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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

Chapter 5

Gathering Information and

Measuring Market Demand

MBA

671

Dr. S. Borna


Objectives

Objectives

  • Components of a marketing information system

  • Criteria of good marketing research

  • Decision support systems for marketing management

  • Demand measurement and forecast


Chapter 5

What is information?

Output

Information

process

Input

data

info.

A Decision

with Attendant

uncertainty


Chapter 5

The Expanding Role of

Organizational Information

1. Growth in size & complexity

of organizations.

2. Proliferation of staff groups

3. Improvement of information

technology


Chapter 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


Chapter 5

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.


Chapter 5

(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


Chapter 5

(3)Marking Research

Is the systematic design, collection

analysis, and reporting of data and

findings relevant to a specific

marketing situation facing the

company


Chapter 5

Marketing Research conducted:

1. Externally: Universities,

Research Firms etc.

2. Internally


Defining the problem research objectives

  • 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


Research approaches

Observational

Focus-group

Survey

Behavioral

Experimental

Research Approaches


Secondary data sources

Secondary-Data Sources

  • Internal Sources

  • Government Publications

  • Periodicals and Books

  • Commercial Data

  • On-Line

    • Associations

    • Business Information


The marketing research process

Developing

the research

plan

Collect the

information

Present the

findings

Analyze the

information

The Marketing Research Process

Defining the

problem and

research

objectives


Good marketing research

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


Chapter 5

(4) Marketing Decision Support System

(MDSS)


Chapter 5

MARKET MEASUREMENT

Why to measure “Market”?

Why managers need to

understand market measurement

procedures?

a) Managers may have to do their

own market measurements;


Chapter 5

b) To specify the information they

will need;

c) To be aware of the limitations

of market measurement

methods.


Chapter 5

WHY MEASURE MARKET?

Which market to target?

What resources to allocate?

Is company’s sale performance

on a segment by segment

satisfactory?


Ninety types of demand measurement 6 x 5 x 3

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)


Chapter 5

What do we mean by the

term market?

Market? Potential Market? Available

Market? Qualified Market? Etc.


Chapter 5

BASIC TERMINOLOGIES

Company

Market

Market

Demand

Company

Demand

Demand

Company

Potential

Market

Potential

Potential

Market

Forecast

Company

forecast

Forecast


Demand

Company

Demand

Market

Demand

Demand


Chapter 5

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.


Estimating current demand

Estimating Current Demand

  • Total Market Potential

  • Area Market Potential

  • Industry Sales

  • Market Share


Chapter 5

MARKET POTENTIAL DEFINED

Is an estimate of maximum

possible sales of a product

for an entire industry during

a stated period.


Chapter 5

MARKET FORECAST DEFINED

A demand estimate based on

the most likely level of

industry expenditures on the

marketing programs currently

in effect.


Chapter 5

Market potential and

Forecast

Market potential

Assumes a

given marketing

effort and

time period.

Market forecast

Market minimum

Expected effort


Chapter 5

A note on Possible Essay Question!

Plan

Forecast

(Plan marketing activities then forecast

sales)

Forecast

Plan

(forecast sales then plan marketing

activities)


Chapter 5

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.


Chapter 5

ASSUMPTIONS

“LARGE T.V. SCREEN”

36-INCH AND OVER

PERCEIVED QUALITY

PRICE

WARRANTIES


Chapter 5

LIMITATIONS OF MARKET

POTENTIAL

1. Does not say anything about

competitive nature of the market.

2. Measurement problems

3. Etc.


Chapter 5

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


Chapter 5

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


Estimating future demand

Estimating Future Demand

  • Survey of Buyers’ Intentions

  • Composite of Sales Force Opinion

  • Expert Opinion

  • Past Sales Analysis

  • Market Test Method


Chapter 5

ESTIMATING FUTURE DEMAND

3 FORECAST INFORMATION

BASES:

1. WHAT PEOPLE SAY

2. WHAT PEOPLE DO

3. WHAT PEOPLE HAVE

DONE


Chapter 5

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


Chapter 5

2. Composite of Sales force

Opinions

3. Expert Opinions

4. Executive Opinions


Chapter 5

WHAT PEOPLE DO

MARKET-TEST METHOD?

What Markets?

How Many Markets?

How Long?

What Information?


Chapter 5

WHAT PEOPLE HAVE DONE

TIME-SERIES ANALYSIS

TREND ANALYSIS (T)

CYCLE (C)

SEASON (S)

ERRATIC (E) EVENTS

STATISTICAL DEMAND

ANALYSIS


Review

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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