CHAPTER – TWO

CAPTURING MARKETING
INSIGHTS
 Contents to be covered
– Information Systems and Marketing Research
– Analyzing marketing Environment
– Measuring and forecasting demand
– Analysing Consumer Markets and buying behavior
• The buyers decision process
• Major factors influencing buying behavior
• Consumer buying,

– Analysing Business Markets buying behavior

• Characteristics of Business Market
• Buying situations in organizational buying
• Decision making process in organizational buying
• Influence on organizational buying decision
 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 Competitio
Is n
Identify
Customer Needed
Needs
Develop
Strategi
c
Planning
2.1 Information Systems & 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,
c
and distribute needed, timely, and accurate information to
omarketing decision makers, i.e
n
s
i • People, equipment, and procedures
s
t
Prs • Gather, sort, analyze, evaluate and distribute
oco
essf

wh • Needed, timely, and accurate information

at

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
 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
2.2. 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.
 CHAPTER THREE

Connecting with Customers

 CUSTOMER ANALYSIS
• How do consumer characteristics influence buying behavior?
• How do marketers analyze consumer decision making?

• What is the business market, and how does it differ from the
consumer market?

• Who participates in the business-to-business buying process?

• How do business buyers make their decisions?

 What is Customer Analysis
• To develop effective marketing strategies, it requires to
understand the needs of customers

• The success of any customer-focused program will involve

– inventive product development,
– integrated distribution methods,
– well calibrated pricing and
– state of the art communications.

• Customer analysis involves analysis of

– Consumer buying behavior
– Organizational buying behavior
 3.1.1 Analyzing the Consumer Market
• Consumer behaviour is the study of how individuals, and groups,
select, buy, use, and dispose of goods, services, ideas, or experiences
to satisfy their needs and wants.
• consumer behavior is the process whereby individuals decide what,
when, where, how and from whom to purchase goods and services

• Consumers behavior is described as an investigation into the way

individuals make decisions on how to spend their available
resources (time, money, effort) on personal and household products.

• A study of consumer behavior need to consider

– what occurs before people consume something,
– what goes on during the consumption period itself and
– how consumers handle the disposal of what they have consumed.
What Influences Consumer Behavior?

• Cultural factors
• Social factors
• Personal factors
• Psychological factors
Factors affecting the buying behaviour
 A. Cultural Factors

• Culture, subculture, and social class are important influences on

consumer buying behavior.
• Culture is a set of: Ideas, Customs, Values, Art and Belief that are
produced or shaped by a society and passed on from generation
to generation.

• Each culture consists of smaller subcultures that provide more

specific identification and socialization for their members.

• Subculture is based on religion, language, geographic region,

nationality, age etc
Nationalities e.g. in USA population-we can find
Asians, Europeans, Africans, Latino and many more..) (in
Ethiopia many nations with their own subculture)

Religions (e.g. Christian, Muslim… )

Racial groups (e.g. black, white, Hispanics…)

 B. Social Factors

Social factors that affect buyer behavior includes:

a) Reference groups: a person’s reference groups are all the groups that
have a direct or indirect influence on their attitudes or behavior
 Groups having a direct influence are called membership groups. It includes
• Primary groups: whom the person interacts fairly continuously and
informally, such as family, friends, neighbors, and coworkers
• Secondary groups: such as religious, professional, and trade-union
groups, which tend to be more formal and require less continuous
interaction

 People are also influenced by groups to which they do not belong.

• Aspirational groups: are those a person hopes to join
• Dissociative groups: are those whose values or behavior an individual
rejects
• Reference group create pressures for conformity that may affect actual
product and brand choices.
 D. Psychological Factors
 A person's buying choices are further influenced
by four important psychological factors:
• Motivation,
• Perception,
• Learning, and
• Beliefs and attitudes.
The Buying Decision Process: The Five-stage Model
 3.1.2. Business Markets and Business Buyer Behaviour

• The business markets consists of all organizations that acquire

goods and services used in the production of other products or
services that are sold or supplied to others.

• Organization buyers are customers that comprised of various

organizations such as
– Industrial Firms,
– Commercial Businesses, or
– Governmental Organizations And Institutions

• It is also known by the Business-to- Business Marketing (B2B

marketing)

• B2B markets have fewer buyers that can be communicated through

personal selling than mass advertising
 What is Organizational Buying?

• Organizational buying- refers to the decision-making process

by which formal organizations establish the need for
purchased products and services, and identify, evaluate, &
choose among alternative brands and suppliers.
 Example of leather industry
• Hide venders sell to hide tanners

in
• Tanners sell to shoes manufacturers

cha
• Manufacturers to whole sellers

ply
• Whole sellers to retailers

sup
• Retailers to customers

• Each party in the supply chain also buy many

other goods and services in support of their
operations.
 Characteristics

• It is concerned with the marketing of products and

services from one organization to another.

• The customer is an organization with organizational goals

• Business to business marketing is the process of trying to

match a company’s products and services to the
organizational goals of its target customers.
Characteristics of Business markets
Dimension Characteristics of Explanation
business market

Nature of Demand Derived Demand The demand from a business is

derived from its own sales volume
Buying influences Many influences There are often many interested
parties who influence the buying
decision (bid committee, experts, etc)

Market structure Often concentrated A small number of large customers

demand often make up a substantial share of
the market
Purchasing motives organizational, rational Products purchased for the
achievements of organizational goals

Purchasing decision Often complex and Decisions can involve long and
process lengthy complex analysis and negotiation

Purchasing skills Professional, trained Buyers are often professionally

qualified in purchasing
 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.