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A FRAMEWORK for
MARKETING MANAGEMENT
Chapter 3
Understanding
Markets,
Market Demand,
and the
Marketing
Environment
Kotler
Keller
Cunningham
Chapter Questions
• What are the components of a
modern marketing information
system?
• How can marketers improve
marketing decisions through
intelligence systems and marketing
research?
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Chapter Questions
• How can demand be more accurately
measured and forecast?
• What are some key macro
environmental developments that
marketers must understand?
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Profile: Canadian Marketing Excellence
HEALTHY CHOICES
• The obesity epidemic has led many Canadian marketers to
rethink their strategies and tactics
• Obesity rates have doubled since 2002
• Lawsuits, legislation consumer fears, and ultimately falling profits
threaten the food industry
• Kraft Foods demonstrated its commitment to healthy eating
through clearer labeling, smaller portions, and an end to in-school
marketing
•Other companies, including McCain
Foods, Coca-Cola, and Frito-Lay, have
all followed suit by introducing healthier
products
•Sleeman’s even launched its low-carb
beer in 2003
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Marketing Information System
A marketing information system (MIS)
consists of people, equipment, and
processes to gather, sort, analyze,
evaluate, and distribute
needed, timely, and accurate information
to marketing decision makers.
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MIS Resources
Marketing
research
Marketing intelligence
Internal company records
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Internal Records
Order-to-payment
cycle
Databases and
warehouses
Sales
information
system
Data mining
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Internal Records
CANADIAN TIRE
•In 2002, Canadian Tire entered into an agreement with
NAPA Canada (a distributor of automotive parts),
whereby NAPA would supply Canadian Tire with
emergency parts using its parts-ordering automated
inventory technology
•Assisted Canadian Tire by allowing it to grow its
automotive organization without adding infrastructure and
inventory costs
•The parts supplied now make up around 15% of
Canadian Tire’s automotive hard part sales (2005)
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Improving the Quality of Marketing Intelligence
Train sales force to scan for new developments
Motivate channel members to share intelligence
Network internally
Establish a customer advisory panel
Utilize government data resources
Purchase information
Collect customer feedback online
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Marketing Research Defined
Systematic design, collection,
analysis, and reporting of data
and findings relevant to a specific
marketing situation facing a company
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The Marketing Research Process
Define problem
Develop research plan
Collect information
Analyze information
Make
decision
Present findings
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Step 1
• Define problem
• Specify decision alternatives
• State research objectives
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Step 2
Data
sources
Research
approach
Research
instruments
Sampling
plan
Contact
methods
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Data Sources
Secondary data
Primary data
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Research Approaches
Observation
Focus group
Survey research
Behavioural data
Experimentation
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Research Instruments
 Questionnaires
 Qualitative research techniques
 Mechanical devices
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Sampling Plan
• Sampling unit: Who is to be surveyed?
• Sample size: How many people should be
surveyed?
• Sampling procedure: How should the
respondents be chosen?
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Contact Methods
Mail questionnaire
Telephone
interview
Personal
interview
Online
interview
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Forecasting and Demand Measurement
Which market to measure?
Potential market
Available market
Target market
Penetrated market
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Company Demand and Sales Forecast
• Company demand is the company’s
estimated share of market demand at
alternative levels of company marketing
effort in a given time
• Company sales forecast is the expected
level of company sales based on a
chosen marketing plan and an assumed
marketing environment
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Figure 3.2 Market Demand Functions
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Figure 3.2 Market Demand Functions
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Estimating Current Demand
• Total market potential is the maximum number
of sales that might be available to all of the firms
in an industry during a given period, under a
given level of industry marketing effort and
environmental conditions
• Area market potential is the market potential of
a specific location
• Market buildup method
• Multiple-factor index method
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Estimating Future Demand
•
•
•
•
•
Survey of buyers’ intentions
Composite of sales force opinions
Expert opinion
Past-sales analysis
Market-test method
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Macro Environmental Trends and Forces
Fad
Trend
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Environmental Forces
Demographic
Political-Legal
Economic
Technological
Socio-Cultural
Natural
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Population and Demographics
• Worldwide
population
growth
• Population age
mix
• Ethnic markets
• Educational
groups
• Household
patterns
• Geographic
shifts in
population
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Marketing Skills:
SPOTTING TRENDS
• In 2003,when Canada began to legalize gay marriage,
DeBoer’s Furniture (Concord, Ontario) spotted a key
opportunity
• Gay and lesbian
couples earn above
average incomes
• DeBoer’s created
advertising around
this segment and
the notion that
“everybody needs a
sofa”
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Population Age Groups
65+
40-65
25-40
Teens
School-age
Preschool
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Household Patterns
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Economic Environment
Income distribution
Savings, debt, and
credit availability
Outsourcing and
free trade
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Types of Industrial Structures
Industrial
economies
Industrializing
economies
Raw-materialexporting
economies
Subsistence
economies
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Social-Cultural Environment
Views of themselves
Views of others
Views of organizations
Views of society
Views of nature
Views of the universe
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Natural Environment
Shortage of
raw materials
Increased
energy costs
Anti-pollution
pressures
Governmental
protections
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Technological Environment
Pace of change
Opportunities
for innovation
Varying R&D
budgets
Increased regulation
of change
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Political-Legal Environment
Increase in
business legislation
Growth of special
interest groups
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For Discussion
When was the last time you
participated in a survey? How helpful
do you think was the information
you provided? Could the research
have been done differently?
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