Understanding Markets and the Marketing Environment

1. Understanding Markets and the Marketing Environment

2. Marketing Environment • Marketing Environment- consists of : • the actors & forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. • Includes: • Microenvironment - forces close to the company that affect its ability to serve its customers. • Macroenvironment - larger societal forces that affect the microenvironment.

3. Marketing Analysis Marketing Planning Product Target Consumers Place Price Promotion Marketing Implementation Marketing Control The Marketing Environment Demographic- Economic Environment Technological- Natural Environment Marketing Intermediaries Suppliers Publics Political- Legal Environment Social- Cultural Environment Competitors

4. The Company’s Microenvironment Forces affecting company’s ability to serve customers: • Company’s Internal Environment • Suppliers • Intermediaries • Customer Markets • Competitors • Publics

5. Microenvironment • Company’s Internal Environment: Company itself and its role in microenvironment • Functional areas inside a company that have an impact on the marketing department’s plans. • Top management is responsible for setting company’s mission, objectives, broad strategies and policies • Marketing managers must make decisions within the parameters established by top management • Marketing managers must also work closely with other company departments

6. Company’s Internal Environment

7. Microenvironment • Suppliers: Firms and individuals providing resources to the company and its competitors to produce goods and services. • Important link in the company’s overall customer “value delivery system.” • One consideration is to watch supply availability • Another point of concern is the monitoring of price trends of key inputs

8. Microenvironment • Intermediaries: • Marketing intermediaries: Firms that help the company to promote, sell, and distribute its goods to final buyers. • Resellers ğ Distribution channel firms that help the company to find customers or to make sales to them. • These include wholesalers and retailers • They perform important functions more effectively

9. Microenvironment • Intermediaries (cont.): • Physical distribution firmsğ Help the company to stock and move goods from their origins to their destinations • Marketing service agenciesğ Help the company target and promote its products such as marketing research firms, ad agencies etc. • Financial intermediariesğ Help finance transactions and insure against risks such as banks, insurance companies

10. Microenvironment • Customers- five main types of markets that purchase a company’s goods and services: Reseller Markets Government Markets Business Markets Consumer Markets International Markets Company

11. Microenvironment • Competitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage. • Every company faces a wide range of competitors • A company must secure a strategic advantage over competitors to be successful in the marketplace • No single competitive strategy is best for all companies

12. Microenvironment • Publics: any group that has actual or potential interest in or impact on an organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. • Financial publics • Media publics • Government publics • Citizen-action publics • Local publics • General publics • Internal publics

13. The Company’s Macroenvironment • Demographic • Economic • Natural • Political-Legal • Social-Cultural • Technological

14. Demographic Environment Worldwide Population Growth Age Structure of the Population Household Patterns Geographical Shifts in Population Educational Groups Shift from Mass Market to Micromarkets Ethnic Markets

15. Economic Development Changes in Income: Value Marketing Key Economic Concerns for Marketers Changing Consumer Spending Patterns Economic Environment

16. Economic Environment Income Distribution Subsistence economiesğThe vast majority of people engage in simple agriculture, consume most of their output and barter the rest for simple goods and services. Raw-material-exporting economiesğ are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources. Industrializing economiesğManufacturing accounts for 10 to 20% of gross domestic product. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods. Industrial economiesğ are major exporters of manufactured goods and investment funds. They buy manufactured goods from one another & export them to other types of economies in exchange for raw materials & semi-finished goods. Savings, Debt, & Credit Availability

17. Natural Environment • Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Factors Affecting the Natural Environment Shortages of Raw Materials Increased Pollution Governmental Intervention

18. Issues in the Technological Environment Accelerating Pace of Change Unlimited Opportunities for Innovation Varying R & D Budgets Increased Regulation Technological Environment

19. Technological Environment • Faster pace of technological change; products are outdated at a rapid pace. • Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field. • Challenge is not only technical, but also commercial – make practical, affordable versions of products. • Increased regulation concerning product safety, individual privacy, and other areas that affect technological changes.

20. Political Environment Includes laws, government agencies, etc. that influence & limit organizations/individuals in a given society • Legislation affecting businesses worldwide has increased • Laws protect companies, consumers and the interests of society • Increased emphasis on socially responsible actions

21. Social/Cultural Environment People’s View of Themselves People’s View of Others People’s View of the Universe Cultural Values of a Society People’s View of Nature People’s View of Organizations People’s View of Society

22. Responding to the Marketing Environment • Environmental Management Perspective • Taking a proactive approach to managing the microenvironment & the macroenvironment by taking active actions to affect the publics and forces in the marketing environment. • How? • Hire lobbyists , run “advertorials”, press law suits, file complaints, and form agreements.

23. Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation The marketplace isn’t what it used to be…

24. The Importance of Information “Marketing is becoming a battle based more on information than on sales power”

25. The Importance of Information • Companies need information about their • marketing environment • competition • customer needs • Some have developed advanced mktg info. systems, some others lack information sophistication • Companies with superior information; • choose its markets better • develop better offerings • execute better marketing planning

26. The Marketing Information System • A marketing information system (MIS) • consists of people, equipment, and procedures • to gather, sort, analyze, evaluate, and distribute • needed, timely, and accurate info. to marketing decision makers. • The MIS helps managers to: • Assess information needs, • Develop needed information, • Distribute information.

27. The Marketing Information System

28. 10 useful questions to determine the information needs of marketing managers • What decisions do you regularly make? • What information do you need to make these decisions? • What information do you regularly get? • What special studies do you periodically request? • What information would you want that you are not getting now? • What information would you want daily? Weekly? Monthly? Yearly? • What magazines and trade reports would you like to see on a regular basis? • What topics would you like to be kept informed of? • What data analysis programs would you want? • What are the three most helpful improvements that could be made in the present marketing information system?

29. Information Managers Would Like to Have What They Really Need & What is Feasible to Offer Functions of a MIS: Assessing Information Needs Benefit Cost

30. Internal Data Computerized Collection of Information from Data Sources (i.e. Accounting) Within the Company. Marketing Intelligence Collection and Analysis of Publicly Available Information about Competitors and the Marketing Environment Marketing Research Design, Collection, Analysis, and Reporting of Data about a Specific Marketing Situation Facing the Organization. Functions of a MIS: Developing Information Information Needed by Managers Can be Obtained From:

31. Internal Record System • Consists of computerized collections of info. obtained from data sources within the company (internal data); • Includes reports on orders, sales, prices, costs, inventory levels, receivables, payables, etc. • “opportunities” and “problems” can be determined by analyzing these information • Can usually be accessed more quickly and cheaply • May be incomplete or data may be in the wrong form.

32. Marketing Intelligence System • A set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment • Data gathering sources: • Company personnel (esp.sales repr.) • Suppliers, resellers, customers • “Mystery shoppers” sent by retailers • Annual reports, speeches, press releases, and advertisements • Business publications, web pages • Trade show exhibits • Outside suppliers (e.g. mktg research company) • Internal mktg info.center to collect and circulate mktg intelligence

33. Marketing Research System • Marketing researchğthe systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing an organization. • Market researchğ research into a particular market ! • just one component of mktg research

34. Examples of research

35. QUANTITATIVE RESEARCH : Seeks to quantify the data andtypically applies some form of statisticalanalysis. • It is based on large number of representative sample • Data collection is structured • Recommend a final course of action • QUALITATIVE RESEARCH : The main objective is to gain qualitative understanding of the underlying reasons & motives. • It is based on large number of representative sample • Sample consists of small number of nonrepresentative cases. • Data collection is unstructured • Data analysis is nonstatistical • It is possible to develop an initial understanding

36. Developing the research plan Implementing the research plan: collecting the data Interpreting and reporting the findings Implementing the research plan: analyzing the data The Marketing Research Process Defining the problem and research objectives

37. Defining the Problem & Research Objectives Example: ABC Airlines Case • ABC Airlines is constantly looking for new ways to serve the needs of air travelers: • One manager came up with the idea of offering phone service to passengers. • The other managers got excited about this idea and agreed that it should be researched further. • The marketing manager volunteered to do some preliminaryresearch • The marketing manager then asked the company’s research managerto find out how air travelers would respond to this new service.

38. Defining the Problem & Research ObjectivesExample: American Airlines Case (cont.) • Research Problem ? • “to find out everything about air travelers’ need” – too broad! • “to find out if enough passengers aboard a B-747 flying between East Cost and West Coast would be willing to pay $ 25” to make a phone call so that the company would break even on the cost of offering this service” – too narrow! • Research Problemis finally defined as: “Will offering an in-flight phone service create enough incremental preference and profit for American Airlines to justify its cost against other possible investments that the company might make?”

39. Defining the Problem & Research Objectives Example: American Airlines Case (cont.) • Research Objectives: • What are the main reasons that airline passengers might place phone calls while flying? • What kinds of passengers would be the most likely to make phone calls? • How many passengers are likely to make phone calls, given different price levels? • How many extra customers might choose this company because of this new service? • How important will phone service be relative to other factors? (such as flight schedules, food quality, baggage handling, etc.)

40. Sheds light on problem - suggest • solutions ornew ideas. • Gathers preliminary information • that will help define the problem • and suggest hypotheses • Ascertain magnitudes • Describes things as market • potential for a product or the • demographics and consumers’ • attitudes. • Test cause- and-effect • relationships. • Tests hypotheses about cause- • and-effect relationships. Defining the Problem & Research Objectives Exploratory Research Descriptive Research Causal Research

41. Developing the Research Plan • Designing a research plan calls for decisions on: • Data sources • Research approaches • Contact methods • Sampling plan • Research instruments

42. Secondary Primary both must be: Relevant Accurate Current Impartial Data that were collected for another purpose, and already exist somewhere (+)Obtained more quikcly / at lower cost (-)Might not be usable data. Data gathered for a specific purpose or for a specific research project Developing the Research Plan:Data Sources

43. A classification of marketing research data

44. Developing the Research PlanSecondaryData Collection • Internal Sources • Company profit-loss statements, balance sheets, sales figures, sales-callreports, invoices, inventory records, and prior research reports. • Government Publications • Statistical Abstract • County and City Data Book • Industrial Outlook • Marketing Information Guide • Periodicals and Books • Business Periodicals Index • Standard and Poor’s Industry • On-Line Databases (e.g. Lexis-Nexis, Compuserve, Dialog)

45. Applications of Secondary Data • Demand Estimation • Monitoring the environment • Segmentation and Targeting

46. Sources of Secondary Data (examples) • ESOMAR website - www.esomar.org • founded in 1948 • 4,400 members in 100 countries • mission : "ESOMAR is the world organisation for enabling better research into markets, consumers and societies." • the aim is to promote the value of market and opinion research in illuminating real issues and bringing about effective decision-making. • creates and manages a comprehensive programme of industry-specific and thematic conferences, publications and communications • www.arastirmacilar.orgin Turkey (Pazarlama ve Kamuoyu Araştırmacıları Derneği) • Other useful sources: • AMA website – www.marketingpower.com • AMS website – www.ams-web.org • www.trendwatching.com

47. www.esomar.org

48. www.arastirmacilar.org

49. Basic Means of Primary Data Communication Observation • Human versus machine observers • Natural versus contrived situations • Survey • Depth Interview • Focus group • Projective techniques

50. Focus-group Experimental Research Techniques Behavioral Research Observation Depth Interview Projective Techniques Survey