Chapter 5

Understanding Markets,
Market Demand, and the
Marketing Environment
PowerPoint by Karen E. James
Louisiana State University - Shreveport

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 0 in Chapter 5
 Objectives

 Identify the major components of a

marketing system.
 Understand how marketers can
improve marketing decisions
through intelligence systems,
marketing research, and marketing
decision support systems.
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 5
 Objectives

 Learn how demand can be more

accurately measured and
forecasted.
 Understand key demographic,
economic, natural, technological,
political-legal, and socio-cultural
developments.
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 5
Supporting Marketing Decisions

 A Marketing Information System

is defined as . . .
“people, equipment, and
procedures that gather, sort,
analyze, evaluate, and distribute
needed, timely, and accurate
information to marketing decision
makers.”
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 5
Supporting Marketing Decisions

 Marketing Information Systems

compile information from:
– Internal records systems
– Marketing intelligence systems
– Marketing research
– Marketing decision support analysis

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 5
Supporting Marketing Decisions

 Internal Records Systems

– Order-to-payment cycle is key
– Timely sales reports help to better
manage inventory
– Customer, product, salesperson and
other databases can be mined for
fresh insights

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 5
Supporting Marketing Decisions

 Improving the Quality of Marketing

Intelligence System Data Requires:
– Training and motivating sales force
to report developments
– Motivating channel members to share
important intelligence
– Collecting competitive intelligence
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 5
Supporting Marketing Decisions

 Improving the Quality of Marketing

Intelligence System Data Requires:
– Developing a customer advisory
panel
– Purchasing information from
commercial data sources
– Establishing a marketing information
center within the company
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 5
Supporting Marketing Decisions

 The Marketing Research Process:

– Defining the problem and research
objectives
– Developing the research plan
– Collecting the information
– Analyzing the information
– Presenting the findings
– Making the decision
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 5
Supporting Marketing Decisions

 Developing the Research Plan Involves:

– Gathering secondary and primary data
– Selecting one or more research
approaches for primary data collection
– Using the appropriate research instrument
– Developing a sampling plan
– Determining subject contact methods

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 5
Supporting Marketing Decisions

 Approaches for primary data

collection include:
– Observational research
– Focus-group research
– Survey research
– Behavioral data
– Experimental research

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 5
Supporting Marketing Decisions

 A Marketing Decision Support

System is defined as a . . .
“coordinated collection of data, systems,
tools, and techniques with supporting
software and hardware by which an
organization gathers and interprets
information from business and the
environment and turns it into a basis for
marketing action.”

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 5
 Forecasting and
Demand Measurement
Essential Aspects  Market
 Potential market
 The market  Available market
 Market demand  Target market
 Company demand (served market)
and sales forecasts  Qualified available
 Current demand market
 Future demand  Penetrated market
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 5
 Forecasting and
Demand Measurement
Essential Aspects  Market demand
– Market minimum
 The market – Market forecast
– Market potential
 Measuring demand – Nonexpansible vs.
 Company demand expansible markets
and sales forecasts – Primary vs.
secondary demand
 Current demand
 Market forecast
 Future demand
 Market potential
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 5
 Forecasting and
Demand Measurement
Essential Aspects  Company demand
 Company sales
 The market forecast
 Measuring demand  Sales quota
 Company demand  Sales budget
and sales forecasts
 Current demand  Company sales
potential
 Future demand
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 5
 Forecasting and
Demand Measurement
Essential Aspects  Total market
potential
 The market
 Area market
 Measuring demand
potential
 Company demand
and sales forecasts – Market-buildup
method
 Current demand
 Future demand
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 5
 Forecasting and
Demand Measurement
Essential Aspects  Many Forecasting
Methods:
 The market – Buyer intentions
survey
 Measuring demand
– Composite of sales
 Company demand force opinions
and sales forecasts – Expert opinion
 Current demand – Past-sales analysis
 Future demand – Market-test method

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 5
 Macroenvironmental
Trends and Forces
 Demographic Environment
– Worldwide population growth
– Population age mix
– Ethnic markets
– Educational groups
– Household patterns
– Geographic population shifts
– Rise of micromarkets

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 5
 Macroenvironmental
Trends and Forces

 Economic Environment
– Income distribution
– Savings, debt, and credit
availability

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 18 in Chapter 5
 Macroenvironmental
Trends and Forces

 Natural Environment
– Shortage of raw materials
– Increased energy costs
– Anti-pollution pressures
– Changing role of governments

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 19 in Chapter 5
 Macroenvironmental
Trends and Forces

 Technological Environment
– Accelerating pace of technological
change
– Unlimited opportunities for
innovation
– Varying R&D budgets
– Increased regulation of
technological change
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 20 in Chapter 5
 Macroenvironmental
Trends and Forces

 Political-Legal Environment
– Legislation regulating business
– Growth of special interest groups

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 21 in Chapter 5
 Macroenvironmental
Trends and Forces

 Socio-Cultural Environment
– World views that consumers hold
of themselves, others, society,
organizations, nature, and the
universe
– High persistence of core values
– Existence of subcultures
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 22 in Chapter 5