficient purchasing power.
Population Age Mix
A) National populations vary in their age mix. A population can be subdivided into six
age groups:
1) Preschool
2) School-age children
3) Teens
4) Young adults age 25 to 40
5) Middle-aged adults age 40 to 65
6) Older adults ages 65 and up
Cohorts are groups of individuals who are born during the same time period and travel
through life together

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Marketing Insight: Friends for life

Shows the seven distinct cohorts: Depression cohort; WW II cohort, Postwar cohort: Leading-
Edge Baby Boomer cohort; Training-edge cohort; Generation X cohort; N Generation cohort;
Ethnic and Other Markets
Countries vary in ethnic and racial makeup.
A) A frequently noted megatrend, the increase in the percentage of Hispanics in the total
population, represents a major shift in the nation’s center of gravity.
B) Ethnic groups have certain specific wants and buying habits.
C) Marketers must be careful not to overgeneralize about ethnic groups.
D) Within each ethnic group are consumers who are quite different from each other.
E) Diversity goes beyond ethnic and racial markets.
1) More than 50 million Americans have disabilities and they constitute a market for
home delivery products.
Educational Groups
A) The population in any society falls into five educational groups:
1) Illiterates.
2) High school dropouts.
3) High school degrees.
4) College degrees.
5) Professional degrees.
Household Patterns
A) The “traditional household” consists of a husband, wife, and children (sometimes
grandparents).
B) In the United States today, one out of eight households is "diverse” or “nontraditional”
and includes:
1) Single live-alones.
2) Adult live-togethers of one or both sexes.
3) Single-parent families.
4) Childless married couples.
5) Empty-nesters.
C) Gay and Lesbian population between 4 and 8%
D) “Metrosexual” – straight urban men with gay shopping styles

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Geographical Shifts in Population

This is a period of great migratory movements between and within countries. Forward-looking
companies and entrepreneurs are taking advantage of the growth in immigrant populations
and marketing wares specifically to these new members of the population.
A) Within countries, population movement occurs as people migrate from rural to urban
areas, and then to suburban areas.
B) Location makes a difference in goods and service preferences.

OTHER MAJOR MACROENVIRONMENTS

Other macroenvironment forces profoundly affect the fortunes of marketers, these are:
economic, social-cultural, natural. technological, and political-legal.
Economic Environment
Income Distribution
A) There are four types of industrial structures:
1) Subsistence economies.
2) Raw material exporting economies.
3) Industrializing economies.
B) Industrial economiesMarketers often distinguish countries with five different income-
distribution patterns:
1) Very low incomes.
2) Mostly low incomes.
3) Very low, very high incomes.
4) Low, medium, high incomes.
5) Mostly medium incomes.
C) Over the past three decades in the United States, the rich have grown richer, the
middle class has shrunk, and the poor have remained poor.
Savings, Debt, and Credit Availability
A) Consumer expenditures are affected by:
1) Savings.
2) Debt.
3) Credit availability.
Social-Cultural Environment
Society shapes the beliefs, values, and norms that largely define these tastes and preferences.
A) People absorb a worldview that defines their relationships to themselves, others,
organizations, society, nature, and to the universe.

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1) Views of themselves, people vary in the relative emphasis they place on self-
gratification.
2) View of others, people are concerned about the homeless, crime and victims, and
other social problems.
3) Views of organizations, people vary in their attitudes toward corporations,
government agencies, trade unions, and other organizations.
4) Views of society, people vary in their attitudes toward their society.
5) View of nature, people vary in their attitudes toward nature.
6) View of the universe, people vary in their beliefs about the origin of the universe
and their place in it.
High Persistence of Core Cultural Values
The people living in a particular society hold many core beliefs and values that tend to persist.
A) Core beliefs and values are passed on from parents to children and are reinforced by
major social institutions.
B) Secondary beliefs and values are more open to change.
C) Marketers have some chance of changing secondary values but little chance of
changing core values.
Existence of Subcultures
A) Each society contains subcultures, groups with shared values emerging from their
special life experiences or circumstances.
B) Members of subcultures share common beliefs, preferences, and behaviors.
C) To the extent that subcultural groups exhibit different wants and consumption
behavior, marketers can choose particular subcultures as target markets.
D) Marketers sometimes reap unexpected rewards in targeting subcultures.
Natural Environment
A) The deterioration of the environment is a major global concern.
B) In many world cities, air and water pollution have reached dangerous levels.
C) There is great concern about “greenhouse gases.”
D) New regulations have hit certain industries very hard.
E) Consumers often appear conflicted about the natural environment.
F) Corporate environmentalism is the recognition of the importance of environmental
issues facing the firm and the integration of those issues into the firm’s strategic plans.
Shortage of Raw Materials
The earth’s raw materials consist of the infinite, the finite renewable, and the finite
nonrenewable.
A) Infinite resources, such as air and water.

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B) Finite renewable resources, such as forests and foods.

C) Finite nonrenewable resources, such as oil and minerals.
Marketing Insight: Green marketing

Gallup polls revels that the percentage of U.S. consumers who report that they worry about the
environment a great deal or fair amount increased from 62% to 77% between 2004 and 2006.

Technological Environment
A) One of the most dramatic forces shaping peoples’ lives is technology.
B) Every new technology is a force for “creative destruction.”
C) The economy’s growth rate is affected by how many major new technologies are
discovered.
D) New technologies also creates major long-run consequences that are not always
foreseeable.
E) The marketer should monitor the following trends in technology:
1) Accelerating pace of change
2) Unlimited opportunities for innovation
3) Varying R&D budgets
4) Increased regulation of technological change
Political-Legal Environment
Marketing decisions are strongly affected by developments in the political and legal
environment. This environment is composed of laws, government agencies, and pressure
groups.
A) Increase in business legislation
B) Growth of Special-Interest Groups
1) Consumerist movement
2) Privacy issues will continue as a public policy issue in the near future

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