Chapter 3 Lecture Notes
Collecting and Analyzing Marketing Information
Chapter 3: Collecting and Analyzing Marketing Information
Chapter Outline
I. Introduction
A. Beyond the Pages 3.1 discusses the challenges and opportunities of marketing to
baby boomers.
B. The purpose of the situation analysis is to describe current and future issues and
key trends as they affect three key environments: the internal environment, the
customer environment, and the external environment.
C. Although staying abreast of trends in the marketing environment is one of several
tasks performed by marketing managers, it is perhaps the most important, as
practically all planning and decision making depends on how well this analysis is
conducted. [Exhibit 3.1]
II. Conducting a Situation Analysis
A. Analysis Alone Is Not a Solution
1. While a comprehensive situation analysis can lead to better planning and
decision making, analysis itself is not enough.
2. Situation analysis is a necessary, but insufficient, prerequisite for effective
strategic planning.
3. A thorough situation analysis empowers the marketing manager because it
encourages both analysis and synthesis of information.
B. Data Is Not the Same as Information
1. Good, useful information is not the same as data. Data are easy to collect
and store, but good information is not.
2. Data do not become informative until a person or process transforms or
combines them with other data in a manner that makes them useful.
C. The Benefits of Analysis Must Outweigh the Costs
1. Situation analysis is valuable only to the extent that it improves the quality
of the resulting marketing plan.
2. Although the costs of acquiring data are easy to determine, the benefits of
improved decisions are difficult to estimate.
3. Perpetually analyzing data without making any decisions is usually not
worth the additional costs in terms of time or financial resources.
D. Conducting a Situation Analysis Is a Challenging Exercise
1. Situation analysis is one of the most difficult tasks in developing a
marketing plan.
3. Tracking all three environments (internal, customer, and external) at the
same time is challenging due to their interconnectedness. [Exhibit 3.2]
Chapter 3 Lecture Notes
Collecting and Analyzing Marketing Information
III. The Internal Environment [Exhibit 3.3]
A. Review of Current Objectives, Strategy, and Performance
1. A periodic assessment of marketing objectives is necessary to ensure that
they remain consistent with the firm’s mission and the changing customer
and external environments.
2. The marketing manager should also evaluate the performance of the
current marketing strategy with respect to sales volume, market share,
profitability, and other relevant measures.
3. Poor or declining performance may be the result of:
a) holding on to marketing goals or objectives that are inconsistent
with the current realities of the customer or external environments.
b) a flawed marketing strategy.
c) poor implementation.
d) changes in the customer or external environments beyond the
control of the firm.
B. Availability of Resources
1. This review includes an analysis of financial, human, and experience
2. It is also important to gauge whether the availability or level of these
1. One of the most important issues in this review involves the internal
culture of the firm.
3. The internal culture also includes any anticipated changes in key executive
positions within the firm.
4. Other structural issues to be considered include the overall customer
orientation of the firm (or lack thereof), issues related to employee
motivation and commitment to the organization (particularly among
unionized employees), and the relative emphasis on long- versus short-
term planning.
5. For most firms, culture and structure are relatively stable issues that do not
change dramatically from one year to the next.
IV. The Customer Environment [Exhibit 3.4]
A. Who Are Our Current and Potential Customers?
1. Answering the “who” question requires an examination of the relevant
characteristics that define target markets, such as demographic geographic,
and psychographic characteristics.
2. The analysis must also assess the viability of potential customers or
markets that may be acquired in the future.
Chapter 3 Lecture Notes
Collecting and Analyzing Marketing Information
B. What Do Customers Do with Our Products?
1. The “what” question entails an assessment of how customers consume and
dispose of the firm’s products.
2. In the case of derived demand—where the demand for one product
depends on (is derived from) the demand of another product—the
marketer must also examine the consumption and usage of the
complementary product.
3. Marketers have become increasingly interested in how customers dispose
of products, such as whether customers recycle the product or its
packaging.
4. Another post-consumption issue deals with the need for reverse channels
of distribution to handle product repairs.
5. Beyond the Pages 3.2 examines the growing problem of e-waste, or
obsolete and broken electronics.
C. Where Do Customers Purchase Our Products?
1. The “where” question is mainly one of distribution and customer
convenience.
2. The fastest growing form of distribution today is nonstore retailing—
which includes vending machines; direct marketing through catalogs,
home sales, or infomercials; and electronic merchandising through the
Internet, interactive television, and video kiosks.
D. When Do Customers Purchase Our Products?
1. The “when” question refers to any situational influences that may cause
customer purchasing activity to vary over time.
2. The “when” question also includes subtler influences that can affect
purchasing behavior, such as physical and social surroundings, time
perceptions, and the purchase task.
E. Why (and How) Do Customers Select Our Products?
2. The “how” part of this question refers to the means of payment that
3. Barter—an exchange of goods and services for other goods and services—
has reemerged in business markets.
F. Why Do Potential Customers Not Purchase Our Products?
1. There are many potential reasons why customers might not purchase a
firm’s products:
a) Noncustomers have a basic need that the firm’s product does not
fulfill.
b) Noncustomers perceive that they have better or lower-priced
alternatives, such as competing substitute products.
c) Competing products actually have better features or benefits than
the firm’s product.
d) The firm’s product does not match noncustomers’ budgets or
lifestyles.
Chapter 3 Lecture Notes
Collecting and Analyzing Marketing Information
e) Noncustomers have high switching costs.
f) Noncustomers do not know that the firm’s product exists.
g) Noncustomers have misconceptions about the firm’s product
(weak or poor image).
h) Poor distribution makes the firm’s product difficult to find.
2. The potential for converting noncustomers into customers must also be
assessed.
V. The External Environment [Exhibit 3.5]
A. Competition
1. When a firm defines the target markets it will serve, it simultaneously
selects a set of competing firms.
2. Most firms face four basic types of competition: [Exhibit 3.6]
a) Brand competitors, which market products with similar features
and benefits to the same customers at similar prices.
b) Product competitors, which compete in the same product class, but
with products that are different in features, benefits, and price.
c) Generic competitors, which market very different products that
solve the same problem or satisfy the same basic customer need.
d) Total budget competitors, which compete for the limited financial
resources of the same customers.
3. Brand competitors rightfully receive the greatest attention because
customers see different brands as direct substitutes for each other. For this
reason, strategies aimed at getting customers to switch brands are a major
focus in any effort to beat brand competitors.
4. Competitive analysis has received greater attention recently for several
reasons:
a) more intense competition from sophisticated competitors
b) increased competition from foreign firms
c) shorter product life cycles
d) dynamic environments, particularly in the area of technological
innovation
5. Competitive intelligence involves the legal and ethical observation,
tracking, and analysis of the total range of competitive activity; including
1. A thorough examination of economic factors requires marketing managers
2. General economic conditions include inflation, employment and income
levels, interest rates, taxes, trade restrictions, tariffs, and the current and
future stages of the business cycle (prosperity, stagnation, recession,
depression, and recovery).
Chapter 3 Lecture Notes
Collecting and Analyzing Marketing Information
3. Consumers’ confidence, their overall impressions of the economy, and
their ability and willingness to spend are also important.
C. Political Trends
1. Most organizations should track political trends and attempt to maintain
good relations with elected officials.
2. Elected officials who have negative attitudes toward a firm or its industry
are more likely to create or enforce regulations unfavorable for the firm.
D. Legal and Regulatory Issues
1. The simple existence of laws and regulations causes many firms to accept
their influence as a predetermined aspect of market planning.
2. In reality, most laws and regulations are fairly vague, which often forces
3. Managers should also examine recent court rulings, as well as the
decisions of federal, state, local and self-regulatory trade agencies to
determine their effects on marketing activities.
E. Technological Advancements
1. Technology refers to the way we accomplish specific tasks or the
processes we use to create the “things” we consider as new.
2. Some technologies assume a frontstage presence (advances that are most
noticeable to customers) in creating new marketing opportunities.
3. Other technological changes can also assume a backstage presence when
their advantages are not necessarily apparent to customers.
F. Sociocultural Trends [Exhibit 3.7]
1. Sociocultural factors are those social and cultural influences that cause
changes in attitudes, beliefs, norms, customs, and lifestyles.
2. One of the most important sociocultural changes taking place today is the
shifting demographic makeup of the U.S. population. [Exhibit 3.8]
3. Changes in cultural values—the guiding principles of everyday life—can
also create opportunities and challenges for marketers.
4. Beyond the Pages 3.3 provides an overview of the corporate affairs
function in many different firms.
VI. Collecting Marketing Data and Information
A. Secondary Information Sources
1. Internal Data Sources—The firm’s own records are the best source of data
on current objectives, strategy, performance, and available resources.
2. Government Sources—The sheer volume of available information on the
economy, population, and business activities is the major strength of most
government data sources. Government sources are also easily accessible
and low in cost.
3. Book and Periodical Sources—The articles and research reports available
in books and periodicals provide a gamut of information about many
organizations, industries, and nations.
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2. Understanding the motivations of a firm’s noncustomers is often just as important as
understanding its customers. Look again at the reasons why an individual would not
purchase a firm’s products. How can a firm reach out to noncustomers and successfully
convert them into customers?
3. Do you think the Internet has made it easier or more difficult to collect marketing data
and information? Why? How might the major data collection issues of today compare to
the issues that occurred in the pre-Internet era?
Exercises
1. Choose a specific product that you use on a daily basis (such as food items, toiletries, or
your car) and apply the 5W model in Exhibit 3.4 to yourself:
a. Who are you (demographics, psychographics, etc.)?
b. What do you do with the product (consumption, storage, disposal, etc.)?
c. Where do you purchase the product? Why?
d. When do you purchase the product? Why?
e. Why and how do you select the product?
f. Why do you not purchase competing products?
Assume your responses are similar to millions of other consumers. Given this profile,
how would you approach the marketing strategy for this particular product?
