PART 2 CAPTURING MARKETING INSIGHTS Kotler Keller Ang

PART 2 CAPTURING MARKETING INSIGHTS © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -1

Chapter 3 GATHERING Information & Scanning the Environment © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -2

In this chapter, we address the following questions: 1. What are the components of a modern marketing information system? 2. What are useful internal records? 3. What is involved with a marketing intelligence system? 4. What are the key methods for tracking & identifying opportunities in the macroenvironment? 5. What are some important macroenvironment developments? Asian 3 -3 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

Adidas’ campaign against counterfeits in the Philippines Counterfeits in Asia 5 -7 % global merchandise trade $512 b in lost sales 2004 60% - from China fakes close to real thing spend more to stop them © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -4

Components of a Modern Marketing Information System To carry out analysis, planning, implementation & control, Marketing managers need Marketing Information System MIS § Assess information needs, develop & distribute - timely manner © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -5

Table 3. 1 © Kotler, Keller, Ang, Leong & Tan Information Needs Probes Marketing Management - An Asian Perspective 4 th Edition 3 -6

Components of a Modern Marketing Information System MIS - 3 components 1. Internal records system – Order-to-payment cycle & sales 2. Marketing intelligence system – Daily developments - market environment 3. Marketing research system – Collection, analysis & reporting of data relevant to marketing situation © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -7

Internal Records & Marketing Intelligence The Order-to-Payment Cycle § § § Heart of internal records system Orders sent to firm; Invoices sent Out-of-stock items back-ordered Customers favor timely delivery Internet - speed, accuracy, efficiency © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -8

Internal Records & Marketing Intelligence Sales Information Systems 7 -Eleven chain Japan customizes merchandise § Use sophisticated sales information system § Marketing needs accurate current sales reports Asian - get right signals § Carefully interpret data © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 3 -9

Internal Records & Marketing Intelligence Databases, Data Warehousing & Data Mining § Databases (customer/product/sales) Ø Score customers - frequency & value Ø Send offer to highest scores Ø Better response rate & save mail expense § Data warehousing - data easily accessible § Data mining - insights into neglected segments © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -10

Internal Records & Marketing Intelligence Databases, Data Warehousing & Data Mining § Manage database: business integration software Eg: Ben & Jerry’s Pint tracking number put in database Sales see flavors with most sales Marketing check online orders © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -11

Internal Records & Marketing Intelligence The Marketing Intelligence System marketing intelligence system procedures & sources to get information on developments in marketing environment § Books, newspapers, trade publications § Talk to customers, suppliers, distributors § Meet other company managers © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -12

Internal Records & Marketing Intelligence The Marketing Intelligence System Improve marketing intelligence quality HOW? 1. Train sales - spot developments 2. Motivate middlemen - share intelligence 3. Network externally 4. Customer advisory panel 5. Government data resources 6. Purchase data from suppliers 7. Online customer feedback systems © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -13

Analyzing the Macroenvironment Needs & Trends § Fad – Unpredictable, short-lived, little significance § Trend – Direction of events with some momentum & durability § Megatrends – Major social, economic, political & technological changes - long-lasting influence © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -14

Analyzing the Macroenvironment Needs & Trends § Successful companies respond to unmet needs & trends – Eg Fed. Ex was created to meet need for next-day mail delivery § Market research assess profit potential of opportunity © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -15

Analyzing the Macroenvironment Identifying the Major Forces Global forces affect companies & consumers Firm must monitor 6 major forces: Demographic Economic Social-cultural Natural Technological & Political-legal © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -16

The Demographic Environment § This store is in old part of town in Ipoh Malaysia § Singer sewing machines less popular in urban areas § More working women & smaller families § Suburban towns - good sales © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -17

The Demographic Environment Worldwide population growth Changing mixes of age, ethnic composition & educational levels Rise of non-traditional families Large geographic shifts in population Micromarketing from mass marketing © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -18

The Demographic Environment Worldwide Population Growth § § Main demographic force - population Population explosion –major concern Insufficient food, overcrowding, pollution Large population - attractive potential population ≠ markets unless sufficient purchasing power © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -19

The Demographic Environment Worldwide Population Growth A Mattel ad in Chinese Hot Wheels toy Headline reads: “Hot Wheels Performance Tracks Great Varieties, Great Challenges!” § Eg: China - Skyrocketing population § Limit families to 1 child – get full attention § Trend – companies like Mattel & Lego - exploit opportunity aggressively Asian © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 3 -20

The Demographic Environment Population Age Mix § Populations vary in age mix § Global trend ØAging population ØFalling fertility rates ØFuture Asian retiree: affluent, cosmopolitan ØGood market for travel, entertainment © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -21

The Demographic Environment Population Age Mix 6 Age Groups: 1. Preschool 2. School-age children 3. Teens 4. Young adults age 25 to 40 5. Adults age 40 to 65 6. Older adults age 65 & up groups shape marketing Most populous environment © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -22

The Demographic Environment Ethnic & Other Markets § Countries vary in ethnic & racial makeup § Ethnic groups - specific wants & buying habits § Asia’s ethnic diversity: > 20 major languages & > 12 major religions in 12 Asian countries © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -23

The Demographic Environment Educational Groups Asians desire for knowledge demand for § Books, education § Offshore campuses § Joint degree programs § Online courses © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -24

The Demographic Environment Educational Groups 5 educational groups: 1. Illiterates 2. High school dropouts 3. High school degree holders 4. College degree holders 5. Professional degree holders © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -25

The Demographic Environment Household Patterns Traditional household § Husband, wife & children Non-traditional household § Singles § Single-parent families § Divorcees Growing rapidly § Distinct needs, buying habits – Eg smaller furniture, food sets § Singles can spend > family © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -26

The Demographic Environment Geographical Shifts in Population § Migration between/within countries – Eg 1997 - Hong Kong reverted to China – Hong Kongers migrate to other countries & increase demand for housing & education § Marketers target these new & successful population members © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -27

Other Major Macroenvironments Economic Environment Markets need purchasing power & people Economy’s purchasing power depends on 1. Current income 2. Prices 3. Savings 4. Debt 5. Credit availability Strong impact if products geared - high-income & price-sensitive consumers © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -28

Other Major Macroenvironments Economic Environment - INCOME DISTRIBUTION 4 types of industrial structures: 1. Subsistence economies 2. Raw-material-exporting economies 3. Industrializing economies 4. Industrial economies Shifting income distribution in countries - affluence levels rising © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -29

Other Major Macroenvironments Economic Environment - INCOME DISTRIBUTION 5 income-distribution patterns: 1. 2. 3. 4. 5. 6. © Kotler, Keller, Ang, Leong & Tan Very low incomes Mostly low incomes Very low & high incomes Low Medium, high incomes Mostly medium incomes Marketing Management - An Asian Perspective 4 th Edition 3 -30

Other Major Macroenvironments Economic Environment - INCOME DISTRIBUTION Marketers to consider: § Cross-national income differences § Intracountry variations in income § Income gap between more & less developed Asian countries may narrow over time © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -31

Other Major Macroenvironments Economic Environment SAVINGS, DEBT & CREDIT AVAILABILITY Consumer expenditures affected by savings, debt & credit availability Eg Japan § Recession ate into savings § Prefer eating in - more ready-to-eat meals sold § 7 -Eleven increased food market § 7 -Eleven - bill payments services © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -32

Other Major Macroenvironments Economic Environment OUTSOURCING & FREE TRADE Outsourcing - migration of jobs § Eg: In 2003, IBM moved jobs to India & China § Competitive necessity but unemployment Asian firms benefit - outsourcing trend Outsourcing cut 20 -70 % labor costs © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -33

Other Major Macroenvironments Social-Cultural Environment § Society shapes beliefs, values & norms tastes & preferences § Understand people’s views of themselves, others, organizations etc § Market products - match society’s values & needs of different subcultures © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -34

Other Major Macroenvironments Social-Cultural Environment Views of themselves § Groups with different views of themselves Views of others § Concerned with social problems, seek “own kind” & relationships – Market for social-support services – Market for “social surrogates” - television & Internet chat rooms © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -35

Other Major Macroenvironments Social-Cultural Environment More Japanese teenagers view themselves as individualists © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -36

Other Major Macroenvironments Social-Cultural Environment Views of organizations § Attitudes toward organizations vary § Decline in loyalty § Downsizings bred distrust § Companies: win back employee confidence Views of society § Consumption patterns - social attitude § Makers - high achievers - eat & live well § Escapers, seekers: market for movies, camping © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -37

Other Major Macroenvironments Social-Cultural Environment Malaysian photo studio – women return to their roots photos taken dressed in. Asian traditional costume © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 3 -38

Other Major Macroenvironments Social-Cultural Environment Views of nature § Master nature - technology § Concerned – fragile nature, finite resources § Demand for eco-tours to the wild Views of the universe § Asia - multi religious § Conviction & practice varies § Non-religious: self-fulfillment & gratification © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -39

Other Major Macroenvironments Social-Cultural Environment The modern & traditional in Asia Coca-Cola vending machine. Asiannext to Chinese temple 3 -40 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

Other Major Macroenvironments Social-Cultural Environment Other cultural characteristics: 1. High Persistence- Core Cultural Values § § Hold core beliefs & values that persist Easier to change secondary than core 2. Existence of Subcultures- shared values 3. Shifts of Secondary Cultural Values Over Time § Core values - cultural. Asianswings do take place © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 3 -41

Other Major Macroenvironments Natural Environment Marketers to take note of: 1. Shortages of raw materials 2. Increased costs of energy 3. Increased pollution levels 4. Changing role of governments - protect environment © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -42

Other Major Macroenvironments Natural Environment § Nature deteriorates - global concern § Air & water pollution - dangerous levels § Companies - practices, protect nature § Green products - protect environment § Change consumer attitudes - role to protect environment © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -43

Other Major Macroenvironments Technological Environment 1. Accelerating pace of change – Computers, internet - reduce auto pollution 2. Unlimited opportunities for innovation – Virtual reality - consumer reactions to products 3. Varying R&D budgets – Content to copy products - slight changes 4. Increased regulation- technological change – Public safety © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -44

Other Major Macroenvironments Political-Legal Environment Laws, government & pressure groups influence & limit firms & individuals Marketers must work: 1. 2. 3. 4. Within laws - business practices Engage - special-interest groups Exploit opportunities - market reform Deal with corruption © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -45

Other Major Macroenvironments Political-Legal Environment INCREASE IN BUSINESS LEGISLATION But marketers can get around regulations Eg: Dahongying – China bans Tobacco advertising – Yet, Dahongying - sells cigarettes - seen on TV, billboards & in-store displays – Why? Dahongying has education business & libraries with same name © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -46

Other Major Macroenvironments Political-Legal Environment INCREASE IN BUSINESS LEGISLATION To protect: 1. Companies - unfair competition 2. Consumers - unfair business practices 3. Society - unbridled business behavior “At what point do costs of regulation exceed the benefits? © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -47

Other Major Macroenvironments Political-Legal Environment Shanghai - KFC clone - Colors - Colonel Sanders icon © Kotler, Keller, Ang, Leong & Tan Beijing – KFC clone operates next to KFC Asian Marketing Management - An 4 th Edition Perspective 3 -48

Other Major Macroenvironments Political-Legal Environment INCREASE IN BUSINESS LEGISLATION Protect home industries § Eg KFC Bangalore closed - overuse of MSG § Rumors - closed to protect local retailers Counter protectionistic policies, foreign firms - new local brands – Eg “Made-in-Thailand” Heineken beer © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -49

Other Major Macroenvironments Political-Legal Environment GROWTH OF SPECIAL-INTEREST GROUPS Consumerist movement - strengthen rights & powers of buyers § § Eg: true interest cost of loan Basic ingredients in product Personal data - customized products - privacy issues - public policy issue Consumer affairs - policies - consumer complaints © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -50

Other Major Macroenvironments Political-Legal Environment MARKET REFORM Consistency - nation-building agenda Take time- less developed Asian countries – Vietnam’s doi moi, - criticized as too slow, over-regulated & inefficient © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -51

Other Major Macroenvironments Political-Legal Environment CORRUPTION Corruption - Asian officials- rife Bribes paid - smallest of clearances Survey - Chinese - most willing pay bribes Asian governments to clean up - longterm economic dividends © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -52

Final discussion Marketing Debate - Is Consumer Behavior More a Function of a Person’s Age or Generation? One of the widely debated issues in developing marketing programs that target certain age groups is how much consumers change over time. Some marketers maintain that age differences are critical & that the needs & wants of a 25 year-old in 2006 are not that different from those of a 25 year-old in 1976. Others dispute that contention & argue that cohort & generation effects are critical & that marketing programs must therefore suit the times. Take a position: Age differences are fundamentally more important than cohort effects versus Cohort effects can dominate age differences Marketing Discussion - What brands & products do you feel successfully “speak to you” & effectively target your age group? Why? Which ones do not? What could they do better? Asian © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 3 -53

Video Links Secondary Videos to watch: § Burke, Inc. (9: 01 min) § DDB Worldwide (6: 55 min) § Hasbro (9: 41 min) Click here to watch the video clips from the US Website. © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 3 -54