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 about the order-to-payment cycle and sales information systems; (b) a
3. Marketers find many opportunities by identifying trends (directions or sequences
4. Within the rapidly changing global picture, marketers must monitor six major
5. In the demographic environment, marketers must be aware of worldwide
7. In the social-cultural arena, marketers must understand people’s views of
C H A P T E R
3
COLLECTING
INFORMATION AND
FORECASTING
DEMAND
8. Acknowledging the public’s increased concern about the health of the natural
environment, marketers are embracing sustainability and green marketing programs.
9. In the technological arena, marketers should take account of the accelerating pace
11. To estimate current demand, companies attempt to determine total market
potential, area market potential, industry sales, and market share. To estimate future
demand, companies survey buyers’ intentions, solicit their sales force’s input, gather
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 of the
environments identified in this chapter. Today, marketers must be cognizant of “how” their
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.
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
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
students 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 U.S. in these
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.
campus are clinically obese? This is a very good project to demonstrate the skill of data
mining and the use of secondary data.
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.
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.
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 they 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
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
MARKETING DISCUSSION
What brands and products do you feel successfully speak to you and effectively target your
age group? Why? Which ones do not? What could they do better?
Suggested Response
Marketing Excellence: Microsoft
Evaluate Microsoft’s product and marketing evolution over the years. What has the company
done well, and where did it falter?
Questions:
1) Evaluate Microsoft’s product and marketing evolution over the years. What has the
company done well, and where did it falter?
Suggested Answer: Microsoft’s marketing strategy has not always changed to reflect
consumer’s changing buying priorities. For example, in 2008 in the midst of a recession,
2) Evaluate Microsoft’s recent expansions into areas such as search engines and smart
phones. Do you think these are good areas of growth for Microsoft? Why or why not?
Suggested Answer: Student responses may vary. Microsoft is responding to changes in
Marketing Excellence: Walmart
Questions:
1) Evaluate the evolution of Walmart’s marketing campaign and tagline over the years.
What does the company continue to do well? What are the pros and cons of its most
recent strategic marketing plan?
Suggested Answer: Sam Walton had an effective strategy and message in that tag line –
the consumer would always know what Walmart stands for and how she/he can/ could
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
DETAILED CHAPTER OUTLINE
Opening vignette: Marketers need up-to-date information to make marketing decisions.
Campbell attempted to understand macroenvironmental trends to boost soup sales among
millenials.
I. Components of a Modern Marketing Information System
A. Marketers are responsible for identifying significant marketplace changes
i. They have disciplined methods for collecting information
ii. The spend time interacting with customers and observing competitors
and other outside groups
B. Some firms, like DuPont, have marketing information systems that provide
details about buyer wants, preferences and behavior
C. A 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.
i. Internal company records
ii. Marketing intelligence activities
iii. Marketing research
D. Information needs probes for marketing managers
i. What decisions do you regularly make?
ii. What information do you need to make these decisions?
iii. What information do you regularly get?
iv. What special studies do you periodically request?
II. Internal Records
A. Internal reports of orders, sales, prices, costs, inventory levels, receivables and
payables
B. The Order-to-Payment Cycle, which is the heart of the internal records
system, includes invoices, shipping and billing documents
C. Sales Information Systems include sales and inventory data
D. Databases, Data Warehouses and Data Mining provide information that
enables customer engagement, but present challenges because it cannot be
effectively managed with traditional database and business intelligence tools
due to:
III. Marketing Intelligence
A. A marketing intelligence system is a set of procedures and sources that
managers use to obtain everyday information about developments in the
marketing environment.
B. It reports “happenings” data from books, newspapers, trade publications,
customers, suppliers, distributors, managers and social media monitoring
C. Marketing intelligence gathering must be legal and ethical
D. Eight actions to improve the quantity and quality of its marketing intelligence
i. Train and motivate the sales force to spot and report new
developments.
ii. Motivate distributors, retailers, and other intermediaries to pass along
important intelligence.
E. Communicating and Acting on Marketing Intelligence: competitive
intelligence works best when it is closely coordinated with decision-making
process
IV. Analyzing the Macroenvironment
A. Needs and Trends
i. Create new solutions to similarly unmet needs
ii. A fad is an unpredictable, short-lived, and without social, economic
and political significance
B. Identifying the Major Forces
i. Demographic
ii. Economic
C. The Demographic Environment
i. Population size and growth, rate in cities, regions and nations, age
distribution and ethnic mix, educational levels, household patterns
ii. Population growth fastest in developing regions
iii. 5 billion unserved and underserved people make up the “bottom of the
pyramid”
2. Reverse innovation – focus on the needs and constraints of a
developing market to create an inexpensive product that can
iv. Age and Population
1. Age and population growth varies by country
3. Six age groups
a. Preschool
4. Cohorts are groups of individuals born during the same time
period who travel through life together
5. Ethic and racial diversity varies across countries
a. Hispanic population is fastest-growing and most
6. Educational groups
a. Illiterates
7. Household patterns affect buying behavior
a. Only 20% of US households will include a husband,
wife and children under 18 by 2010.
b. Women without husbands as head of household is up
18%]
and price
ii. Consumers have been shaken by the recession, have more debt and
less savings, and feel it will change their behavior, to be more risk
averse, going forward
iii. Income distribution: four types of industrial structures
2. Raw-material-exporting economies
4. Industrial economies
iv. Five income-distribution patterns
2. Mostly low incomes
4. Low, medium, high incomes
5. Mostly medium incomes
v. Income, savings, debt and credit affect expenditures
1. U.S. consumers have high debt-to-income ratio, which slows
expenditures on housing and large-ticket items
3. Manufacturers and service jobs are migrating offshore
E. The Sociocultural Environment impacts consumption trends and behavior,
1. Core beliefs and values are passed from parents to children and
reinforced by social institutions
2. Secondary beliefs and values are more open to change
ii. Subcultures are groups with shared values, beliefs, preferences and
behaviors emerging from their special life experiences or
circumstances
F. The Natural Environment
i. In the U.S., experts have documented ecological deterioration
ii. There are opportunities for those who can reconcile prosperity and
environmental protection
G. The Technological Environment
i. Innovation’s long-run consequences are not fully foreseeable
ii. Trends include:
2. Unlimited opportunities for innovation
4. Increased regulation of technological change
H. The Political-Legal Environment
1. Increased business legislation
2. Growth of special interest groups (including the consumerist
movement)
iii. The personal data economy worries consumers
V. Forecasting and Demand Measurement
A. The company must measure and forecast the size, growth and profit potential
of each new opportunity
B. Sales forecasts are used by finance to raise cash for investment and
operations, by manufacturing to establish capacity and output, by purchasing
to acquire the right amount of supplies, by human resources to hire the needed
workers
C. Measures of Market Demand
i. Potential market: sufficient interest in market offer (becomes a market
if sufficient income and access)
iv. Target market: part of the qualified available market the company
decides to pursue
v. Penetrated market: set of consumers who are buying the company’s
product
D. Vocabulary for Demand Measurement
i. Market demand for a product is the total volume that would be bought
by a defined customer group in a defined geographical area in a
defined time period in a defined marketing environment under a
defined marketing program
vi. The market size is the level of primary demand
vii. Market share is the selective demand for a particular product
viii. Market-penetration index: low index indicates substantial growth
potential; high index suggests it will be expensive to attract the few
xiii. Sales quota is the sales goal for a product line, company division, or
sales representative
xiv. Sales budget is a conservative estimate of the expected volume of sales
xv. Company sales potential is the conservative estimate of the expected
volume of sales
E. Estimating Current Demand
i. 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.
2. The most difficult component to estimate is number of buyers
ii. Area market potential allocates the marketing budget optimally among
the best territories
1. Market-buildup method identifies all the potential buyers in
each market and estimates their potential purchases
3. Normally, the lower the Brand Development Index, the higher
the market opportunity, in that there is room to grow the brand.
4. Other marketers would argue instead that marketing funds
iii. Industry sales and market shares means finding out competitors and
estimating their sales/evaluating performance against the industry’s
F. Estimating Future Demand
i. The macroeconomic forecast projects inflation, unemployment,
interest rates, consumer spending, business investment, government
expenditures, net exports, and other variables (forecasts GDP)
ii. They buy forecasts from someone else
iii. They build a forecast on what people say, what people do, or what
people have done
2. Ask the sales force
4. Past sales analysis