MARKETING MANAGEMENT-CHAPTER 3 MIS collects the information through its subsystems.

These
subsystems are called components, The four main components of
A market tool needed for this regular evaluation of the business Marketing Information System (MIS) are:
situation is called environmental scanning.
 Internal Records
Environmental scanning compels an organization to dig deeper  Marketing Intelligence System
into the external environment and discover important lessons, trends,  Marketing Decision Support System
opportunities or threats that can unfavorably influence the company  Marketing Research
and its industry.
Marketing managers get lots of information from the internal records
MARKETING INFORMATION SYSTEM of the company.
A marketing information system (MIS) is a management The information can be collected from the documents such as
information system designed to support marketing decision making. invoices, transmit copies, billing documents prepared by the firms
once they receive the order for the goods and services from the
American academician Philip Kotler has defined it more broadly as
customers, dealers or the sales representatives.
"people, equipment, and procedures to gather, sort, analyze,
evaluate, and distribute needed, timely, and accurate information to The current sales data should be maintained on a regular basis that
marketing decision makers." serves as an aide to the Marketing Information System.
A few rounds of market research can produce tons of information Companies maintain several databases such as:
that must be managed in a way that ensures it has value to decision
makers. 1. Customer database - A database wherein the complete
information about the customer's name, address, phone number, the
The use of a Marketing Information System (MIS) is one approach frequency of purchase, financial position, and others is saved.
for dealing with the volumes of market research data created for
clients or even to support the use of research data by a business 2. Product database - A database wherein the complete information
owner. about the product's price, features, variants, is stored.

Marketing Information System (MIS) collects, analyzes, and 3. Salesperson database - A database wherein the complete
supplies a lot of relevant information to the marketing managers. information about the salesperson, his name, address, phone number,
sales target, and others is saved.
The role of MIS is to identify (find out) what sort of information is
required by the marketing managers. It then collects and analyzes the A marketing intelligence is used by marketing managers to sift
information. information from the external environment to use in the decision
making.
The information which is collected from the external sources cannot Several companies conduct marketing research to analyze the
be used directly. It must be first evaluated and arranged in a proper marketing environment comprising of changes in the customer's
order. tastes and preferences

This scanning of the economic and business environment can be In order to conduct the market research, the data are to be collected
undertaken in a variety of ways, including: that can be either primary data or the secondary data.

1. Unfocused scanning - The manager, by virtue of what he/she 1. Primary data – Primary data are the data which are collected first
reads, hears and watches exposes him/herself to information that may hand specially for the purpose of study.
prove useful.
The main sources of collecting primary data are:
2. Semi-focused scanning - Again, the manager is not in search of
particular pieces of information that he/she is actively searching but a. Salesmen - They are the most important source of providing first
does narrow the range of media that is scanned. hand information.

3. Informal search - This describes the situation where a fairly limited b. Dealers - Valuable information can be collected with regard to
and unstructured attempt is made to obtain information for a specific demand of the product from retailers.
purpose. c. Consumers - This source of collecting primary data is of great
4. Formal search-This is a purposeful search after information in importance.
some systematic way. The information will be required to address a 2. Secondary data - are the data that have been already collected by
specific issue. and readily available from other sources.
Some enterprises will approach marketing intelligence gathering in a Marketing Decision Support System MDDS is the tools which help
more deliberate fashion and will train its sales force. the marketing managers to analyze data and to take better marketing
Marketing research is the systematic collection, organization, decisions.
analysis and interpretation of the primary or the secondary data to find A good MDSS should have the following characteristics:
out the solutions to the marketing problems.
1. Interactive - The process of interaction with the MDSS should be
Marketing research also provides information to the marketing simple and direct.
managers. However, this information is specific information
2. Flexible - A good MDSS should be flexible.
The scope of MIS is very wide. It includes MR. However; the scope of
MR is very narrow.
3. Discovery oriented - The MDSS should not only assist managers 1. Persistence of cultural values - People's core beliefs and values
in solving the existing problems but should also help them to probe for have a high degree of persistence.
trends and ask new questions.
Core beliefs and values are passed on from parents to children and
4. User friendly - The MDSS should be user-friendly. are reinforced by schools, churches, business, and government.

Major factors influencing the market can be categorized under the Secondary beliefs and values are more open to change.
following different:
2. Shifts in secondary cultural values - Since secondary cultural
* Political -The political environment includes laws, government values and beliefs are open to change, marketers want to spot them
agencies, and pressure groups that influence and limit various and be able to capitalize on the change potential. Society's major
organizations and individuals in a given society. cultural views are expressed in:

These political factors influence organizations in many ways. a. People's views of themselves - People vary in their emphasis on
serving themselves versus serving others.
Political factors can create advantages and opportunities for
organizations. In the 1980s, personal ambition and materialism increased
dramatically, with significant implications for marketing.
* Economic - All businesses are affected by national and global
economic factors. b. People's views of others - Observers have noted a shift from a
"me-society" to a "we-society."
The climate of the economy dictates how consumers, suppliers and
other organizational stakeholders such as suppliers and creditors c. People's views of organizations People are willing to work for
behave within society. large organizations but expect them to become increasingly socially
responsible.
*Socio-Cultural
d. People's views of society-This orientation influences consumption
Social factor focuses its attention on forces within society such as patterns. "
family, friends, colleagues, neighbors and the media.
e. People's view of nature - There is a growing trend toward
Social forces affect the attitudes, interests and opinions. people's feeling of mastery over nature through technology and the
belief that nature is bountiful.
Cultural factors consist of opinion people have towards themselves,
others, organization and society in general. f. People's views of the universe - Studies of the origin of man,
religion, and thought-provoking ad campaigns are on the rise.
Certain cultural characteristics can affect marketing decision-making.
Among the most dynamic cultural characteristics are:
Organizations must be able to offer products and services that aim to 3. Government intervention in natural resource management has
complement and benefit people's lifestyle and behavior. caused environmental concerns to be more practical and necessary in
business and industry.
*Demographic
4. Environmentally sustainable strategies The so-called green
Demography is the study of human populations in terms of size, movement has encouraged or even demanded that companies
density, location, age, sex, race, occupation, and other statistics. produce strategies that are not only environmentally friendly but are
also environmentally proactive.
There are many subdivisions of this group.
*Technological The internet and connectivity are changing the face
a. Generation X - This group lies in the shadow of the boomers and
of business. More and more people are doing business online.
lack obvious distinguishing characteristics.
Technology has created a society which expects instant results.
b. Echo boomers (baby boomlets) are the large growing kid and
teen market. Marketers should be aware of the regulations concerning product
safety, individual privacy, and other areas that affect technological
Many in the modern family now "telecommute" or work at home or in
changes.
a remote office and conduct their business using fax, cell phones,
modem, or the Internet. The competitive environment, also known as the market structure,
is the dynamic system in which a business competes.
*Ecological It consists of natural resource composition in a given
county. 1. Direct Competitors - The direct competitors provide products or
services similar to a specific business.
During the past two decades environmental concerns have steadily
grown. Some trend analysts labeled the specific areas of concern 2. Indirect Competitors In addition to direct competitors, some
were: businesses also face competition from providers of dissimilar products
or services.
1. Shortages of raw materials - Staples such as air, water, and
wood products have been seriously damaged and non-renewable In a marketing environment, a competitor analysis is a crucial part of
such as oil, coal, and various minerals have been seriously depleted a small business' overall strategy and should include a thorough
during industrial expansion. assessment of the strengths, weaknesses, opportunities and threats
of current and prospective competitors as well as the political,
2. Increased pollution is a worldwide problem-Industrial damage to
economic and technological influences that affect the way in which a
the environment is very serious.
business competes.
Here are the five forces as a foundation for developing a strong MARKET OPPORTUNITY ANALYSIS
analysis of the competition.
Nothing is more important for any company than to find and exploit
1. Threat of New Potential Entrants - This external force refers to new market opportunities.
the potential competitors that are not currently in the market but have
the capabilities and resources to compete. Fad is short-lived mushrooming of opportunity which is difficult to
predict and forecast.
2. Threat of Substitute Products - Substitute products are identical
or similar products from different manufacturers that effectively satisfy Trend is something which takes time to build up compared to fad and
a customer's needs at a lower price and can lower industry has a predictable future.
attractiveness and profitability because they restrict price levels. Trend is sometimes co-related with changes in social culture and
3. Bargaining Power of Suppliers - Suppliers of raw materials, economical situation.
equipment and components or markets of inputs can control the Megatrend is much slower in development and is associated with
supply chain and heavily influence pricing and terms when there are political, socio-economical, technology and regulatory changes.
few substitutes in the market.
Megatrends are estimated to last around half decade or more.
A supplier's bargaining power increases if the following factors apply:
Market opportunity analysis is a kind of business planning that
a. Switching suppliers is too costly; emphasizes on discovering the future opportunities and evaluating the
b. A supplier's input cannot be provided by anyone else; company's technological, financial and competitive willingness to
make use of them.
c. The input is an integral component of a company's product.
Market analysis includes the identification of the unmet needs of the
4. Bargaining Power of Buyers - Buyers are the customers or customers, identification of target markets, and assessing the
market of outputs and they have the power to affect price and terms of competitive advantages as well as resource capacity of the company
purchases. in order to meet the market's needs.

5. Rivalry among Competitors Rivalry for market share among The following procedure involved in analysis of market opportunity is
industry competitors can range from low to extreme, and the level of presented below:
intensity refers to the extent to which businesses within an industry
put pressure on one another. 1. Identify what's currently happening in the business
environment - In this section there is a need to look at the economic
conditions (growth, stable or decline) as well as any trends or social
changes that could have an impact on the business.
2. . Define the industry and determine the outlook - Here the ii. Interviews and discussions with competitors (or with customers
company needs to state exactly the industry that is operating within, about competitors)
and make forecasts on the size of the market.
iii. Interviews and discussions with experts
3. Look into the details of competitors - A company needs to know
what businesses they are competing with, and know their products iv. A personal opinion of the macro environmental influences
inside and out. As the company is making its conclusions in the market opportunity
4. Describe the target market - A company needs to construct a analysis, remember that there are four key areas where it can create
profile of its ideal customer, so that it can adequately focus its sales value for its clients.
and marketing efforts and reach its customers. 1. Trapped value - This is empowering customers, creating greater
5. Create projections - Use a variety of techniques that build on all of efficiency and accessibility of products.
the information in the marketing plan to set a forecast of its sales. 2. New value - This is extending product lines, personalizing products
This includes best and worst case scenario analysis, any intuition or and using collaboration to build a loyal following of customers.
"gut-feelings" it has about new markets, and compare any results it 3. Horizontal value - This is improving the functionality of existing
has seen to date. products.
Here are the types of information that will help a company build its 4. Vertical value - This is improving the industry specific products and
market opportunity analysis: activities the business engages in.
a. Published works Market dominance is a measure of the strength of a brand, product,
i. Trade reports from industry associations service, or firm, relative to competitive offerings.

ii. Newspapers and periodicals Typically there are four types of market dominance strategies that a
marketer will consider: These are market leader, market challenger,
iii. Information service reports that are standardized for an industry market follower, and market nicher.

iv. Government reports The market leader is dominant in its industry.

v. Annual Company Report The main options available to market leaders are:

b. Firsthand observations 1. Expanding total market - The leader normally gains more when
the total market expands.
i. Interviews and discussions with customers or suppliers
Total market can be expanded in four different ways: b. Flank defense - Here, the purpose is to protect weak sides or
fronts. Flank defense consists of setting outposts to protect weak
a. Add new users - The leader firm must try to add new users. fronts that are vulnerable to be attacked.
New users can be added in several ways: c. Preemptive or preventive defense - The basic idea of preemptive
defense is to launch the attack before the enemy starts attacking.
i. Convincing non-users to use the product (market penetration
strategy) d. Counter-offensive defense - Counter-offensive indicates
responding enemy's attack with a counterattack.
ii. Adding more users in user-class (new market strategy)
Economical clout includes applying further price-cut or may
iii. Winning competitors customers (aggressive strategy)
announce product upgradation to delay customers buying the
iv. Selling product in other markets (geographical-expansion competitors' products while political clout includes lobbying legislators
strategy) to take political actions to hamper or slow down the enemy.

b. Discover new uses Another option to expand the total market e. Mobile defense-also called shifting defense, is much more than
consists of discovering and promoting new uses of the existing simply protecting the territories.
products.
There are two approaches to mobile defense:
c. More usage per occasion/time - The third strategy to expand the
i. Market broadening - It involves shifting company's focus from the
market consists of convincing the present users to use more of the
current product to forthcoming new technology and concentrating
product per use occasion.
more on research and development activities.
d. More frequent uses - Sometimes, a company tries to convince
ii. Market diversification - Market diversification calls upon moving
users to use the product more frequently to increase consumption.
quickly into unrelated industries to strengthen its position.
2. Defending/maintaining current market share This strategy is
f. Contraction defense - Sometimes, even large companies can no
based on the theme; "Customer-retention is more profitable than
longer defend all territories.
customer-creation.
3. Expanding market share - Instead of expanding total market and
There are six defense strategies:
defending current market shares, sometimes the market leader
a. Position defense-The most basic defense strategy is to build an prefers to improve profitability by increasing market share.
indestructible protecting fort around one's territory to keep the
opponents away.
There are several ways to expand market share: Some of the options open to a market challenger are:

a. Adding new product lines - In order to expand market share, the 1. Defining strategic objectives and opponents - First of all, a
market leader can add new and diversified product lines to make the market challenger firm must define its strategic objectives.
product mix comprehensive and attractive.
2. Choosing general attack strategies - Once strategic objectives
b. Expanding existing product lines - It is a product line extension are defined and opponents are selected, the challenger can apply
strategy. following attacking options:

c. Improving product qualities - Market share can be increased by a. Frontal attack-A frontal or head-on attack is an aggressive attack
improving qualities of current products so that customers expecting strategy.
better qualities can be attracted.
b. Flank attack The challenger concentrates on opponent's less-
d. Increasing promotion efforts Heavy advertising, aggressive sales secured, rear-side or weak spots to attack.
force, effective sales promotion, and attractive publicity efforts can
help expanding market share faster relative to competitors. c. Encirclement/all-round attack - Encirclement attack is a form of
all-rounded and comprehensive attack.
e. Improving distribution system - Market share can be expanded
via better distribution system. d. Bypass attack-It is the most indirect attacking option to harm
others.
f. Deploying aggressive sales force - Effective personal selling
efforts also have positive impact on sales volume, market share, and There are three approaches:
profitability as well. i. Diversifying into unrelated products It involves producing and
g. Applying price-cut - In order to attract price-sensitive customers, introducing unrelated product to avoid direct confrontation.
leader can practice price-cut strategy. ii. Diversifying into new geographical markets - It involves
g. Improving production efficiency A leader must improve launching the products in such areas where competitors are absent.
production efficiency to reduce overall costs. iii. Leapfrogging into new technologies to replace existing
A market challenger is a company in a strong, but not dominant products - It involves researching and developing patiently new
position that is following an aggressive strategy of trying to gain technologies and launching an attack with superior products.
market share. e. Guerrilla attack This type of warfare contains making small and
intermittent.
3. Choosing specific attack strategies or attacking tools - The five A market follower is a company in a strong, but not dominant
main attack strategies namely frontal attack, flank attack, position that is content to stay at that position.
encirclement attack, bypass attack, and guerrilla attack are very
broad. Market follower may have following strategic options:

These strategies consist of many specific attack strategies, some of 1. Counterfeiter/fraudster - It is a simple way to follow the leader.
them have been described as under: 2. Cloner/emulator - The cloner emulates the leader's products,
a. Price-discount strategy - It consists of offering a comparable distribution, advertising and other aspects.
product at a lower price. 3. Imitator - Some followers prefer to copy some aspects from the
b. Cheaper-good-strategy – It consist of offering average or low leader, but maintain differentiation in terms of packaging, advertising,
quality products at much lower price. sales promotion, distribution, pricing, services, and so forth.

c. Prestige-good strategy - It consists of launching the high quality 4. Adaptor - Some followers prefer to adapt the leader's products and
products and selling them at premium price. improve them.

d. Product-proliferation strategy - It consists of attacking leader by In this niche strategy, the company concentrates on a select few
launching a large number of product varieties to give buyers more target markets. It is also called a focus strategy.
choice. The most successful nichers tend to have the following strategies:
e. Product-innovation strategy - It consists of adopting product 1. End-user specialist - It is very popular and widely used option to
innovation to attack leaders' position. serve niches.
f. Improved-services strategy - It consists of offering the customers 2. Vertical level specialist - A company can specialize at vertical
new and better services with same products. level of production or distribution, for example, producing only raw-
g. Distribution-innovation strategy It consists of attacking leaders materials for specific companies, only warehousing services, or it may
by discovering new ways or channels of distribution. concentrate only on retailing.

h. Manufacturing-cost-reduction strategy It consists of reducing 3. Customer size specialist - A company can sell products only to
manufacturing costs by more efficient purchasing, lower labor costs, small, medium, or large sized customers.
modern production equipment, and improved technology. 4. Specific customer specialist - A firm supplies its products only to
i. Intensive advertising and promotion - It consists attacking the distinct group of buyers.
leader by increasing advertising and promotional expenditures.
5. Geographic specialist - A company serves customers of only
specific region or area of the world, for example, specific need of the
people living in the hilly area.

6. Product or product line specialist - A company produces or sells

only one product or product line, for example, it sells only socks, ties,
or tie pins.

7. Event specialist - A company concentrates its efforts only on

particular events or occasions like marriage, grand inauguration,
birthday, anniversary, or some festivals.

According to Lieberman and Montgomery, every entrant into a

market, be it new or not, is classified under the following:

1. Pioneers - Market Pioneers are known to open a new market to

consumers based off a major innovation.

Technological leadership means gaining an advantage through

either research and development (R&D) or the "learning curve".

Preemption of assets can help gain an advantage through acquiring

scarce assets within a certain market, allowing the first-mover to be
able to have control of existing assets rather than those that are
created through new technology.

2. Close followers - Being a market pioneer can more often than not
attract entrepreneurs and/or investors depending on the benefits of
the market.

3. Late followers - Those who follow after the close followers are
known as the late entrants. While being a late entrant can seem very
daunting, there are some perks to being a latecomer.

Customer value means taking into account the investment of

customers as well as the brand or product.