LEARNING OBJECTIVES
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?
CHAPTER SUMMARY
1. To carry out their analysis, planning, implementation, and control responsibilities,
2. 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
3. Marketers find many opportunities by identifying trends (directions or sequences of
4. Within the rapidly changing global picture, marketers must monitor six major
5. In the demographic environment, marketers must be aware of worldwide population
6. In the economic arena, marketers need to focus on income distribution and levels of
C H A P T E R
3
GATHERING
INFORMATION AND
FORECASTING
DEMAND
7. In the social-cultural arena, marketers must understand people’s views of themselves,
8. In the natural environment, marketers need to be aware of the public’s increased
9. In the technological arena, marketers should take account of the accelerating pace of
10. In the political-legal environment, marketers must work within the many laws
regulating business practices and with various special-interest groups.
11. There are two types of demand: market demand and company demand. To estimate
current demand, companies attempt to determine total market potential, area market
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
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 weeks), have the students develop the
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.
• 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.
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
years? b) What is the age dispersion in the U.S. in these years, and c) What industries do you
see benefiting/losing within the U.S. because of these population figures.
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.
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
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
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.
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
Marketing Excellence: MICROSOFT
Questions:
1) Evaluate Microsoft’s strategy in good and poor economic times.
Suggested Answer: Microsoft’s marketing strategy did not/does not change to reflect
consumer’s changing buying priorities. For example, in 2008 in the midst of a recession,
2) Discuss the pros and cons of Microsoft’s most recent “I’m a PC” campaign. Is
Microsoft doing a good thing by acknowledging Apple’s campaign in its own marketing
message? Why or why not?
Suggested Answer: Why not: Most branding and marketing professionals would say that
Marketing Excellence: WALMART
Questions:
1) Evaluate Walmart’s new marketing campaign and tagline. Did the company make the
right decision to drop “Always Low Prices. Always.”? Why or why not?
Suggested Answer: No, Sam Walton had an effective strategy and message in that tag
2) Walmart does very well when the economy turns sour. How can it protect itself when
the economy is on the rise? Explain.
Suggested Answer: Walmart is vulnerable with aspirational buyers and shoppers and
shoppers who shop for recreational, social, and entertainment reasons. Walmart also
DETAILED CHAPTER OUTLINE
Making marketing decisions in a fast-changing world is both an art and a science. To
provide context, insight, and inspiration for marketing decision making, companies must
possess comprehensive, up-to-date information about macro trends, as well as about
COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM
The major responsibility for identifying significant marketplace changes falls to the
company’s marketers. Marketers have two advantages for the task: disciplined methods
for collecting information, and time spent interacting with customers and observing
competitors and other outside groups. Some firms have marketing information systems
that provide rich detail about buyer wants, preferences, and behavior.
1. What decisions do you regularly make?
2. What information do you need to make these decisions?
6.What information would you want daily? Weekly? Monthly? Yearly?
7.What online or offline newsletters, briefings, blogs, reports, or magazines would you
like to see on a regular basis?
8.What topics would you like to be kept informed of?
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.
Order–to-Payment Cycle
A) Companies warehouse these data for easy accessibility to decision makers.
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
A company can take eight possible actions to improve the quantity and quality of its
marketing intelligence:
1) A company can train and motivate the sales force to spot and report new
developments.
2) A company can motivate distributors, retailers, and other intermediaries to pass
along important intelligence.
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.
There are five main ways marketers can research competitors’ product strengths and
weaknesses online.
1. Independent customer goods and service review forums.
Communicating and Acting on Marketing Intelligence
In some companies the staff scans the Internet and major publications, abstracts relevant
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 with momentum and durability.
Identifying the Major Forces
The end of the first decade of the new century brought a series of new challenges: the
steep decline of the stock market, which affected savings, investment, and retirement
funds; increasing unemployment; corporate scandals; stronger indications of global
warming and other signs of deterioration in the national environment; and of course, the
rise of terrorism. These dramatic events were accompanied by the continuation of many
existing trends that have already profoundly influenced the global landscape.
i
Firms must monitor six major forces in the broad environment: demographic, economic,
social-cultural, natural, technological, and political-legal.
1) Demographic
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.
Worldwide Population Growth
World population growth is explosive: Earth’s population totaled 6.8 billion in 2010 and will
exceed 9 billion by 2040.
A) Population growth is highest in countries and communities that can least afford it
Marketing Insight:
Finding Gold at the bottom of the pyramid
There are 5 billion unserved and underserved people at the so-called “bottom of the pyramid.”
One study showed that 4 billion people live on $2 or less a day. Firms operating in those
markets have had to learn how to do more with less
Population Age Mix
A) There is a global trend toward an aging population. National populations vary in their
age mix. A population can be subdivided into six age groups:
1) Preschool children
Ethnic and Other Markets
Ethnic and racial diversity vary across countries.
The growth of the Hispanic population represents a major shift in the nation’s center of
gravity.
A) Ethnic groups have certain specific wants and buying habits.
Educational Groups
A) The population in any society falls into five educational groups:
1) Illiterates
Household Patterns
The “traditional household” consists of a husband, wife, and children (sometimes
grandparents). Yet by 2010, only one in five U.S. households will consists of a married couple
with children under 18. More people are divorcing or separating, choosing not to marry,
The Economic Environment
The available purchasing power in an economy depends on current income, prices,
savings, debt, and credit availability. As the recent economic downturn vividly
Consumer Psychology
Did new consumer spending patterns during the 2008-2009 recession reflect short-term,
temporary adjustments or long-term, permanent changes?
ii
Some experts believed the
Income Distribution
A) There are four types of industrial structures:
1) Subsistence economies
B) Marketers often distinguish countries with five different income-distribution patterns:
1) Very low incomes
2) Mostly low incomes
Income, Savings, Debt, and Credit Availability
A) Consumer expenditures are affected by:
1) Income
Social-Cultural Environment
From our socio-cultural environment we absorb, almost unconsciously, a world view that
defines our relationships to ourselves, others, organizations, society, nature, and the
universe.
1) Views of ourselves
High Persistence of Core Cultural Values
Most people in the United States still believe in working, getting married, giving to charity,
and being honest.
A) Core beliefs and values are passed on from parents to children and are reinforced by
social institutions.
Existence of Subcultures
A) Each society contains subcultures, groups with shared values emerging from their
special life experiences or circumstances.
Natural Environment
In Western Europe, “green” parties have pressed for public action to reduce industrial
Corporate environmentalism recognizes the need to integrate environmental issues into the
firm’s strategic plans.
2006.
Technological Environment
It is the essence of market capitalism to be dynamic and tolerate the creative destructiveness of
technology as the price of progress. The marketer should monitor the following trends in
technology:
Political-Legal Environment
The political and legal environment consists of laws, government agencies, and pressure
groups that influence various organizations and individuals. Sometimes these laws create new
business opportunities.
FORECASTING AND DEMAND MEASUREMENT
Understanding the marketing environment and conducting marketing research (described in
Chapter 4) can help to identify marketing opportunities. The company must then measure and
The Measures of Market Demand
Companies can prepare as many as 90 different types of demand estimates for six different
product levels, five space levels, and three time periods. Each demand measure serves a
specific purpose.
A Vocabulary for Demand Measurement
MARKET DEMAND
The marketer’s first step in evaluating marketing opportunities is to estimate total market
demand.
Market demand for a product is the total volume that would be bought by a defined
A nonexpansible market—for example, the market for weekly trash or garbage
removal—is not much affected by the level of marketing expenditures; the distance
between Q1 and Q2 is relatively small.
Organizations selling in a nonexpansible market must accept the market’s size—the level
of primary demand for the product class—and direct their efforts toward winning a larger
market share for their product, that is, a higher level of selective demand for their
product.
MARKET FORECAST
Only one level of industry marketing expenditure will actually occur. The market demand
corresponding to this level is called the market forecast.
MARKET POTENTIAL
The market forecast shows expected market demand, not maximum market demand.
COMPANY DEMAND
Company demand is the company’s estimated share of market demand at alternative levels
of company marketing effort in a given time period. It depends on how the company’s
products, services, prices, and communications are perceived relative to the competitors’.
COMPANY SALES FORECAST
Once marketers have estimated company demand, their next task is to choose a level of
marketing effort.
COMPANY SALES POTENTIAL
Company sales potential is the sales limit approached by company demand as company
marketing effort increases relative to that of competitors. The absolute limit of company
demand is, of course, the market potential.
Estimating Current Demand
TOTAL MARKET POTENTIAL
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
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.
Two major methods are the market-buildup method, used primarily by business marketers,
and the multiple-factor index method, used primarily by consumer marketers.
Multiple-Factor Index Method Like business marketers, consumer companies also need
to estimate area market potentials, but since their customers are too numerous to list they
commonly use a straightforward index.
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.
Estimating Future Demand
The few products or services that lend themselves to easy forecasting generally enjoy an
absolute level or a fairly constant trend, and competition that is either nonexistent (public
utilities) or stable (pure oligopolies). In most markets, in contrast, good forecasting is a
key factor in success.
SURVEY OF BUYERS’ INTENTIONS
Forecasting is the art of anticipating what buyers are likely to do under a given set of
conditions.
COMPOSITE OF SALES FORCE OPINIONS
When buyer interviewing is impractical, the company may ask its sales representatives to
estimate their future sales.
EXPERT OPINION
Companies can also obtain forecasts from experts, including dealers, distributors,
suppliers, marketing consultants, and trade associations.
PAST-SALES ANALYSIS
Firms can develop sales forecasts on the basis of past sales.
MARKET-TEST METHOD
When buyers don’t plan their purchases carefully, or experts are unavailable or
unreliable, a direct-market test can help forecast new-product sales or established product
sales in a new distribution channel or territory.