Gathering Information and

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Chapter 5
Gathering Information and Measuring Market Demand
MBA 671
Dr. S. Borna
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Objectives

• 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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What is information?
Output
Information process
Input data
info.
A Decision with Attendant uncertainty
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The Expanding Role of Organizational Information
1. Growth in size complexity of
organizations. 2. Proliferation of staff
groups 3. Improvement of information
technology
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4. Shifts from local to national and
international markets 5. Transition from buyers
need to buyers wants 6. Transition form
price to non-price competition



Important to marketers
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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.
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(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
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(3)Marking Research
Is the systematic design, collection analysis,
and reporting of data and findings relevant to a
specific marketing situation facing the company
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Marketing Research conducted 1. Externally
Universities, Research Firms etc. 2.
Internally
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Defining the Problem Research Objectives
Exploratory Research
Descriptive Research
Causal Research
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Research Approaches
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Secondary-Data Sources

• Internal Sources
• Government Publications
• Periodicals and Books
• Commercial Data
• On-Line
• Associations
• Business Information

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The Marketing Research Process
Defining the problem and research objectives
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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

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(4) Marketing Decision Support System (MDSS)
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MARKET MEASUREMENT
Why to measure Market? Why managers need to
understand market measurement procedures? a)
Managers may have to do their own market
measurements
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b) To specify the information they will need
c) To be aware of the limitations of market
measurement methods.
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WHY MEASURE MARKET?
Which market to target? What resources to
allocate? Is companys sale performance on a
segment by segment satisfactory?
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Ninety Types of Demand Measurement (6 x 5 x 3)
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What do we mean by the term market?
Market? Potential Market? Available Market?
Qualified Market? Etc.
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BASIC TERMINOLOGIES
Company
Market
Market Demand
Company Demand
Demand
Company Potential
Market Potential
Potential
Market Forecast
Company forecast
Forecast
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Demand
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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.
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Estimating Current Demand

• Total Market Potential
• Area Market Potential
• Industry Sales
• Market Share

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MARKET POTENTIAL DEFINED
Is an estimate of maximum possible sales of a
product for an entire industry during a stated
period.
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MARKET FORECAST DEFINED
A demand estimate based on the most likely level
of industry expenditures on the marketing
programs currently in effect.
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Market potential and Forecast
Market potential
Assumes a given marketing effort and time
period.
Market forecast
Market minimum
Expected effort
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A note on Possible Essay Question!
Plan
Forecast
(Plan marketing activities then
forecast sales) Forecast
Plan
(forecast sales then plan marketing activities)
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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.
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ASSUMPTIONS
LARGE T.V. SCREEN 36-INCH AND OVER PERCEIVED
QUALITY PRICE WARRANTIES
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LIMITATIONS OF MARKET POTENTIAL
1. Does not say anything about competitive
nature of the market. 2. Measurement problems 3.
Etc.
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ABSOLUTE MARKET POTENTIAL
Total market potential
DNPQ
Dtotal market potential Nno. of buyers in a
given market QQuantity purchased PPrice
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MULTIPLE FACTOR INDEX METHOD
BUYING POWER INDEX
B .5 Y .3R .2 P
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Note There are several other methods
available for measuring market potential
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Estimating Future Demand

• Survey of Buyers Intentions
• Composite of Sales Force Opinion
• Expert Opinion
• Past Sales Analysis
• Market Test Method

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ESTIMATING FUTURE DEMAND
3 FORECAST INFORMATION BASES 1. WHAT
PEOPLE SAY 2. WHAT PEOPLE DO 3. WHAT
PEOPLE HAVE DONE
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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
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2. Composite of Sales force Opinions
3. Expert Opinions 4. Executive Opinions
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WHAT PEOPLE DO
MARKET-TEST METHOD? What Markets?
How Many Markets? How Long? What
Information?
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WHAT PEOPLE HAVE DONE
TIME-SERIES ANALYSIS TREND ANALYSIS (T)
CYCLE (C) SEASON (S) ERRATIC (E)
EVENTS STATISTICAL DEMAND ANALYSIS
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Review

• Components of a marketing information system
• Criteria of good marketing research
• Decision support systems for marketing management
• Demand measurement and forecast