PART 2 CAPTURING MARKETING INSIGHTS Kotler Keller Ang

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PART 2 CAPTURING MARKETING INSIGHTS © Kotler, Keller, Ang, Leong & Tan Marketing Management

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

Chapter 4 CONDUCTING Marketing Research and Forecasting Demand © Kotler, Keller, Ang, Leong &

Chapter 4 CONDUCTING Marketing Research and Forecasting Demand © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -2

In this chapter, we address the following questions: 1. What constitutes good marketing research?

In this chapter, we address the following questions: 1. What constitutes good marketing research? 2. What are good metrics for measuring marketing productivity? 3. How can marketers assess their return on investment of marketing expenditures? 4. How can companies more accurately Asian © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 4 -3

Marketing Research and Forecasting Demand LG Telecom - differentiated service - each group -

Marketing Research and Forecasting Demand LG Telecom - differentiated service - each group - research on customer. Asian value & profitability 4 -4 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

The Marketing Research System Good marketing research is characterized by scientific method, creativity, multiple

The Marketing Research System Good marketing research is characterized by scientific method, creativity, multiple research methods, accurate model building, cost-benefit analysis, a healthy skepticism & an ethical focus © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -5

The Marketing Research System 3 categories Market Research Firms 1. Syndicatedservice 2. Custom marketing

The Marketing Research System 3 categories Market Research Firms 1. Syndicatedservice 2. Custom marketing 3. Specialty-line market © Kotler, Keller, Ang, Leong & Tan Other ways to conduct research § § § Marketing Management - An Asian Perspective 4 th Edition Engage students Use the Internet Check out rivals 4 -6

The Marketing Research Process Define problem & research objective, Develop research plan, Collect information,

The Marketing Research Process Define problem & research objective, Develop research plan, Collect information, Analyze information, Present findings to management & Make decision © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -7

Figure 4. 1 The Marketing Research Process © Kotler, Keller, Ang, Leong & Tan

Figure 4. 1 The Marketing Research Process © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -8

The Marketing Research Process Step 1: Define Problem, Decision Alternatives & Research Objectives §

The Marketing Research Process Step 1: Define Problem, Decision Alternatives & Research Objectives § § Marketing- studies to researcher Define problem carefully Survey, forecast, ad evaluation Marketing researcher - insight customer’s attitudes & buying behavior © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -9

The Marketing Research Process Step 2: Develop the Research Plan § § Develop efficient

The Marketing Research Process Step 2: Develop the Research Plan § § Develop efficient plan - gather information Design research plan calls for: Data sources Research approaches Research instruments Sampling plan Contact methods © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -10

The Marketing Research Process Step 2: Develop the Research Plan - DATA SOURCES Secondary

The Marketing Research Process Step 2: Develop the Research Plan - DATA SOURCES Secondary data § Collected for other purpose & already exist § Low cost & ready availability Primary data § Data freshly gathered for specific purpose Ø Procedure - interview people – their feeling on topic - develop instrument & proceed © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -11

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH APPROACHES Primary

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH APPROACHES Primary data collected in 5 ways 1. Observation 2. Focus groups 3. Surveys 4. Behavioral data 5. Experiments © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -12

The Marketing Research Process A focus group © Kotler, Keller, Ang, Leong & Tan

The Marketing Research Process A focus group © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -13

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS §

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS § Marketing researchers - 3 main research instruments to collect primary data: 1. Questionnaires 2. Qualitative measures 3. Mechanical devices © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -14

Table 4. 1 Types of Questions © Kotler, Keller, Ang, Leong & Tan Marketing

Table 4. 1 Types of Questions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -15

Table 4. 1 Types of Questions © Kotler, Keller, Ang, Leong & Tan Marketing

Table 4. 1 Types of Questions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -16

Questionnaire Dos & Don’ts 1. Ensure questions - not biased 2. Make questions simple

Questionnaire Dos & Don’ts 1. Ensure questions - not biased 2. Make questions simple & specific 3. Avoid jargon 4. Avoid uncommon or ambiguous words 5. Avoid questions with a negative 6. Avoid hypothetical questions 7. Avoid words that could be misheard 8. Desensitize questions - use response bands 9. Ensure fixed responses don’t overlap 10. Allow for “other” in fixed Asianresponse questions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 4 -17

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS Qualitative

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS Qualitative research techniques § Unstructured measurement approaches § Range of responses © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -18

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS Understand

The Marketing Research Process Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS Understand customer experience 7 techniques 1. Shadowing 2. Behavior mapping 3. Consumer journey 4. Camera journals 5. Extreme user interviews 6. Storytelling 7. Unfocus groups © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -19

Getting into Consumers’ Heads with Qualitative Research § Common qualitative research approaches: 1) Word

Getting into Consumers’ Heads with Qualitative Research § Common qualitative research approaches: 1) Word associations 2) Projective techniques 3) Visualization 4) Brand personification 5) Laddering © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -20

The Marketing Research Process Step 2: Develop the Research Plan – SAMPLING PLAN After

The Marketing Research Process Step 2: Develop the Research Plan – SAMPLING PLAN After research approach & instruments, design sampling plan Decide on: 1. Sampling unit 2. Sample size 3. Sampling procedure © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -21

Table 4. 2 Probability & Non-probability Samples © Kotler, Keller, Ang, Leong & Tan

Table 4. 2 Probability & Non-probability Samples © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -22

The Marketing Research Process Step 2: Develop the Research Plan – CONTACT METHODS Once

The Marketing Research Process Step 2: Develop the Research Plan – CONTACT METHODS Once sampling plan is determined, decide how to contact subject: Mail Questionnaire Telephone Interview Personal Interview Online Interview © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -23

Pros and Cons of Online Research Advantages § Inexpensive § Faster § People -

Pros and Cons of Online Research Advantages § Inexpensive § Faster § People - more honest online than - personal or telephone interviews § More versatile Disadvantages § Samples - small & skewed § Prone to technological problems & Asian inconsistencies 4 -24 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective

The Marketing Research Process Step 3: Collect the Information § Data collection – expensive,

The Marketing Research Process Step 3: Collect the Information § Data collection – expensive, prone to error § Get right respondents - critical § Data collection improve - technology § Protect personal data of respondents © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -25

The Marketing Research Process Step 3: Collect the Information 4 surveys problems: 1. Respondents

The Marketing Research Process Step 3: Collect the Information 4 surveys problems: 1. Respondents not home 2. Respondents refuse to cooperate 3. Respondents – biased/dishonest answers 4. Interviewers biased or dishonest © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -26

The Marketing Research Process Step 4: Analyze the Information § Extract findings from collected

The Marketing Research Process Step 4: Analyze the Information § Extract findings from collected data § Tabulate & develop frequency distribution § Averages & dispersion computed variables § Advanced statistical techniques & decision models © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -27

The Marketing Research Process Step 5: Present the Findings § The researcher present findings

The Marketing Research Process Step 5: Present the Findings § The researcher present findings relevant to major marketing decisions facing management © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -28

The Marketing Research Process Step 6: Make the Decision Marketing decision support system (MDSS)

The Marketing Research Process Step 6: Make the Decision Marketing decision support system (MDSS) Collection of data, systems, tools & techniques With software & hardware by which organization gathers & interprets relevant information from business & environment & used for marketing action © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -29

Table 4. 3 7 Characteristics - Good Marketing Research © Kotler, Keller, Ang, Leong

Table 4. 3 7 Characteristics - Good Marketing Research © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -30

The Marketing Research Process Overcoming Barriers to the Use of Marketing Research § Many

The Marketing Research Process Overcoming Barriers to the Use of Marketing Research § Many fail to use marketing research sufficiently or correctly WHY? Narrow conception of research Uneven caliber of researchers Poor framing of problem Late & occasionally erroneous findings Personality & presentational differences © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -31

The Marketing Research Process Failure to use marketing research properly led to numerous gaffes:

The Marketing Research Process Failure to use marketing research properly led to numerous gaffes: Eg: Star Wars § Researcher predicted science fiction film fail – America - realism over science fiction – “War” in title - America would stay away § He gave information, not insight § Failed to study script - human story - against space backdrop © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -32

Marketing Research in Asia Marketing research in Asia challenging WHY? 1. Unreliable/no secondary data

Marketing Research in Asia Marketing research in Asia challenging WHY? 1. Unreliable/no secondary data 2. Databases not comparable cross-nationally 3. Poor research infrastructure 4. Cultural differences in response 5. Variations in research capabilities 6. High rates of change in marketplace © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -33

Marketing Research in Asia Solutions: 1. Sequence piloting, adapting & rollout of surveys regionally

Marketing Research in Asia Solutions: 1. Sequence piloting, adapting & rollout of surveys regionally 2. External validation of data sources 3. Use samples on future demographic profiles 4. Invest on research capabilities & infrastructure © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -34

Measuring Marketing Productivity § Marketers accountable for investments § Justify marketing expenditures Measure Marketing

Measuring Marketing Productivity § Marketers accountable for investments § Justify marketing expenditures Measure Marketing Productivity 2 WAYS: 1. Marketing metrics 2. Marketing mix modeling © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -35

Measuring Marketing Productivity - Marketing Metrics Marketing metrics § set of measures - to

Measuring Marketing Productivity - Marketing Metrics Marketing metrics § set of measures - to quantify, compare & interpret marketing performance § customer/company-level concerns – Eg: 3 M tracks sales % from recent innovation § Processes - maximize metrics value § Measures - marketing dashboard synthesis & interpretation © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -36

Table 4. 4 © Kotler, Keller, Ang, Leong & Tan Sample marketing metrics Marketing

Table 4. 4 © Kotler, Keller, Ang, Leong & Tan Sample marketing metrics Marketing Management - An Asian Perspective 4 th Edition 4 -37

Measuring Marketing Productivity 2 scorecards - Performance & warning signals: 1. Customer-performance scorecard –

Measuring Marketing Productivity 2 scorecards - Performance & warning signals: 1. Customer-performance scorecard – Annual performance - customer-based measures 2. Stakeholder-performance scorecard – Tracks satisfaction of those with critical interest in & impact on performance © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -38

Table 4. 5 Sample Customer-Performance Scorecard Measures © Kotler, Keller, Ang, Leong & Tan

Table 4. 5 Sample Customer-Performance Scorecard Measures © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -39

Measuring Marketing Productivity - Measuring Marketing Plan Performance § 4 tools to check on

Measuring Marketing Productivity - Measuring Marketing Plan Performance § 4 tools to check on plan performance: 1. Sales analysis 2. Market share analysis 3. Marketing expense-to-sales analysis 4. Financial analysis © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -40

Measuring Marketing Productivity - Measuring Marketing Plan Performance SALES ANALYSIS § Measure & evaluate

Measuring Marketing Productivity - Measuring Marketing Plan Performance SALES ANALYSIS § Measure & evaluate actual sales - goals 2 tools: 1. Sales-variance analysis - relative contribution of factors to gap in sales performance 2. Microsales analysis - products, territories that failed to produce expected sales © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -41

Measuring Marketing Productivity - Measuring Marketing Plan Performance MARKET SHARE ANALYSIS Market share measured

Measuring Marketing Productivity - Measuring Marketing Plan Performance MARKET SHARE ANALYSIS Market share measured in 3 ways: 1. Overall market share: – sales as % of total market sales 2. Served market share: – – sales as % of sales to served market always > overall market share 3. Relative market share: – market share in relation to largest competitor © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -42

Measuring Marketing Productivity - Measuring Marketing Plan Performance MARKET SHARE ANALYSIS Assumptions (not true/valid

Measuring Marketing Productivity - Measuring Marketing Plan Performance MARKET SHARE ANALYSIS Assumptions (not true/valid always): 1. Outside forces affect firms- same way 2. Performance - against average of industry 3. New firm- industry– each firm’s market share falls § § Market share decline - deliberate - profits Market share - fluctuate - many minor reasons © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -43

Measuring Marketing Productivity - Measuring Marketing Plan Performance © Kotler, Keller, Ang, Leong &

Measuring Marketing Productivity - Measuring Marketing Plan Performance © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -44

Measuring Marketing Productivity - Measuring Marketing Plan Performance MARKETING EXPENSE-TO-SALES ANALYSIS § § §

Measuring Marketing Productivity - Measuring Marketing Plan Performance MARKETING EXPENSE-TO-SALES ANALYSIS § § § Annual-plan control - company not overspend -achieve sales goals Key ratio - marketing expense-to-sales Find how & where company makes money Abnormal fluctuations - cause for concern Period-to-period fluctuations tracked - control chart © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -45

Figure 4. 2 The Control-Chart Model © Kotler, Keller, Ang, Leong & Tan Marketing

Figure 4. 2 The Control-Chart Model © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -46

Measuring Marketing Productivity - Measuring Marketing Plan Performance FINANCIAL ANALYSIS § Find profitable strategies

Measuring Marketing Productivity - Measuring Marketing Plan Performance FINANCIAL ANALYSIS § Find profitable strategies beyond sales § Factors - rate of return on net worth Return on net worth = return on assets x financial leverage § To improve return on net worth – Increase net profits to assets ratio – Increase assets to net worth ratio © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -47

Figure 4. 3 Financial Model of Return on Net Worth © Kotler, Keller, Ang,

Figure 4. 3 Financial Model of Return on Net Worth © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -48

Measuring Marketing Productivity - Measuring Marketing Plan Performance FINANCIAL ANALYSIS Return on assets =

Measuring Marketing Productivity - Measuring Marketing Plan Performance FINANCIAL ANALYSIS Return on assets = profit margin x asset turnover Improve performance - HOW? 2 ways: 1. Increase profit margin – increase sales/cut costs 2. Increase asset turnover – increase sales/reduce assets for given sales level © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -49

Measuring Marketing Productivity - Profitability Analysis § Deep financial analysis – benefits firm §

Measuring Marketing Productivity - Profitability Analysis § Deep financial analysis – benefits firm § Determine if any product/marketing activity- expanded, reduced or removed § Analyze profitability of: Products, territories, customer groups, segments, trade channels, order sizes © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -50

Measuring Marketing Productivity - Profitability Analysis MARKETING-PROFITABILITY ANALYSIS Step 1: Identify Functional Expenses §

Measuring Marketing Productivity - Profitability Analysis MARKETING-PROFITABILITY ANALYSIS Step 1: Identify Functional Expenses § Table 4. 6 & 4. 7 Step 2: Assign Functional Expenses to Marketing Entities § Table 4. 8 Step 3: Prepare Profit-and-Loss Statement for each Marketing Entity § Table 4. 8 & Table 4. 9 © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -51

Table 4. 6 Simplified Profit-and-Loss Statement © Kotler, Keller, Ang, Leong & Tan Marketing

Table 4. 6 Simplified Profit-and-Loss Statement © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -52

Table 4. 7 Mapping Natural Expenses into Functional Expenses © Kotler, Keller, Ang, Leong

Table 4. 7 Mapping Natural Expenses into Functional Expenses © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -53

Table 4. 8 Bases for Allocating Functional Expenses to Channels © Kotler, Keller, Ang,

Table 4. 8 Bases for Allocating Functional Expenses to Channels © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -54

Table 4. 9 Profit-and-Loss Statements for Channels © Kotler, Keller, Ang, Leong & Tan

Table 4. 9 Profit-and-Loss Statements for Channels © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -55

Measuring Marketing Productivity - Profitability Analysis DETERMINING CORRECTIVE ACTION Marketing-profitability analysis § Only indicate

Measuring Marketing Productivity - Profitability Analysis DETERMINING CORRECTIVE ACTION Marketing-profitability analysis § Only indicate relative profitability of channels, product etc § Not to drop unprofitable entities § Not to show profit if entities dropped © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -56

Measuring Marketing Productivity - Profitability Analysis DIRECT VERSUS FULL COSTING § Allocate full costs

Measuring Marketing Productivity - Profitability Analysis DIRECT VERSUS FULL COSTING § Allocate full costs OR only direct & traceable costs to evaluate entity’s performance 3 types of costs: 1. Direct costs 2. Traceable common costs 3. Non-traceable common costs © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -57

Measuring Marketing Productivity - Profitability Analysis Full-cost approach § All costs imputed to get

Measuring Marketing Productivity - Profitability Analysis Full-cost approach § All costs imputed to get true profit 3 major weaknesses: 1. Profit shift if cost allocation replaced 2. Demoralizes managers 3. Weaken real cost control © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -58

Measuring Marketing Productivity - Profitability Analysis Activity-based cost accounting (ABC) § Quantify true profitability

Measuring Marketing Productivity - Profitability Analysis Activity-based cost accounting (ABC) § Quantify true profitability of activities § Refocus from only standard to full cost § Capture actual costs of supporting individual products, customers & others © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -59

Measuring Marketing Productivity - Marketing-Mix Modeling § Marketing-mix models – Analyze data - effects

Measuring Marketing Productivity - Marketing-Mix Modeling § Marketing-mix models – Analyze data - effects of marketing – But not how elements work together – Eg: Multivariate analyses – How each marketing element influences outcomes © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -60

Forecasting & Demand Measurement § Marketing research - opportunities § Sales forecasts – Raise

Forecasting & Demand Measurement § Marketing research - opportunities § Sales forecasts – Raise investment, hire workers – Based on estimates of demand § Managers need to define market demand © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -61

Forecasting & Demand Measurement § Importance of defining market correctly: – Eg: Coke’s sales

Forecasting & Demand Measurement § Importance of defining market correctly: – Eg: Coke’s sales believed to be maxed out – New CEO changed that view – Coca-Cola: tiny % of fluid world drank daily – “The enemy is coffee, milk, tea, water” – Ushered in a huge period of growth © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -62

The Measures of Market Demand § Companies can prepare up to 90 types of

The Measures of Market Demand § Companies can prepare up to 90 types of demand estimates § Each demand measure - specific purpose – Eg: Company forecasts regional demand for major product line to decide whether to set up regional distribution § Forecasts also depend on type of market © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -63

Figure 4. 4 Ninety Types of Demand Measurement (6 × 5 × 3) ©

Figure 4. 4 Ninety Types of Demand Measurement (6 × 5 × 3) © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -64

The Measures of Market Demand Productive ways to break down market: 1. The potential

The Measures of Market Demand Productive ways to break down market: 1. The potential market 2. The available market 3. The target market 4. The penetrated market © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -65

The Measures of Market Demand - A Vocabulary for Demand Measurement MARKET DEMAND Total

The Measures of Market Demand - A Vocabulary for Demand Measurement MARKET DEMAND Total product volume bought by defined customer group in defined geographical area in defined time period in defined marketing environment under defined marketing program © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -66

The Measures of Market Demand - A Vocabulary for Demand Measurement § Marketing sensitivity

The Measures of Market Demand - A Vocabulary for Demand Measurement § Marketing sensitivity of demand – Distance between market minimum & potential § Expansible market – Total size affected by marketing expenditures § Market penetration index – Compare current demand to potential demand § Share penetration index – Compare current to potential market share © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -67

Figure 4. 5 Market Demand Functions © Kotler, Keller, Ang, Leong & Tan Marketing

Figure 4. 5 Market Demand Functions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -68

Figure 4. 5 Market Demand Functions © Kotler, Keller, Ang, Leong & Tan Marketing

Figure 4. 5 Market Demand Functions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -69

The Measures of Market Demand - A Vocabulary for Demand Measurement MARKET DEMAND MARKET

The Measures of Market Demand - A Vocabulary for Demand Measurement MARKET DEMAND MARKET FORECAST § expected market demand MARKET POTENTIAL § market demand from high expenditure – more effort, little demand © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -70

The Measures of Market Demand - A Vocabulary for Demand Measurement MARKET DEMAND §

The Measures of Market Demand - A Vocabulary for Demand Measurement MARKET DEMAND § COMPANY DEMAND § Estimated share of demand at levels of marketing in given time period § COMPANY SALES FORECAST § Expected sales based on marketing & environment § COMPANY SALES POTENTIAL § Sales limit by demand as marketing increases relative to competitors © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -71

The Measures of Market Demand - Estimating Current Demand TOTAL MARKET POTENTIAL § Maximum

The Measures of Market Demand - Estimating Current Demand TOTAL MARKET POTENTIAL § Maximum sales to industry in period, given level of industry marketing & environmental conditions AREA MARKET POTENTIAL § Sales available to territory given a level of conditions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -72

The Measures of Market Demand - Estimating Current Demand 2 methods to assess Area

The Measures of Market Demand - Estimating Current Demand 2 methods to assess Area Market Potential: 1. Market-Buildup Method – Identify buyers in market & estimate purchases – Accurate but not easy to gather 2. Multiple-Factor Index Method – Estimate area market potentials – Single factor not complete indicator of sales – Multiple-factor – each assigned specific weight – Numbers are weights - to variable © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -73

Table 4. 10 Calculating the Brand Development Index (BDI) Asian BDI: Index of brand

Table 4. 10 Calculating the Brand Development Index (BDI) Asian BDI: Index of brand sales to category sales © Kotler, Keller, Ang, Leong & Tan Marketing Management - An 4 th Edition Perspective 4 -74

The Measures of Market Demand - Estimating Current Demand INDUSTRY SALES AND MARKET SHARES

The Measures of Market Demand - Estimating Current Demand INDUSTRY SALES AND MARKET SHARES § § Actual industry sales in market Competitors & estimate their sales How? 1. Published total industry sales 2. Buy reports from marketing research firm - audits total sales & brand sales © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -75

The Measures of Market Demand - Estimating Future Demand 3 -stage procedure - sales

The Measures of Market Demand - Estimating Future Demand 3 -stage procedure - sales forecast 1. Macroeconomic forecast 2. Industry forecast 3. Company sales forecast © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -76

The Measures of Market Demand - Estimating Future Demand How do firms develop their

The Measures of Market Demand - Estimating Future Demand How do firms develop their forecasts? § – § § Internally or buy forecasts Forecasts built on: what people say what people do or what people have done © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -77

The Measures of Market Demand - Estimating Future Demand SURVEY OF BUYERS’ INTENTIONS §

The Measures of Market Demand - Estimating Future Demand SURVEY OF BUYERS’ INTENTIONS § Forecasting - Anticipate what buyers do given conditions § Consumer surveys: – Buying intentions – Personal finances – Expectations about economy © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -78

The Measures of Market Demand - Estimating Future Demand SURVEY OF BUYERS’ INTENTIONS Shifts

The Measures of Market Demand - Estimating Future Demand SURVEY OF BUYERS’ INTENTIONS Shifts in buying intentions § – Firms adjust production & marketing Business buying § – Surveys done on plant, equipment & materials © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -79

The Measures of Market Demand - Estimating Future Demand § § Buyer-intention surveys -

The Measures of Market Demand - Estimating Future Demand § § Buyer-intention surveys - estimate demand – product purchase Value increases if: 1. Cost to reach buyers is small 2. Few buyers 3. Clear intentions 4. Implement intentions 5. Willingly disclose intentions © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -80

The Measures of Market Demand - Estimating Future Demand SALES FORCE OPINIONS § Involve

The Measures of Market Demand - Estimating Future Demand SALES FORCE OPINIONS § Involve sales to forecast future sales § Encourage better estimate - incentives Benefits: Benefits 1. Sales reps - insight into trends 2. Reps > confidence in quota & achieve it 3. “Grassroots” forecast - detailed estimates by product, territory, customer & sales rep © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -81

The Measures of Market Demand - Estimating Future Demand EXPERT OPINIONS § Experts: distributors,

The Measures of Market Demand - Estimating Future Demand EXPERT OPINIONS § Experts: distributors, suppliers, consultants & trade associations 1. Buy forecasts - forecasting firms – More data available & forecasting expertise 2. Invite experts to prepare forecast § Group-discussion method § Pooling of individual estimates © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -82

The Measures of Market Demand - Estimating Future Demand PAST-SALES ANALYSIS 1. Time series

The Measures of Market Demand - Estimating Future Demand PAST-SALES ANALYSIS 1. Time series analysis – past time-series - projects them into future 2. Exponential smoothing – project sales – use past average & recent sales 3. Statistical demand analysis – measure impact causal factors on sales 4. Econometric analysis – equations to describe system & fit parameters statistically © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -83

The Measures of Market Demand - Estimating Future Demand MARKET-TEST METHOD § Direct-market test

The Measures of Market Demand - Estimating Future Demand MARKET-TEST METHOD § Direct-market test – Buyers purchases not carefully planned or – Experts not available/reliable § Forecast new/established product sales in a new distribution channel/territory © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -84

Final discussion Marketing Debate What is the Best Type of Marketing Research? Many market

Final discussion Marketing Debate What is the Best Type of Marketing Research? Many market researchers have their favorite research approaches or techniques, although different researchers often have different preferences. Some researchers maintain that the only way to really learn about consumers or brands is through in-depth, qualitative research. Others contend that the only legitimate & defensible form of marketing research involves quantitative measures. Take a position: Marketing research should be quantitative versus Marketing research should be qualitative. Marketing Discussion When was the last time you participated in a survey? How helpful do you think was the information you provided? How could the research have been done differently to make it more effective? © Kotler, Keller, Ang, Leong & Tan Marketing Management - An Asian Perspective 4 th Edition 4 -85

Video Links Primary Video to watch: § Burke, Inc. (9: 01 min) Secondary Videos

Video Links Primary Video to watch: § Burke, Inc. (9: 01 min) Secondary Videos to watch: § Sony Metreon (8: 30 min) § Wild Planet (9: 21 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 4 -86