Understanding Markets and the

Marketing Environment

Marketing Environment

Marketing Environment- consists of : the actors & forces outside marketing that affect

marketing management’s ability to develop and maintain successful relationships with its target customers.

Includes: Microenvironment - forces close to the

company that affect its ability to serve its customers.

Macroenvironment - larger societal forces that affect the microenvironment.

TargetConsumers

Product

Place Price

Promotion

Mar

ketin

g

Im

plem

enta

tion

Marketing

Planning

Marketing

Control

Mar

ketin

g

Analysis

Competitors

MarketingIntermediaries

PublicsSuppliers

Demographic-Economic

Environment

Technological-Natural

Environment

Political-Legal

Environment

Social-Cultural

Environment

The Marketing Environment

The Company’s Microenvironment

Forces affecting company’s ability to serve customers: Company’s Internal Environment Suppliers Intermediaries Customer Markets Competitors Publics

Microenvironment Company’s Internal Environment: Company

itself and its role in microenvironment Functional areas inside a company that have

an impact on the marketing department’s plans.

Top management is responsible for setting company’s mission, objectives, broad strategies and policies

Marketing managers must make decisions within the parameters established by top management

Marketing managers must also work closely with other company departments

Company’s Internal Environment

Microenvironment

Suppliers: Firms and individuals providing resources to the company and its competitors to produce goods and services.

Important link in the company’s overall customer “value delivery system.” One consideration is to watch supply availability Another point of concern is the monitoring of

price trends of key inputs

Microenvironment

Intermediaries: Marketing intermediaries: Firms that help the

company to promote, sell, and distribute its goods to final buyers.

Resellers ğ Distribution channel firms that help the company to find customers or to make sales to them.

These include wholesalers and retailers They perform important functions more effectively

Microenvironment

Intermediaries (cont.): Physical distribution firms ğ Help the company

to stock and move goods from their origins to their destinations

Marketing service agencies ğ Help the company target and promote its products such as marketing research firms, ad agencies etc.

Financial intermediaries ğ Help finance transactions and insure against risks such as banks, insurance companies

Microenvironment

Government Markets

International

Markets

ResellerMarkets

Business

Markets

Con

sum

er M

arke

ts

Company

Customers - five main types of markets that purchase a company’s goods and services:

Microenvironment

Competitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage.

Every company faces a wide range of competitors

A company must secure a strategic advantage over competitors to be successful in the marketplace

No single competitive strategy is best for all companies

Microenvironment

Publics: any group that has actual or potential interest in or impact on an organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets.

Financial publics Media publics Government publics Citizen-action publics Local publics General publics Internal publics

The Company’s Macroenvironment

Demographic Economic Natural Political-Legal Social-Cultural Technological

Demographic Environment

Worldwide Population GrowthWorldwide Population Growth

Age Structure of the PopulationAge Structure of the Population

Household PatternsHousehold Patterns

Educational GroupsEducational Groups

Geographical Shifts in PopulationGeographical Shifts in Population

Shift from Mass Market to MicromarketsShift from Mass Market to Micromarkets

Ethnic MarketsEthnic Markets

EconomicDevelopment

EconomicDevelopment

Changes in Income:Value Marketing

Changes in Income:Value Marketing

Changing ConsumerSpending Patterns

Changing ConsumerSpending Patterns

KeyEconomic

Concerns forMarketers

KeyEconomic

Concerns forMarketers

Economic Environment

Economic EnvironmentIncome DistributionIncome Distribution

Subsistence economies ğ The vast majority of people engage in simple agriculture, consume most of their output and barter the rest for simple goods and services.

Subsistence economies ğ The vast majority of people engage in simple agriculture, consume most of their output and barter the rest for simple goods and services.

Raw-material-exporting economies ğ are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources.

Raw-material-exporting economies ğ are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources.

Industrializing economies ğ Manufacturing accounts for 10 to 20% of gross domestic product. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods.

Industrializing economies ğ Manufacturing accounts for 10 to 20% of gross domestic product. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods.

Industrial economies ğ are major exporters of manufactured goods and investment funds. They buy manufactured goods from one another & export themto other types of economies in exchange for raw materials & semi-finished goods.

Industrial economies ğ are major exporters of manufactured goods and investment funds. They buy manufactured goods from one another & export themto other types of economies in exchange for raw materials & semi-finished goods.

Savings, Debt, & Credit AvailabilitySavings, Debt, & Credit Availability

Shortages of Raw Materials

Natural Environment

Factors Affecting

the Natural

Environment

Increased Pollution

GovernmentalIntervention

Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities

Accelerating Paceof Change

Accelerating Paceof Change

Unlimited Opportunitiesfor Innovation

Unlimited Opportunitiesfor Innovation

IncreasedRegulation

IncreasedRegulation

Issues in the TechnologicalEnvironment

Issues in the TechnologicalEnvironment

VaryingR & D Budgets

VaryingR & D Budgets

Technological Environment

Technological Environment

Faster pace of technological change; products are outdated at a rapid pace.

Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field.

Challenge is not only technical, but also commercial – make practical, affordable versions of products.

Increased regulation concerning product safety, individual privacy, and other areas that affect technological changes.

Includes laws, government agencies, etc. that influence & limit organizations/individuals in a given society

Includes laws, government agencies, etc. that influence & limit organizations/individuals in a given society

Political Environment

Legislation affecting businesses worldwide has increased Laws protect companies, consumers and the interests of society Increased emphasis on socially responsible actions

Social /Cultural Environment

People’s View of Organizations

People’s View of Organizations

People’s View of Nature

People’s View of Nature

People’s View of Themselves

People’s View of Themselves

People’s View of Society

People’s View of Society

People’s View ofthe Universe

People’s View ofthe Universe

People’s View of Others

People’s View of Others

Cultural Valuesof a

Society

Cultural Valuesof a

Society

Responding to the Marketing Environment

Environmental Management Perspective Taking a proactive approach to managing the

microenvironment & the macroenvironment by taking active actions to affect the publics and forces in the marketing environment.

How? Hire lobbyists , run “advertorials”, press law

suits, file complaints, and form agreements.

The marketplace isn’t what it used to be…

Changing technologyChanging technology

GlobalizationGlobalization

DeregulationDeregulation

PrivatizationPrivatization

EmpowermentEmpowerment

CustomizationCustomization

ConvergenceConvergence

DisintermediationDisintermediation

The Importance of Information

“Marketing is becoming a battle based more on information than on sales power”

Companies need information about their marketing environment competition customer needs

Some have developed advanced mktg info. systems, some others lack information sophistication

Companies with superior information; choose its markets better develop better offerings execute better marketing planning

The Importance of InformationThe Importance of Information

The Marketing Information System

A marketing information system (MIS) consists of people, equipment, and

procedures to gather, sort, analyze, evaluate, and distribute

needed, timely, and accurate info. to marketing decision makers.

The MIS helps managers to: 1. Assess information needs,2. Develop needed information,3. Distribute information.

The Marketing Information System

10 useful questions to determine the information needs of marketing managers

1. What decisions do you regularly make?2. What information do you need to make these decisions?3. What information do you regularly get?4. What special studies do you periodically request?5. What information would you want that you are not getting

now?6. What information would you want daily? Weekly? Monthly?

Yearly?7. What magazines and trade reports would you like to see on

a regular basis? 8. What topics would you like to be kept informed of?9. What data analysis programs would you want?10.What are the three most helpful improvements that could

be made in the present marketing information system?

Information Managers

Would Like to Have

What They Really Need &

What is Feasible to

Offer

Functions of a MIS: Assessing Information Needs

Internal DataInternal DataComputerized Collection of Information

from Data Sources (i.e. Accounting) Within the Company.

Computerized Collection of Information from Data Sources (i.e. Accounting)

Within the Company.

MarketingResearchMarketingResearch

Design, Collection, Analysis, and Reporting of Data about a Specific

Marketing Situation Facing the Organization.

Design, Collection, Analysis, and Reporting of Data about a Specific

Marketing Situation Facing the Organization.

MarketingIntelligenceMarketing

IntelligenceCollection and Analysis of Publicly

Available Information about Competitors and the Marketing Environment

Collection and Analysis of Publicly Available Information about Competitors

and the Marketing Environment

Functions of a MIS: Developing Information

Information Needed by Managers Can be Obtained From:

Internal Record System

Consists of computerized collections of info. obtained from data sources within the company (internal data);

Includes reports on orders, sales, prices, costs, inventory levels, receivables, payables, etc. “opportunities” and “problems” can be determined

by analyzing these information Can usually be accessed more quickly and cheaply May be incomplete or data may be in the wrong

form.

Marketing Intelligence System

A set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment Data gathering sources:

Company personnel (esp.sales repr.) Suppliers, resellers, customers

“Mystery shoppers” sent by retailers Annual reports, speeches, press releases, and

advertisements Business publications, web pages Trade show exhibits Outside suppliers (e.g. mktg research company) Internal mktg info.center to collect and circulate mktg

intelligence

Marketing Research System

Marketing research ğ the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing an organization.

Market research ğ research into a particular market !

just one component of mktg research

Examples of research

• QUANTITATIVE RESEARCH : Seeks to quantify the data and typically applies some form of statistical analysis.

It is based on large number of representative sample Data collection is structured Recommend a final course of action

• QUALITATIVE RESEARCH : The main objective is to gain qualitative understanding of the underlying reasons & motives.

It is based on large number of representative sample Sample consists of small number of nonrepresentative cases. Data collection is unstructured Data analysis is nonstatistical It is possible to develop an initial understanding

The Marketing Research Process

Defining the problem and

research objectives

Defining the problem and

research objectives

Developing theresearch plan

Developing theresearch plan

Implementingthe research

plan: collecting the data

Implementingthe research

plan: collecting the data

Implementingthe research

plan: analyzing the data

Implementingthe research

plan: analyzing the data

Interpreting and reporting the findings

Interpreting and reporting the findings

Defining the Problem & Research Objectives

Example: ABC Airlines Case ABC Airlines is constantly looking for new

ways to serve the needs of air travelers:

One manager came up with the idea of offering phone service to passengers.

The other managers got excited about this idea and agreed that it should be researched further.

The marketing manager volunteered to do some preliminary research

The marketing manager then asked the company’s research manager to find out how air travelers would respond to this new service.

Defining the Problem & Research Objectives Example: American Airlines Case (cont.)

Research ProblemResearch Problem ? ? ““to find out everything about air travelers’ need” – too broad! “to find out if enough passengers aboard a B-747 flying

between East Cost and West Coast would be willing to pay $ 25” to make a phone call so that the company would break even on the cost of offering this service” – too narrow!

Research ProblemResearch Problem is finally defined as: “Will offering an in-flight phone service create enough incremental preference and profit for American Airlines to justify its cost against other possible investments that the company might make?”

Defining the Problem & Research Objectives Example: American Airlines Case (cont.)

Research Objectives: What are the main reasons that airline

passengers might place phone calls while flying?

What kinds of passengers would be the most likely to make phone calls?

How many passengers are likely to make phone calls, given different price levels?

How many extra customers might choose this company because of this new service?

How important will phone service be relative to other factors? (such as flight schedules, food quality, baggage handling, etc.)

Defining the Problem & Research Objectives

ExploratoryResearch

DescriptiveResearch

CausalResearch

•Test cause- and-effect relationships.

•Tests hypotheses about cause- and-effect relationships.

•Test cause- and-effect relationships.

•Tests hypotheses about cause- and-effect relationships.

•Sheds light on problem - suggest solutions or new ideas.

•Gathers preliminary information that will help define the problem

and suggest hypotheses

•Sheds light on problem - suggest solutions or new ideas.

•Gathers preliminary information that will help define the problem

and suggest hypotheses

•Ascertain magnitudes•Describes things as market

potential for a product or the demographics and consumers’

attitudes.

•Ascertain magnitudes•Describes things as market

potential for a product or the demographics and consumers’

attitudes.

Developing the Research Plan

Designing a research plan calls for decisions on: Data sources Research approaches Contact methods Sampling plan Research instruments

Data that were collected for another purpose, and already exist somewhere

(+)Obtained more quikcly / at lower cost

(-)Might not be usable data.

Developing the Research Plan:Data Sources

both must be:

Relevant

Accurate

Current

Impartial

Data gathered for a specific purpose or for a specific research project

A classification of marketing research data

Developing the Research Plan Secondary Data Collection

Internal Sources Company profit-loss statements, balance

sheets, sales figures, sales-call reports, invoices, inventory records, and prior research reports.

Government Publications Statistical Abstract County and City Data Book Industrial Outlook Marketing Information Guide

Periodicals and Books Business Periodicals Index Standard and Poor’s Industry

On-Line Databases (e.g. Lexis-Nexis, Compuserve, Dialog)

Applications of Secondary Data

Demand Estimation Monitoring the environment Segmentation and Targeting

Sources of Secondary Data (examples)

ESOMAR website - www.esomar.org founded in 1948 4,400 members in 100 countries mission : "ESOMAR is the world organisation for enabling

better research into markets, consumers and societies." the aim is to promote the value of market and opinion

research in illuminating real issues and bringing about effective decision-making.

creates and manages a comprehensive programme of industry-specific and thematic conferences, publications and communications

www.arastirmacilar.org in Turkey (Pazarlama ve Kamuoyu Araştırmacıları Derneği)

Other useful sources: AMA website – www.marketingpower.com AMS website – www.ams-web.org www.trendwatching.com

www.esomar.org

www.arastirmacilar.org

Basic Means of Primary Data

• Human versus machine observers • Natural versus contrived situations

Observation Communication

• Survey • Depth Interview• Focus group • Projective techniques

Research Techniques

Focus-groupFocus-group

ExperimentalExperimental

Behavioral Research

Depth Interview

Projective Techniques

Survey

Observation

Developing the Research Plan: Contact Methods

Mail Telephone Personal (arranged or intercept interviews)

Individual or group interviewing CAPI and CATI

On-line (Internet research) the data are not representative of a target

population people in the target market who do not use the

Internet or who don’t want to answer a questionnaire can bias the results.

Developing the Research Plan: Contact Methods (cont.)

Mail Telephone Personal Online

Flexibility Poor Good Excellent Good

Quantity of Data Collected

Good Fair Excellent Good

Control of Interviewer

Excellent Fair Poor Fair

Control of Sample

Fair Excellent Fair Poor

Speed of Data Collection

Poor Excellent Good Excellent

Response Rate

Fair Good Good Good

Cost Good Fair Poor Excellent

Developing the Research Plan: Sampling Plan

Sample -representative segment of the

population How should thesample be

chosen?(Sampl.procedure)

Who is to be surveyed?(Sampling

Unit)

How many should besurveyed?

(Sample size)

A. Probability Sample

Simple random sample Every member of the population has an equal chance of selection

Stratified random sample The population is divided into mutually exclusive groups (such as age groups), and random samples are drawn from each group

Cluster (area) sample The population is divided into mutually exclusive groups (such as city blocks), and the researcher draws a sample of the groups to interview

Probability and Nonprobability Samples

Continued on next slide . . .

B. Nonprobability Sample

Convenience sample The researcher selects the most accessible population members

Judgment sample The researcher selects population members who are good prospects for accurate information

Quota sample The researcher finds and interviews a prescribed number of people in each of several categories

Probability and Nonprobability Samples

Developing the Research Plan: Research Instruments

Mechanical Devices

• People Meters• Supermarket Scanners• Galvanometer• Tachistoscope• Eye Cameras

Questionnaire

• What questions to ask?• Form of each question?

•Closed-end•Open-end

• Wording?• Ordering?

Types of Questions

1_____ 2 _____ 3_____ 4_____ 5_____

Small airlines generally give better service than large ones.Strongly Disagree Neither agree Agree Stronglydisagree nor disagree agree

A statement with which the respondent shows the amount of agreement/ disagreement.

Likert scale

An organized tour groupSpouse and children

Business associates/friends/relativesSpouse

Children onlyNo one

With whom are you traveling on this flight?A question with three or more answers.

Multiple Choice

In arranging this trip, did you personally phone American? Yes No

A question with two possible answers.

Dichotomous

ExampleDescriptionName

A. Closed-end Questions

Types of Questions

Evet-Hayır Türü Kapalı SorularCep telefonunuz var mı?( )Evet (X )Hayır

Çok Seçenekli Kapalı Sorular A Markasını tercih etmenizin neden(ler)i nedir? Birden fazla

seçenek işaretleyebilirsiniz. ( ) Kalitesi(X ) Fiyatının makul olması .( ) Hafif olması ( ) Arkadaş tavsiyesi( ) Diğer. Belirtiniz

Types of Questions

Çok Seçenekli Kapalı Sorular (önem derecelerine göre sıralatma)A Markasını tercih etmenizin neden(ler)i nedir? Marka

tercihiniz üzerine etkili olduğu düşünülen aşağıdaki faktörleri 1’den 5’e kadar önem sırasına göre işaretleyiniz.

(2) Kalitesi(1) Fiyatının makul olması .(3) Hafif olması (4) Arkadaş tavsiyesi(5) Diğer – Lütfen belirtiniz: ..Bekleme süresi.........

Types of Questions

Likert ÖlçeğiBir cep telefonu için en önemli özellik hafif olmasıdır. Bu

yargıya katılır mısınız? ( ) Kesinlikle katılıyorum () Katılıyorum ( ) Ne katılıyorum ne

katılmıyorum (X) Katılmıyorum ( )Kesinlikle katılmıyorum

Boyutsal Ayırma Ölçeği (Semantic Differential)Bu işyerinde satış elemanlarının müşteriye karşı davranışlarıÇok soğuktur _ _ _ _ _ _ _ Çok sıcaktır

1 2 3 4 5 6 7

Types of Questions

Önem ÖlçeğiSizce bir cep telefonunda bekleme süresinin kısa olması ne

derecede önemlidir?

Çok önemlidir Hiç önemli değildir

( ) ( X ) ( ) ( ) ( ) 1 2 3 4 5

Satın Alma Niyeti Ölçeği Hastanemizde sizlere daha iyi hizmet sunabilmek amacı ile bir

gözlükçünün faaliyet göstermesine izin vermeyi düşünüyoruz. Bu proje gerçekleştirilirse gözlüklerinizi göz polikliniği içinde yer alacak bu gözlükçüye yaptırmayı düşünür müsünüz? Kesinlikle yapt. Yaptırmayı Ne düşünürüm Yaptırmayı Kesinlikle yapt.

düşünürüm düşünürüm ne düşünmem düşünmem düşünmem ( ) ( X ) ( ) ( ) ( )

Types of Questions

Önem-Performans Ölçeği

Bir hastanede yemekler sizce ne kadar lezzetli olmalıdır? Düşüncenizi 1-7 arasında bir değer vererek açıklayınız.

(en düşük) 1 2 3 4 5 6 7 (en yüksek)

( ) ( ) ( ) ( ) (X ) ( ) ( ) Hastanemizdeki yemekleri ne ölçüde lezzetli buldunuz ? Düşüncenizi

1-7 arasında bir değer vererek açıklayınız.

(en düşük) 1 2 3 4 5 6 7 (en yüksek)

( ) ( X) ( ) ( ) ( ) ( ) ( )

Types of Questions

Tam Açık Uçlu SoruŞirketimiz sizlere daha iyi hizmet sunabilmek amacı ile bir

aylık bakım servisini devreye sokmayı planlamaktadır. Bu proje gerçekleştirilirse yılda 50 milyon ödeyerek kaloriferinizin bakımını yaptırır mısınız? Bu konudaki görüşlerinizi kısaca açıklayınız ............................................................................................................

Kelime Çağrışım SorularıHavayolu .............................Cep telefonu ........................deyince aklınıza ne gelir? Boşlukları doldurunuz.

Interpreting and Reporting Findings

Researcher should present important findings that are useful in the major decisions faced by management.

Step 1. Interpret the Findings

Step 2. Draw Conclusions

Step 3. Report to Management

Back to: ABC Airlines Case:Main Survey Findings

The chief reasons for using in-flight phone service are:

emergencies, urgent business deals, mix-ups in flight times, and so on.

Making phone calls to pass the time would be rare. Most of the phone calls would be made by businesspeople on expense accounts.

About 5 passengers out of every 200 would make in-flight phone calls at a price $25 a call; 12 would make calls at $15.

Thus a charge of $15 would produce more revenue (12x$15=$180) than $25 a call (5x$25=$125).

ABC Airlines Case:Main Survey Findings (cont.)

The promotion of in-flight phone service would win the company about two extra passengers on each flight.

The net revenue from these two extra passengers would be about $ 620, but this still would not help meet the breakeven cost.

Offering in-flight phone service would strengthen the public’s image of ABC Airlines as an innovative and progressive airline.

However, it would cost the company about $200 per flight to create this extra goodwill.

Good Marketing Research:

Is scientific Is creative Uses multiple methods Realizes the interdependence of

models & data Acknowledges the cost & value of

information Maintains “healthy” skepticism Is ethical

Analyzing Marketing Information

Information gathered in internal databases and through marketing intelligence and marketing research ğ may require more analysis

Managers may need help in applying the info. to their mktg problems and decisions

Marketing decision support sysytems (MDSS) ğ “coordinated collection of data, systems, tools and techniques with supporting software and hardware, by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action”

marketing and sales software programs (decision models)

Important Outcome of Marketing Research:Customer Relationship Management

Many companies are turning to CRM ğ to manage detailed info.about individual customers

They manage “customer touch points” in order to maximize “customer loyalty”.

CRM ğ consists of sophisticated software and analytical tools that integrate customer information from all sources, analyze in depth, and apply the results to build stronger relationships

Data warehouses Data mining techniques

“...CRM is not a technology solution....is just one part of an effective overall customer relationship strategy...”

Functions of a MIS:Distributing Information

Information Must be Distributed

to the Right Managers at the Right Time.

Distributes NonroutineInformation for Special

Situations

Distributes Routine Information for

Decision Making