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Unit 2
current demand
Explain how future demand can be forecasted
For Discussion
Marketers are always keen on acquiring useful data
and information on their target market by way of market research. Assume the role of a Consultant Marketer explore the ,marketing research process and its value for your client.
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.
Kotler,P. & Keller, K.(2006)
information to impact the planning process as it relates to buyer wants, preferences, and behaviour.
Components of a MIS
(A) Internal Records system
this supplies results data
Sources include:
B) Market Intelligence system this supplies happening data. Defined as: procedures and sources
managers use to obtain everyday information about the marketing environment
Sales information, payment to order cycle, inventory levels, receivables, payables, monthly reports, etc.
Components of a MIS
Marketing Intelligence Systematic collection and analysis of publicly available information about competitors and developers in the marketing environment Mini quizzes Bench marking competing products (Spies)
4. Consumer Advisory Panel 5. Motivating intermediaries to pass along important information. 6. Government data resources
3.
Components of a MIS
C) MARKET RESEARCH
Market intelligence system and internal record system supplies happening and results data respectively
Marketing Research
Acquisition and analysis of
Marketing Research :
markets
the changing emphasis from buyer needs to wants (buyer behaviour) based on non price
External markets
Marketing tactics & method
used by marketers
MARKET RESEARCH
Systematically
Some companies
gathering, analyzing, interpreting and transforming data, structures and results into decision making information.
Bush, R.P. et. al. (2000)
Research Team This info will help companies to: Assess market potential Understand customer satisfaction & purchase behaviour Measure the effectiveness of pricing product, distribution & promotion activities
MARKET RESEARCH
Decision situations marketing are created by the awareness of :
1. Decision Problems 2. Decision Opportunities 3. Market performance
symptoms.
External source
that will help to define the problem (s) and suggest an hypothesis
Casual Research This tests hypotheses about cause & effect relationships The statement of the problem and research objectives guides the entire research process.
In determining the research problem: a. Determine and clarify information needs B. Re define the decision problem as a
research problem
C. Establish research objectives
developed for collecting information Plan outlines sources of existing information Specific approach, contact, methods instruments Information is usually gathered from primary & secondary data source.
another purpose Comps Internal database Commercial database STATIN - Online database Usually less expensive Sometimes required info. may not exist (reactions to new product)
when collecting primary data to ensure relevance to the research being conducted. Accuracy (reliably collected & reported Currency (up-to-date) Impartiality (obj. coll. & reported)
Approaches to Research
a. Observation, Observing relevant people, b. Survey Research Gathering of data by asking
actions & situations E.g. How much of a particular product consumers purchase, traffic patterns
Mechanical Observation
questions Knowledge, attitudes, preferences, buying patterns Descriptive research Most widely used approach
data
being used?
Approaches to Research
system
Electronic monitoring
answer survey question- - -never thought about what they do or why or cannot remember
Persons may be unwilling to
respond to unknown interviewers & what they consider private information -Resent intrusion May give answers they think interviewers want.
Approaches to Research
Experimental Research The gathering of primary data by
Advantages Contact Methods -includes mail,
selecting matched groups of subjects, giving them different treatments, controlling unrelated factors and for checking for differences in group responses. product they may use different prices in different parts of the country to test consumers response. different prices in Kingston & Ocho Rios
telephone personal interviews Mail large qty, low cost per respondent no interviewer bias
Disadvantage Low return rate All respondents respond in the
Approaches to Research
Telephone Advantages Best for gathering information quickly & greater flexibility Respondents can ask for explanation to questions or not answer Reponses are usually higher more controlled because the interviewer can seek persons with specific characteristics. Disadvantages
Higher cost than mail Respondents may or may not
want to answer personal question. There may be interviewer bias (can skew the questions to obtain particular response Interviewer may even cheat on questionnaires Interviewer may not interpret and record respondents response objectively
Personal Interviews
2 forms Individual in homes, offices, street, mallsoffers flexib.
Interviewers probe respondents to elicit more meaningful information explore issues. Respondents may be able to view actual products, advt pkg & observer reactions Group Interviews
Focus group personal interviewing involves inviting 6-10 people to gather with a trained interviewer to talk about a product, service organ.
Approaches to Research
Sampling A segment of the population selected for marketing research to represent her population as a whole
3 decisions are required for sampling: i. Who is to be surveyed (sampling unit) ii. How many people should be surveyed (sample size -the larger the sample the more reliable the results iii. (How you choose the people for sampling (procedure)
Method chosen depends on the need of the research project.
collection Questionnaire Commonly used Flexible Open-ended question- all possible answers Multiple choice scaled
interest
Researchers use
wording of the question and ordering of the question. unbiased, and arranged in a logical manner
decision-making process
Computer aided techniques
computed
Companies can lose profits by overestimating or underestimating the market: overly optimistic estimates of current or future demand can result in costly overcapacity or excess inventories. Underestimating demand can mean missed sales and profit opportunities.
When a company finds an attractive market it must carefully estimate that markets:Current size Future potential
1. 2.
A. CURRENT SIZE
Measurement of Current Market Demand For this demand marketers need three (3) important pieces of information:
I. II. III.
Total market demand Area market demand Actual sales and market shares
Definitions: i) Total market demandThe volume of a product or service that would be bought by a defined customer group in a defined geographic area in a defined time period in defined marketing environment under defined level and mix of industry marketing effort. (Kotler & Armstrong,2008)
Definitions: ii) Primary Demand Total demand for product/service class or form iii) Selective Demand Demand for a given brand of product or service
According to Fig.1.1 Market minimum (Q1) this would take place without stimulated marketing activities. As expenditure increase then demand will be positively impacted.
If 20 million buyers of bottled water each year, with an average buyer buying 60 bottles per year @$50, then the total market demand for bottled is :
20,000,000*60*$50 = $60billion
In selecting the best sales territories, companies need to estimate the market potential (upper limit for market demand) for different cities, states and countries.
i)
Two commonly used methods are: i) Market build up method (for business goods)
ii)
Procedure: Identify all the potential buyers in each business market Then estimate their potential purchases.
Identify all the potential buyers in each consumer market estimate their potential purchases.
income
- Retail sales
Thus: BPI= .2* % of Nat. pop. + .5*% of buy. Income +.3% of Nat. ret. sales
effective buying power is also from this region along with .6594% of the nations retail sales.
B. FUTURE POTENTIAL
Forecasting future Demand
Definition: This relates to the art of estimating future demand by anticipating what buyers are likely to do under given conditions.
i)
Macroeconomic Forecast (environmental forecast) Industry forecast (Trade Ass. & Mktg firms) Company Sales forecast (past sales info.)
ii) iii)
what people say, Involves the use of surveys of buyers opinion what people do, Involves the use of test markets for product/services and measure buyer response
buying activities and behaviour and/or using various statistical tools to forecast sales from past records
SUMMARY
Current and future demand measures are important in providing information to the marketer about the opportunities that exist in the marketplace. Market potential estimates and industry and company sales forecasts are important for the development of corporate marketing strategies and products objectives. Middle management decisions regarding size and allocation of marketing expenditures depend heavily on sales forecasts.
decision, explain how companies can analyze and distribute marketing information.
What are some of the unique issue facing marketers in terms of
Class Objectives
Identify the Major Models of Consumer Behaviour Outline the Major Characteristics Affecting Consumer Behaviour Distinguish the Major Consumer Buying Roles Explain the Buyer Decision Process
Purchase Decision Product choice Brand Choice Dealer Choice Purchase Amount Purchase timing Payment Method.
the buying behavior of the consumer, especially with todays technologically savvy and well informed consumers.
Consumer buyer behaviour refers to: the buying behaviour of final consumers individuals and
households who buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market.
the individuals and households who buy or acquire goods and services for personal consumption.
Consumers may make many buying decisions every day and hence consumer buyer behaviour and the consumer market are very dynamic. Marketers can study actual consumer purchases to find out what they buy, where and how much.
Consumer purchases are influenced strongly by cultural, social, personal and psychological characteristics.
1.Consumer characteristics
2. Consumer psychology
1. Consumer Characteristics
Cultural Factors
These refer to beliefs, perceptions, values, wants and normative patterns of behavior that is transmitted to the individual by society from family and other important institutions. Culture is the most basic cause of a persons wants and behaviour. Human behaviour is largely learned.
Culture is transmitted from generation to generation via: i) Family ii) Church iii) School iv) Groups v) Media vi) Peers
Impact on marketing:
Both culture and subculture will impact the buying behaviour of consumers. Consumer products/services choice, use and buying patterns are are overwhelming impacted by the cultural exposure of the consumer.
Companies that are able to absorb multicultural activities and strategies in their overall marketing programs are at an advantage in capitalizing on the great potential of this factor
Social forces represents all the forces that will allow for the social development and maturity of the individual. They are closely intertwined in the cultural background of the individual.
All the groups that have direct or indirect impact on an individuals attitudes and behavior
i) Primary
-family, friends, neighbours, co-workers, etc.
ii) Secondary
- religious, professional groups, etc.
1.
Impact on marketing:
i)
Exposing individuals to new lifestyles, behaviors and experiences that will impact attitude towards brands, products, etc. Creating pressure for conformity which may impact product choice, brand and usage rate. Exposing individuals to groups that they are hoping to belong or whose values they reject.
ii) ii)
1.
An individual membership in a group will assign him roles (activities) and each role carries a status.
1.
Impact on marketing:
Consumers will select products that symbolizes and
1.
that they were exposed to (family orientation) and this behavior is transferred to the family they create (family procreation)
Impact on marketing:
Changes in family size and structure will result in changes in the buying behavior of the consumer.
These include:
1. 2. 3. 4.
Age, stage, and life cycle (baby Boomers) Occupation and economic circumstances Personality and self concept Lifestyles and value.
Impact on marketing:
to products/services will reflect changes as they move from age to age and as they move through life events situations like marriage, childbirth, retirement, etc.
B. Economic situations can impact product choice and
ultimately demand. Ones occupation may be a strong indicator of product consumption pattern.
Impact on marketing:
Each person possesses personality characteristics and self concept that will impact his/her buying behavior. Brands are chosen base on how well the brand personality is in sync with the consumers personality. Brand Personality- this refers to the mix of human traits that can be attributed to a particular brand.
Impact on marketing:
Lifestyles and values also help to shape consumers taste and buying patterns. Lifestyle relates to an individuals pattern of living in the world as expressed in activities, interests and opinions. Marketers can aim the brand more closely to reflect the consumers lifestyle or changes within the lifestyle.
2. Consumer Psychology
Consumer psychology can be divided into the following factors impacting consumer behavior:
a. b. c. d.
Numerous theories have been tabled to explain this concept in general which can generally be applied to consumer behaviour. They include:
Motivation Maslows Theory A motive is a need that is of needs sufficient to cause to cause a person to act Hertzbergs TwoKotler,P. (2006)
factor Theory
Numerous theories have been tabled to explain this concept in general which can generally be applied to consumer behaviour. They include:
Freuds Theory
2.
Consumer Psychology
Learning
Learning relates to permanent change in behavior.
Memory
Information and experiences that individuals encounter throughout their lives.