Summary of Marketing Management, 11Ed. Chapter 3


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Philip Kotler, Kevin Lane Keller and Abraham Koshy

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Summary of Marketing Management, 11Ed. Chapter 3

  1. 1. logo copy.tif MIS (Marketing Information System) Consists of people, equipment and procedures, to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketers. Capturing Marketing insights and Spotting Market Trends Chapter 3 MIS (Marketing Information System) Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha SUMMARY by To provide insight into an inspiration for marketing decision making, companies must possess comprehensive, up-to-date information about macro trends as well as micro trends particular to their business. This chapter deals with various modes of obtaining this information and also looks into the major macroeconomic forces that affect marketing decisions. MIS can provide data e.g. Swiss eat most chocolates, Greeks eat most cheese. It relies on internal company records, marketing intelligence activities and Market Research. MIS provides information on market happenings and changes in environment. Purposes of MIS have been noted below. • Train the sales force for intelligence gathering by observing competitors activities and listening to customer comments. • Motivate retailers and distributors to pass intelligence. E.g. mystery shoppers to identify customer treatment and possible flaws. • Network externally using competitor’s annual reports, talking with their retailers, distributors and employees, attending shareholder meetings. It should be done ethically and legally. • Use government sources (Census, NSSO reports) or purchase data from outside suppliers (AC-Nielsen, etc) • Create a panel of largest, sophisticated and important customers for feedback. • Use online forums, sites offering customer and expert reviews, Customer compliant sites,
  2. 2. Analyzing the Macro Environment Fad – Unpredictable, short-lived, without any economic or social significance Trend - Sequence of events that have momentum and durability, reveals the future. Megatrend – Large social and economic influence, slow in formation but has lasting effect. Demographic 16.7% of World population in India; Male to Female ratio of 933:1000 Population Age mix : median age of 23.8 years, 34% b/w 12 and 25yrs, 24% b/w 25 and 34 years Literacy level: 65.38% literate, 75.8% males and 54.16% females, 76% literacy between 15-24yrs age group, 64.5% literacy between 25-34yrs age group. Economic Purchasing Power depends on income, savings, prices, credit availability. India’s GDP is $1.2 trillion, per capital income of $3100 Income distribution: 77.7% of urban households have income up to Rs3000/month while only 2.1% have income more than Rs 10,000/month. Categories of Indian consumers: Destitute ( less than Rs16,000 annually, inactive participants in market exchange), Aspirants ( Rs 16,000 to Rs22,000, new entrants in consumption system), Climbers, (Rs 22,000 to Rs 45,000, have desire and willingness to buy but has limited cash), Consuming Class ( Rs 45, 000 to Rs 2,15,000, majority have money and are willing to pay), Rich ( more than Rs 2,15 000, have money and own a variety of products). Trend shows increasing % of Consumers and Climbers while a decreasing % of Destitute and Aspirants. Social-Cultural Society shapes beliefs, values, demands, and requirements. It affects dress codes, food habits, brand preferences. Trend shows an increasing role of children on purchasing decisions e.g. bicycles, computers, wrist watches, shoes and other FMCG goods. Chapter 3 - Capturing Marketing insights and Spotting Market Trends • Order to Payment cycle - Customer places order for goods -> Sales team sends invoice to various departments -> Sales team back orders out of stock items -> Suppliers send goods and sales team pays suppliers -> Sales team delivers order and receives payment. Purpose is to minimize number and duration of cycles. • Sales Information System - Keeping constant track of sales, customers, etc. It can help in identifying trends. • Database / Data warehousing / Data Mining - Separate databases are there for products, salespersons and customers. Purpose is to analyze (mine) data using statistical methods and discover trends. Major Macro Environmental Forces Internal Company Records
  3. 3. Natural Deterioration of environment is a significant concern e.g. Greenhouse Effect, Ozone layer and fossil fuel depletion. Government concerns in this aspect are Euro-2 emissions norms and CNG. Although majority feels necessity of environmental friendly products, they do not buy because (a) Perception of green good being of inferior quality and (b) Perception that good does not contribute majorly to the environment. Corporate Environmentalism is recognizing the importance of environmental issues affecting the firm and integrating those in its strategic plans is fast gaining ground. E.g. Focus on Non-renewable sources like Jatropha oil, Pollution Control Systems like landfills, recycling centers and focus on CNG initiatives. Technological Four major trends are (a) Accelerated Pace of Change: e.g. Apple selling 23.5 million in 2006 (b) Unlimited Opportunities for Innovation e.g. Developments in Bio-tech, telecommunication, Robotics, aid vaccines, contraceptive pills. (c) Varying R & D Budget: e.g. Increasing R & D in Pharmaceutical companies like Cipla, Dr. Reddy’s, and Ranbaxy (d) Increasing regulation of technological change e.g. Drugs and cosmetic act, control on clinical trial, standard for drugs. Political and Legal Two major trends are (a) Increase in business legislation: to protect companies from unfair competition, to protect consumers from unfair business practices, to protect society from unbridled business behavior and to charge businesses with social costs created by their products or processes (b) Growth of special interest groups and improvements like the Consumer Protection Act. Chapter 3 - Capturing Marketing insights and Spotting Market Trends What is the difference between a Fad and a Trend? A fad becomes a trend when it affects a large number of people, has functional value, has lesser number of substitutes, and has other trends promoting it.