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133 Cards in this Set

  • Front
  • Back
Whatis a Marketing Information System?
consistsof people, equipment, and procedures to gather, sort, analyze, evaluate, anddistribute needed, timely, and accurate information to marketing decision makers

InternalRecords and Marketing Intelligence

Order-to-payment cycle


Sales information system


Databases, warehousing, data mining


Marketing intelligence system

Whatis a Marketing Intelligence System?

A marketingintelligence system is aset of procedures and sources that managers use to obtain everyday informationabout developments in the marketing environment.

Stepsto Quality Marketing Intelligence

Train sales force to scan for newdevelopments Motivate channel members to shareintelligence Hire external experts to collectintelligence


Network externally


Utilize a customer advisory panel


Utilize government data sources


Purchase information

Sourcesof Competitive Information

Independent customer goods and servicereview forums


Distributor or sales agent feedback sites


Combination sites offering customerreviews and expert opinions


Customer complaint sites


Public blogs

Needs and Trends

Fab


Trend


Megatrend

Major Forces in the environment

Demographic


Political-legal


social-cultural


economic


natural


technological

Population and demographics

population growth


population age mix


ethnic markets


educational groups


household patterns

Economic Environment

Consumer psychology


income distribution


income, savings, debt, credit



Income distribution

subsistence economics


raw-material-exporting economics


industrializing economics


industrial economics

Social-cultural environment

view of themselves


view of others


view of organizations


views of society


views of nature


views of the universe

natural environment

shortage of raw materials


increased energy costs


anti-pollution pressures


governmental protections

keys to avoiding green marketing myopia

consumer value positioning


calibration of consumer knowledge


credibility of product claims

Technological environment

Pace of change


Opportunities for innovation


Varying R&D budgets


Increased regulation of change

the political-legal environment

business legislation




growth of special interest groups

how can we measure market demand?

Potentialmarket


Availablemarket


Targetmarket


Penetratedmarket

Estimating the current market demand:


Total market potential

Calculations


Multiplepotential number of buyers by average quantity each purchases times price




or


Chain-ratiomethod

EstimatingFuture Demand

Survey of Buyers’ Intentions


Composite of Sales Force Opinions


Expert Opinion


Past-Sales Analysis


Market-Test Method

Who is responsible for identifying significant marketplace change?




And why?

The marketers




1. Marketers have disciplined methods for collecting information, and time spent interacting with customers and observing competitors and other outside groups.




2, Marketers also have extensive information about how consumption patterns vary across and within countries

A marketing information system is important to help

organize and distribute a continuous flow of information to its marketing managers

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. It relies on internal company records, marketing intelligence activities, and marketing research

the comany's marketing information system should be a mixture of...

what managers think they need, what they really need, and what is economically feasible.

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 heart of the internal records system is the

order-to-payment cycle

The order-to-payment-cycle

Sales representatives, dealers, and customers send orders to the firm. The sales department prepares invoices, transmits copies to various departments, and back-orders out-of-stock items. Shipped items generate shipping and billing documents that go to various departments. Because customers favor firms that can promise timely delivery, companies need to perform these steps quickly and accurately. Many use the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle.

Sales information systems

Marketing managers need timely and accurate reports on current sales.





Web cookies

Smart way to target marketing




consumers are happy to cooperate and expect deals to be shown based on their viewing habits.





Companies organize their data by

customer, product, and salesperson database. Then combine this data.

The customer database will contain

every customer’s name, address, past transactions, and sometimes even demographics and psychographics (activities, interests, and opinions).

Companies can determine which customers to send offers to by...

ranking customers based on purchase recency, frequency, and monetary value (RFM) and send the offer to only the highest-scoring customers.

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 ___________, but the marketing intelligence system supplies _________.

Results Data




Happenings Data

Different ways marketing managers collect marketing intelligence

reading books, newspapers, and trade publications; talking to customers, suppliers, and distributors; monitoring social media on the Internet; and meeting with other company managers.

How to improve 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.


3. Hire external experts to collect intelligence


4. Network internally and externally.


5. Set up a customer advisory panel.


6. Take advantage of government-related data resources.


7. Purchase information from outside research firms and vendors.


8. Collecting Marketing Intelligence on the Internet

Train and motivate the sales force to spot and report new developments.

The company must “sell” its sales force on their importance as intelligence gatherers. Grace Performance Chemicals, a division of W. R. Grace, supplies materials and chemicals to the construction and packaging industries. Its sales reps were instructed to observe the innovative ways customers used its products in order to suggest possible new products. Some were using Grace waterproofing materials to soundproof their cars and patch boots and tents. Seven new-product ideas emerged, worth millions in sales.

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. ConAgra has initiated a study with some of its retailers such as Safeway, Kroger, and Walmart to study how and why people buy its foods. Finding that shoppers who bought their Orville Redenbacher and Act II brands of popcorn tended to also buy Coke, ConAgra worked with the retailers to develop in-store displays for both products. Combining retailers’ data with its own qualitative insights, ConAgra learned that many mothers switched to time-saving meals and snacks when school started. It launched its “Seasons of Mom” campaign to help grocers adjust to seasonal shifts in household needs

Hire external experts to collect intelligence

Many companies hire specialists to gather marketing intelligence. Service providers and retailers send mystery shoppers to their stores to assess cleanliness of facilities, product quality, and the way employees treat customers. Health care facilities’ use of mystery patients has led to improved estimates of wait times, better explanations of medical procedures, and less-stressful programming on the waiting room TV

Network internally and externally.

The firm can purchase competitors’ products, attend open houses and trade shows, read competitors’ published reports, attend stockholders’ meetings, talk to employees, collect competitors’ ads, consult with suppliers, and look up news stories about competitors

Set up a customer advisory panel.

Members of advisory panels might include the company’s largest, most outspoken, most sophisticated, or most representative customers. For example, GlaxoSmithKline sponsors an online community devoted to weight loss and says it is learning far more than it could have gleamed from focus groups on topics from packaging its weight-loss pill to where to place in-store marketing.

Take advantage of government-related data resources.

The U.S. Census Bureau provides an in-depth look at the population swings, demographic groups, regional migrations, and changing family structure of the estimated 304,059,724 people in the United States (as of July 1, 2008). Census marketer Nielsen Claritas cross-references census figures with consumer surveys and its own grassroots research for clients such as The Weather Channel, BMW, and Sovereign Bank. Partnering with “list houses” that provide customer phone and address information, Nielsen Claritas can help firms select and purchase mailing lists with specific clusters

Purchase information from outside research firms and vendors.

Well-known data suppliers include firms such as the A.C. Nielsen Company and Information Resources Inc. They collect information about product sales in a variety of categories and consumer exposure to various media. They also gather consumer-panel data much more cheaply than marketers manage on their own. Biz360 and its online content partners, for example, provide real-time coverage and analysis of news media and consumer opinion information from over 70,000 traditional and social media sources (print, broadcast, Web sites, blogs, and message boards).

Collecting Marketing Intelligence on the Internet

hanks 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.

What are the five ways marketers can research a competitors product strengths and weaknesses online?

1. Independent customer goods and service review forums.


2. Distributor or sales agent feedback sites.


3. Combo sites offering customer reviews and expert opinions.


4. Customer complaint sites.


5. Public Blogs

The competitive intelligence function works best when

it is closely coordinated with the decision-making process

Fad

“unpredictable, short-lived, and without social, economic, and political significance.”




Crocs, Tickle me Elmo.

Trend

A direction or sequence of events with momentum and durability, More predictable and durable than a fad. trends reveal the shape of the future and can provide strategic direction.




Movement towards healthier foods nation wide

Megatrend

a “large social, economic, political, and technological change [that] is slow to form, and once in place, influences us for some time—between seven and ten years, or longer.”

Major Forces

demographic, economic, social-cultural, natural, technological, and political-legal




their interactions will lead to new opportunities and threats.

Main demographic environment to monitor?

population




including the size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns; and regional characteristics and movements

A growing population does not mean

growing populations unless there is sufficient purchasing power.

Age-wise the global trend is...

aging

marketing age groups

preschool


school-aged


teens


young adults


middle age adults


older adults

cohorts

groups of individuals born during the same time period who travel through life together. The defining moments they experience as they come of age and become adults (roughly ages 17 through 24) can stay with them for a lifetime and influence their values, preferences, and buying behaviors.

Within each ethnic group

consumers are different from each other

diversity goes beyond...

ethnic and racial markets. Many consumers have disabilities.

five education groups

illiterates


high school dropouts


high school diplomas


college degrees


professional degrees

The available purchasing power in an economy depends on

Current income, prices, savings, debt, and credit availability

There are four types of industrial structures

subsistence economies like Papua New Guinea, with few opportunities for marketers;




raw-material-exporting economies like Democratic Republic of Congo (copper) and Saudi Arabia (oil), with good markets for equipment, tools, supplies, and luxury goods for the rich;




industrializing economies like India, Egypt, and the Philippines, where a new rich class and a growing middle class demand new types of goods;




industrial economies like Western Europe, with rich markets for all sorts of goods.

five income-distribution patterns used to distinguish countries

(1) very low incomes;


(2) mostly low incomes;


(3) very low, very high incomes;


(4) low, medium, high incomes;


(5) mostly medium incomes.

Consumer expenditures are affected by

income levels, savings rates, debt practices, and credit availability.

Core beliefs
and values are passed from parents to children and reinforced by social institutions—schools, churches, businesses, and governments.
Secondary beliefs and values
are more open to change.
Marketers have some chance of changing secondary values,
but little chance of changing core values
Although core values are fairly persistent,
cultural swings do take place.
SUBCULTURES
groups with shared values, beliefs, preferences, and behaviors emerging from their special life experiences or circumstances.
Corporate environmentalism
recognizes the need to integrate environmental issues into the firm’s strategic plans.
Trends in the natural environment for marketers to be aware of include
the shortage of raw materials, especially water; the increased cost of energy; increased pollution levels; and the changing role of governments.
When old industries fight or ignore new technologies, their businesses decline
Transistors hurt the vacuum-tube industry, and autos hurt the railroads. Television hurt the newspapers, and the Internet hurt them both
Major new technologies...
stimulate the economy’s growth rate.
between innovations, an economy
can stagnate
Marketers should monitor the following technology trends
the accelerating pace of change, unlimited opportunities for innovation, varying R&D budgets, and increased regulation of technological change.

The time between ideas and implementations

is shrinking




So is the time between introduction and peak production

Why is there a concern that the US will not be able to maintain its lead in science

A growing portion of research and development is going to development as opposed to research.

Purpose of business legislation

to protect companies from unfair competition, protect consumers from unfair business practices, protect society from unbridled business behavior, and charge businesses with the social costs of their products or production processes

Each new business legislative law

may have the unintended effect of sapping initiative and slowing growth.

PACs

Political Action Committees



What do PACs do?

lobby government officials and pressure business executives to respect the rights of consumers, women, senior citizens, minorities, and gays and lesbians.

consumerist movement

organized citizens movement where citizens fight for more power in the buyer-seller relationship

Consumerists have won the right to know the real cost of a loan, the true cost per standard unit of competing brands, the basic ingredients and true benefits of a product, and the freshness of food.

Understanding the marketing environment and conducting market research helps identify

new marketing opportunities

Sales forecasts are used by finance to

raise cash for investment and operations

Sales forecasts are used by manufacturing

to establish capacity and output




by purchasing to acquire the right amount of supplies;

Sales forecasts are used by human resources to

To hire the workers they need

What happens if the marketing forecast is off mark?

he company will face excess or inadequate inventory, possibly have too many workers etc.

Companies can prepare as many as ________ different kinds of demand estimates for six different product levels, five space levels, and three time periods

90

Potential Market

is the set of consumers with a sufficient level of interest in a market offer. However, their interest is not enough to define a market unless they also have sufficient income and access to the product.

The Available Market

is the set of consumers who have interest, income, and access to a particular offer. (The company or government may restrict sales to certain groups such as under 21)

Target Market

is the part of the qualified available market the company decides to pursue. The company might concentrate its marketing and distribution effort on the East Coast.

Penetrated Market

is the set of consumers who are buying the company’s product.

If a company isn't satisfied with its current sales it can....

1. Try to attract a larger percentage of buyers from its target market.




2. It can lower the qualifications for potential buyers.




3. It can expand its available market by opening distribution elsewhere or lowering its price




4. it can reposition itself in the minds of its customers.

Market Demand

is the total volume that would be bought by a defined customer group in


1. defined geographical area


2. defined time period


3. defined marketing environment


4. under a defined marketing program

Market Demand Function

Market Demand is not a fixed number because it is based on underlying conditions

Market minimum

Base Sales- part of the market demand function




Takes place without any demanding stimulating expenditure






Q1



Higher marketing expenditure...

would yield higher levels of demand, first at an increasing rate, then at a decreasing rate.




Take fruit juices. Given the indirect competition they face from other types of beverages, we would expect increased marketing expenditures to help fruit juice products stand out and increase demand and sales. Marketing expenditures beyond a certain level would not stimulate much further demand

Market potential

Upper limit of sales- part of the market demand function




Q2

marketing sensitivity of demand

distance between the market minimum and the market potential

Expansible Market

such as the market for racquetball playing, is very much affected in size by the level of industry marketing expenditure




Distance between Q1 and Q2 is large

Nonexpansible Market

for example, the market for weekly trash or garbage removal—is not much affected by the level of marketing expenditures

Distance between Q1 and Q2 is small

Primary Demand

Consumer interest in purchasing an entire class of products



What must organizations selling in a nonexpansible market do?

accept the market’s size or the level of primary demand for the product class




direct their efforts toward winning a larger market share for their product, that is, a higher level of selective demand for their product.

Market Penetration index

comparison of the current and potential levels for market demand.




A high index= expensive to attract remaining prospects (price competition increases and margins fall when the market-penetration index is already high)




Low index=substantial growth potential

Share penetration index

Comparison of current and potential market shares.




if this index is low the company can greatly expand its share.




Holding it back could be low brand awareness, low availability, benefit deficiencies, or high price.




A firm should calculate the share-penetration increases from removing each factor, to see which investments produce the greatest improvement

Remember that market demand function is not

a picture of of market demand over time, rather it shows alternative current forecasts.

Market forecast

The market demand with a certain marketing budget.




For example with your marketing expenditure is 100K then perhaps your demand is 1 Mill verses if your marketing expenditure is 500K then perhaps it would be 2 mill.

Marketing potential

The entire size of the market for a product at a specific time. It represents the upper limits of the market for a product. Market potential is usually measured either by sales value or sales volume.

Companies cannot do anything about the position of the____________ , which is determined by the marketing environment.

market demand function

Product penetration percentage

is the percentage of the relevant population that has purchased a given brand or category at least once in the time period under study.






Companies assume that the lower the product-penetration percentage, the higher the market potential,

Companies assume that the lower the product-penetration percentage...

The higher the market potential

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’. Other things equal, the company’s market share depends on the relative scale and effectiveness of its market expenditures.

Company Sales Forecast

the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.

Sales quota

the sales goal set for a product line, company division, or sales representative.




It is primarily a managerial device for defining and stimulating sales effort, often set slightly higher than estimated sales to stretch the sales force’s effort.

Sales budget

Is a conservative estimate of the expected volume of sales, primarily for making current purchasing, production, and cash flow decisions. It’s based on the need to avoid excessive risk and is generally set slightly lower than the sales forecast.

Company Sales potential

The total potential sales of a product based on company demand within a given period of time and for a given geographic area. This is an optimum figure representing the total sales of all prospects that could use the product.

The two would be equal if the company got 100 percent of the market. In most cases, company sales potential is less than the market potential, even when company marketing expenditures increase considerably. Each competitor has a hard core of loyal buyers unresponsive to other companies’ efforts to woo them.

total market potential

maximum sales available to all firms in an industry during a particular time period under a given level of industry marketing effort and environmental conditions. A common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchases, times the price.

chain-ratio method

an alternative way to calculate total market potential




multiplies a base number by several adjusting percentages





Market-Buildup Method
calls for identifying all the potential buyers in each market and estimating their potential purchases

It produces accurate results if we have a list of all potential buyers and a good estimate of what each will buy. Unfortunately, this information is not always easy to gather.

An efficient method of estimating area market potentials makes use of the ____________________________________ developed by the U.S. Bureau of the Census in conjunction with the Canadian and Mexican governments.

North American Industry Classification System (NAICS),

How to Use NAICS

6 digit number for different industries.


To get a full picture of all six-digit NAICS industries that might use product, the company can (1) determine past customers’ NAICS codes;
(2) go through the NAICS manual and check off all the six-digit industries that might have an interest
(3) mail questionnaires to a wide range of companies inquiring about their interest

business directories that provide complete company profiles of millions of establishments, subclassified by location, number of employees, annual sales, and net worth.

Multiple factor index method

consumer companies often use one index to measure their market potential.




However it can be useful to use multiple factors, such as disposable income and population percentage of Virginia etc.





Brand development Index

BDI quantifies how well a brand performs within a market, compared with its average performance among all markets. That is, it measures the relative sales strength of a brand within a specific market (e.g., the Pepsi brand among 10–50 year old's).

Normally, the lower the ___, the higher the market opportunity, in that there is room to grow the brand.

BDI

Industry Sales Association

Will often collect and publish total industry sales, although it does not usually list individual companies sales separately.




With this information, however, each company can evaluate its own performance against the industry’s.

Another way to estimate sales is to ___________from a _________________that audits total sales and brand sales.

buy reports




marketing research firm

Macroeconomic forecast

projects inflation, unemployment, interest rates, consumer spending, business investment, government expenditures, net exports, and other variables.




The end result is a forecast of gross domestic product (GDP), which the firm uses, along with other environmental indicators, to forecast industry sales.

The company derives its ___________ by assuming it will win a certain market share.

Sales forecast

All forecasts are built on one of three information bases:

what people say, what people do, or what people have done.

forecasting

is the art of predicting what buyers will do under a given set of conditions

Sales force forecasts
yield a number of benefits. Sales reps might have better insight into developing trends than any other group, and forecasting might give them greater confidence in their sales quotas and more incentive to achieve them.

group-discussion method

Occasionally, companies will invite a group of experts to prepare a forecast. The experts exchange views and produce an estimate as a group

Firms can develop sales forecasts on the basis of _____________

Past Sales

Time-series analysis

breaks past time series into four components (trend, cycle, seasonal, and erratic) and projects them into the future.

Exponential smoothing

projects the next period’s sales by combining an average of past sales and the most recent sales, giving more weight to the latter

Statistical demand analysis

measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level

Economic analysis

builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically.