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Chapter 5

Chapter 5. Gathering Information and Measuring Market Demand. MBA 671. Dr. S. Borna. Objectives. Components of a marketing information system Criteria of good marketing research Decision support systems for marketing management Demand measurement and forecast. What is information?.

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Chapter 5

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  1. Chapter 5 Gathering Information and Measuring Market Demand MBA 671 Dr. S. Borna

  2. Objectives • Components of a marketing information system • Criteria of good marketing research • Decision support systems for marketing management • Demand measurement and forecast

  3. What is information? Output Information process Input data info. A Decision with Attendant uncertainty

  4. The Expanding Role of Organizational Information 1. Growth in size & complexity of organizations. 2. Proliferation of staff groups 3. Improvement of information technology

  5. * 4. Shifts from local to national and international markets 5. Transition from buyer’s need to buyer’s wants 6. Transition form price to non-price competition * * * Important to marketers

  6. A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. Components of Marketing Information System (1) Marketing Intelligence system A marketing intelligence system is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment.

  7. (2)Accounting System (Internal recording Systems) Financial Accounting: Deals with information reported to people outside of the organization. Managerial Accounting: Deals with information reported to people inside organization. What price to charge for a product? Whether to expand production facilities

  8. (3)Marking Research Is the systematic design, collection analysis, and reporting of data and findings relevant to a specific marketing situation facing the company

  9. Marketing Research conducted: 1. Externally: Universities, Research Firms etc. 2. Internally

  10. Sheds light on problem - • suggest solutions or • new ideas. • Ascertain magnitudes. • Test cause- and-effect • relationships. • Tests hypotheses about cause- • and-effect relationships. Defining the Problem & Research Objectives Exploratory Research Descriptive Research Causal Research

  11. Observational Focus-group Survey Behavioral Experimental Research Approaches

  12. Secondary-Data Sources • Internal Sources • Government Publications • Periodicals and Books • Commercial Data • On-Line • Associations • Business Information

  13. Developing the research plan Collect the information Present the findings Analyze the information The Marketing Research Process Defining the problem and research objectives

  14. Good Marketing Research: • Is scientific (do not fall in love with your model) • Is creative • Uses multiple methods • Realizes the interdependence of models & data • Acknowledges the cost & value of information • Maintains “healthy” skepticism • Is ethical

  15. (4) Marketing Decision Support System (MDSS)

  16. MARKET MEASUREMENT Why to measure “Market”? Why managers need to understand market measurement procedures? a) Managers may have to do their own market measurements;

  17. b) To specify the information they will need; c) To be aware of the limitations of market measurement methods.

  18. WHY MEASURE MARKET? Which market to target? What resources to allocate? Is company’s sale performance on a segment by segment satisfactory?

  19. World Space level U.S.A. Region Territory Customer All sales Industry sales Product level Company sales Product line sales Product form sales Product item sales Short run Medium run Long run Time level Ninety Types of Demand Measurement (6 x 5 x 3)

  20. What do we mean by the term market? Market? Potential Market? Available Market? Qualified Market? Etc.

  21. BASIC TERMINOLOGIES Company Market Market Demand Company Demand Demand Company Potential Market Potential Potential Market Forecast Company forecast Forecast

  22. Company Demand Market Demand Demand

  23. 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.

  24. Estimating Current Demand • Total Market Potential • Area Market Potential • Industry Sales • Market Share

  25. MARKET POTENTIAL DEFINED Is an estimate of maximum possible sales of a product for an entire industry during a stated period.

  26. MARKET FORECAST DEFINED A demand estimate based on the most likely level of industry expenditures on the marketing programs currently in effect.

  27. Market potential and Forecast Market potential Assumes a given marketing effort and time period. Market forecast Market minimum Expected effort

  28. A note on Possible Essay Question! Plan Forecast (Plan marketing activities then forecast sales) Forecast Plan (forecast sales then plan marketing activities)

  29. USES OF MARKET POTENTIAL DATA 1. Determination of market entry 2. Location and size of new sales offices, warehouses, and plants 3. Determination of trade channels 4. Determination of sales territories 5. Determination of sales quotas 6. Allocation of advertising efforts.

  30. ASSUMPTIONS “LARGE T.V. SCREEN” 36-INCH AND OVER PERCEIVED QUALITY PRICE WARRANTIES

  31. LIMITATIONS OF MARKET POTENTIAL 1. Does not say anything about competitive nature of the market. 2. Measurement problems 3. Etc.

  32. ABSOLUTE MARKET POTENTIAL Total market potential D=NPQ D=total market potential N=no. of buyers in a given market Q=Quantity purchased P=Price

  33. MULTIPLE FACTOR INDEX METHOD: BUYING POWER INDEX B = .5 Y + .3R + .2 P i i i i Note: There are several other methods available for measuring market potential

  34. Estimating Future Demand • Survey of Buyers’ Intentions • Composite of Sales Force Opinion • Expert Opinion • Past Sales Analysis • Market Test Method

  35. ESTIMATING FUTURE DEMAND 3 FORECAST INFORMATION BASES: 1. WHAT PEOPLE SAY 2. WHAT PEOPLE DO 3. WHAT PEOPLE HAVE DONE

  36. WHAT PEOPLE SAY 1. Survey of buyer intentions is appropriate if: No. of buyers are few Cost of reaching them is low Intentions are well defined Willing to disclose their intentions. Buyers implement their intentions

  37. 2. Composite of Sales force Opinions 3. Expert Opinions 4. Executive Opinions

  38. WHAT PEOPLE DO MARKET-TEST METHOD? What Markets? How Many Markets? How Long? What Information?

  39. WHAT PEOPLE HAVE DONE TIME-SERIES ANALYSIS TREND ANALYSIS (T) CYCLE (C) SEASON (S) ERRATIC (E) EVENTS STATISTICAL DEMAND ANALYSIS

  40. Review • Components of a marketing information system • Criteria of good marketing research • Decision support systems for marketing management • Demand measurement and forecast

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