CHAPTER : 2

CAPTURING MARKETING INSIGHTS :

GATHERING INFORMATION AND

SCANNING THE ENVIRONMENT

Learning Questions

A framework of marketing environment

analysis

Strategies in Changing Macro-environment

forces

What is a Marketing Information System (MIS)?

A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,

timely, and accurate information to marketing decision makers.

Table 3.1 Information Needs Probes

• 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 are the four most helpful improvements

that could be made in the present marketing information system?

Internal Records and Marketing Intelligence

Order-to-PaymentCycle

Databases,Warehousing, Data Mining

MarketingIntelligence

System

Sales Information

System

Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd.

3-6

Steps to Improve Marketing Intelligence

Train sales force to scan for new developments

Train sales force to scan for new developments

Motivate channel members to share intelligence

Motivate channel members to share intelligence

Network externallyNetwork externally

Utilize a customer advisory panelUtilize a customer advisory panel

Utilize government data resourcesUtilize government data resources

Purchase informationPurchase information

Collect customer feedback online

Collect customer feedback online

Marketing Environment

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Components of The Macro-Environment

Demographic

Economic

Natural

Technological

Political and Legal

Socio-Cultural

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Demographic Environment

• Demography is the study of human population. Understanding the demographic environment is significant because it involves statistics related to humans and humans make up consumer markets.

• Word wide population growth: Earth’s population totaled 6.8 billion in 2010 and will exceed 9 billion by 2014.

• Population growth is highest in developing countries compared to developed countries.

• However, growing population does not mean growing markets unless there is sufficient purchasing power – hence companies operating in developing countries need to develop a careful strategy to address the needs of the consumers belonging to the bottom of the pyramid.

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Demographic Environment

• Population Age Mix: the demographic profile in south asia is predominantly young, with the average age of India at 25.9 years, Bangladesh at 23.5 years, Pakistan at 21.2 years, Srilanka at 31.3 years. Hence, marketers are constantly targeting the youth in these countries.

• Case Study Discussion : marketing to the cool generation. • Ethnic markets: Ethnic and racial diversity varies across countries. At one extreme

you have Japan, where almost everyone is Japanese; at the other end you have USA, where nearly 25 million people – more than 9% of the population were born in another country. Example1: Telecommunication services are tailored for different ethnic groups; Example2: grocery shops stock merchandise based on the needs of ethnic groups.

• Religion Markets: India has a diverse population in terms of religion – 80% of Indians are Hindus, 13.4% are Muslims, 2.3% are Christians, 1.9 percent are Sikhs.

• Example1: In Malaysia, Pakistan and Bangladesh all food products are Halal because companies have taken into consideration the religious sentiments. Example2: In India, there are hardly any restaurants that sell beef items.

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Demographic Environment

• Educational groups: the population in any society falls into five educational groups: illiterates, high school dropouts, high school certificates, university degrees.

• Over two third of the world’s 785 million illiterate adults are found in only 8 countries – India, China, Bangladesh, Pakistan, Nigeria, Ethiopia, Indonesia, and Egypt.

• Of all the illiterate adults in the world, two-thirds are women. The trend of women getting white collar jobs is increasing but at a low rate in Bangladesh.

• The education level of the society has implications for marketers. Example1: For the brand Magic, the marketers tend communicate with their target customers through TVC and RDC and not newspaper or magazines. Example 2: high tech brands target consumers who are more educated.

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Demographic Environment

• Household patterns comprise of Single person households, nuclear households, joint family households.

• The decline in joint family households and the corresponding increase in nuclear families has serious implications for marketers with the decision making roles now shifted to the younger family heads.

• The rise of nuclear families has also resulted in an increase in demand for child care services which were previously provided by the elderly and the adult members of the joint family.

• This has also adversely impacted the transfer of values to children from grandparents.

13A presentation by Varqa Shamsi

Bahar

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Economic Environment

• The economic environment consists of factors that affect consumer purchasing power and spending patterns.

• Income distribution patterns: i) very low incomes ii) mostly low incomes iii) very low very high incomes iv) low, medium, high incomes v) mostly medium incomes.

• For a brand like Lamborghini which costs more than $150,000, markets where the income distribution is type i and ii is not feasible. One of the largest markets for the brand is Portugal (type iii) which has got enough wealthy families to afford the car even though they have a lot of poor families.

• On the contrary, brands like Meril and Magic can be exported to countries like India and Nepal because they fall under type iv and ii.

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Economic Environment

• Types of industrial structures: • Subsistence economies: non-monetary economy which relies on

natural resources to provide for basic needs, through hunting, gathering, and agriculture. In such countries, there exists very little opportunity for marketers. Example: Papua New Guinea.

• Raw material exporting economies: like Saudi Arabia where there exists a good market for luxury goods.

• Industrializing economies: like India, Egypt, and the Philippines, where there is a growing middle class and a new rich class who demand quality goods sold just like in the industrial economies.

• Industrial economies: like countries in the western Europe, with medium and rich markets demanding for all sorts of quality goods and services to address their needs.

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Natural Environment

• The earth’s natural resources are getting scarce, hence this is continuously affecting the prices of raw materials which in turn affects profitability.

• Industrial activities are affecting the natural environment – the air, the rivers, the underground water.

• Deforestation - An estimated 18 million acres (7.3 million hectares) of forest — roughly the size of Panama — are lost each year.

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Natural Environment

• Corporate environmentalism recognizes the need to integrate environmental issues into the firm’s strategic plan.

• Business should be more proactive in cultivating environmental strategies – find substitutes of raw materials to control costs, establish business processes and waste management departments that do not harm the natural environment.

• Motive should not be to abide government protection laws and other environmental activists. Motive should be to be a good corporate citizen and genuinely care about the environment.

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Technological Environment

• Forecasting technological changes is a pre-requisite to success in doing business.

• Companies should continuously pursue product development strategy – innovate new products that address the same need.– Example1: music retail business companies were hurt due to the internet

boom. – Example2: Kodak’s market leading film business got affected due to the

rise of digital cameras.– Example 3: storage devices.

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Socio-Cultural Environment

• Cultural factors strongly affect how people think and how they consume. • Culture is a collection of shared values and beliefs that are reflected as

“acceptable” behaviour by a specific group of people.• Culture comprises of:

– core beliefs and values which are passed on from parents to children and are reinforced by schools, religious institutions, and governments. For example: believing in marriage and religion is a core belief.

– secondary beliefs and values are more open to change. For example: believing that one’s dress should reflect one’s religiosity.

• Marketers can utilize the core and secondary beliefs in finding opportunities to do business:– 100% halal soap – Aromatic.– Islamic banking.– Ethnic Pakistani dresses - Churidar Kameez. – Ethnic music – Sufi rock and Punjabi Bhanga.

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Political-Legal Environment

• The political and legal environment consists of laws, government agencies, and pressure groups that influence various organizations and individuals.

• Increase in business legislation to protect :– companies from unfair competition : example if company wants to do business in

china, they have to have some sort of joint initiative with a local company. – Consumers from unfair business practices by incorporating product quality

measures. – The environment from industrial practices.

• Growth of special interest groups such as NGOs, organized citizens, and political action committees (PACs) lobby government officials and pressure businesses to respect the rights of consumers. – Consumers have the right to know the true benefits of a product (Revive perfect

fairness, fair and lovely research).– Nutritional quality and freshness of food. – Privacy issue in direct marketing.

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Strategies for changing macro-environments

• Global Positioning: a strategy to think about globalization and focus on core competencies, instead of thinking about domestic market and a portfolio of business and brands to deliver shareholder’s value.

• The Master brand: strength comes from a strong brand equity that has a significant link to success and profitability – most valuable asset of the company.

• The integrated enterprise and end user focus: this strategy builds on the theory of internal marketing and challenges businesses to manage people and processes to deliver value to the customer.

The Shift in Strategy for Delivering Shareholder Value

Focus on core

competencies

Portfolio approaches

Domestic focus

Global focus

The new strategic imperative

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Strategies for changing macro-environments

• Best in class processes: as far as product and service quality standards are concerned, the challenge for businesses is to meet world class standards. This is why Samsung has invested heavily in R&D to compete with the likes of Apple.

• Mass customization: signifies tailoring a product or service for the individual customer’s needs.

• Breakthrough technology: by continuously undergoing product development strategy to come up with better products to satisfy the needs of the consumers. Example: new models of cars for the existing market.