Principles of Marketing Booklet

c
Principles of Marketing
Operations & Administrative Management
First Edition 2013
A comprehensive review of the local and corporate management, from the
planning of a small business to the management of operations, marketing,
finance and human resources in large businesses. Through the analysis of
contemporary business strategies the book also provides rigor, depth and
lays an excellent foundation for students either in tertiary study or in future
employment.
This publication is recommended for;
 Introduction to Principles of Marketing
 Undergraduate Business Marketing exam papers
 Business model for Principles of Marketing & Operations
Director
Kenya School of Finance & Social Sciences
P. O. Box 19496-40123, Mega City-Kisumu
Cell: +254 722 976 633 ; 716 455 743
Email: info.ksfss@gmail.com ; info@ksfss.ac.ke
williamkasati@gmail.com
williamkasati@yahoo.com
2013
Author: Dr. Sati Oloo
Jaramogi Oginga Odinga University of Science & Technology
School of Business & Economics

………………..BBM 2113 Principles of Marketing………………..
S O William: Lecturer - Jaramogi Oginga Odinga University of Science & Technology: williamkasati@gmail.com Page - 2 -
CONTENTS PAGES
TABLE OF CONTENTS………………...……………………………………………..-2-
PREFACE……………………………………………………………………...……….-4-
MARKETING OVERVIEW……………………………………………..……………..-5-
ROLE OF MARKETING WITHIN A FIRM…………………………………………-6-
PRINCIPLES OF MARKETING STRATEGY IN DIGITAL AGE…………………..-7-
EVOLUTION OF MARKETING………………………………………………...…..-10-
MARKETING PHILOSOPHIES……………………………………..………………-14-
CONCEPT OF MARKETING MANAGEMENT PHILOSOPHY……………...…..-15-
MARKETING INFORMATION SYSTEMS…………………………………..……..18-
MARKET RESEARCH AND MARKETING INTELLIGENCE……………..……..-23-
BENEFITS OF MIS……………………………………………………………...…..-28-
THE MARKETING RESEARCH PROCESS………………………………………. -31-
CONDUCT ING A MARKETING RESEARCH PROJECT……………………......-36-
RESEARCHING IN INTERNATIONAL MARKETS……………………………....-41-
INTERNATIONAL MARKET RESEARCH………………………………..………..-45-
THE ETHICS OF MARKETING RESEARCH………………………………...……-46-
MARKETING ENVIRONMENT…………………...………………………………..-50-
INTERNAL ENVIRONMENT…………………………………………...…………..-52-
MICROENVIRONMENT…………………………………………………...………..-53-
PEST & PESTLE ANALYSIS…………………………………………...……………-54-
ELEMENTS OF THE MARKETING ENVIRONMENT…………………………...-58-
CORPORATE SOCIAL RESPONSIBILITY………………………………….……..-62-
CONSUMER BEHAVIOR………………………………………………………..…..-63-

CONSUMER BEHAVIOR AND THE MARKETING MIX……………...…………-65-
CONSUMER RESEARCH METHODS………………………………………...……-67-
FOCUS GROUPS………………………………………………………..……………-70-
PHYSIOLOGICAL MEASURES…………………………………………..…………-77-
RESEARCH SEQUENCE………………………………………...…………………..-78-
CONSUMER DECISION MAKING……………………………….......……………-80-
MASLOW’S HIERARCHY…………………………………...………………………-82-
CONSUMER BUYING DECISION PROCESS…………………...………………..-86-
BRAND AWARENESS ……………………………………………...……………….-87-
INFLUENCES ON CONSUMER DECISIONS……………………………….……-88-
MARKET SEGMENTATION……………………………………………………….-101-
MARKET TARGETING………………………………………………..……………-105-
MARKET POSITIONING…………………………………………….…………….-107-
PRODUCT DECISIONS……………………………………….……………………-111-
4P’S MARKETING MIX……………………………………………….……………-119-
THE EVOLUTION OF THE MARKETING MIX – FROM 4 P’S TO 7 P’S….….-121-
PROMOTIONAL DECISIONS…………………………………………..…………-128-
PRICING DECISIONS……………………………………………….……………..-130-
ELASTICITY DEALS WITH THREE TYPES OF DEMAND SCENARIOS….….-139-
DISTRIBUTION DECISIONS……………………………………………...………-142-
CHANNEL ARRANGEMENTS……………………………………………..………-150-
LEVEL OF DISTRIBUTION COVERAGE……………………………..………….-153-
DISTRIBUTION SYSTEMS…………………………………………….…………..-158-
REVISION KIT & SUGGESTED ANSWERS……………...………………………-162-
REFERENCES………………………………………………………...……………..-175-

PREFACE
Aims of the book;
This publication is designed to provide a sound understanding of Principles of Marketing and is
particularly relevant for;
a) Students pursuing higher level courses and undergraduates pursuing Principles of Marketing,
Management, and any course including Marketing Operations.
b) Students preparing themselves for professional and Academics examination.
c) Managers and others in Basic Marketing, commerce and local authorities who wish to obtain
knowledge of Business Operations to aid them in the developments of their organizations and
operations.
Teaching Methodology;
This book is interactively tailored on teacher-student relationship with practical approach to
emerging issues on Business Studies and needs in the current market. The publication has been
written in standardized format with review questions, suggested answers and summaries.
Book Objectives
The approach taken in this 1st
edition is to teach the key aspects of Principles of Marketing
through realistic and relevant examples from business fields and various organizations. The
course will also utilize the application of practical‗s needed for the implementation of Business
Administration. Class facilitations with lectures on assigned topics and group discussions are
essential for any academic success. The book emphasizes on understanding the concepts in each
topic. Techniques are commonly misused because the concepts are not sufficiently understood.

MARKETING OVERVIEW
Marketing is the creation, communication, and delivery of value as well as the management of
customer relationships for a lifetime.
 The set of engagements necessary for successful marketing management include capturing
marketing insights, connecting with customers, building strong brands, shaping the market
offerings, delivering and communicating value, creating long-term growth, and developing
marketing strategies and plans.
 Marketing is one of several functional areas in a business that must be guided by a core company
philosophy while focusing on the exchanges that take place in external markets in hopes of
maximizing performance.
 The specific role of marketing is to provide assistance in identifying, satisfying, and retaining
customers. If marketing is able to consistently deliver on highlighting its competitive advantage
over other alternatives, consumers may become loyal to the point of selecting the company by
default.
Defining Marketing
Marketing is the activity of facilitating exchange of a given commodity for goods, services,
and/or money for the purpose of delivering maximum value to the owner of the commodity.
From a societal point of view, marketing is the link between a society's material requirements
and its economic patterns of response. Marketing satisfies these needs and wants through
exchange processes and building long-term relationships.
Marketing can be looked at as an organizational function and as a set of processes for creating,
delivering and communicating value to customers, and managing customer relationships in ways
that benefit the organization and its shareholders. Marketing is the science of choosing target
markets through market analysis and market segmentation, as well as understanding consumer
buying behavior and providing superior customer value.

The set of engagements necessary for successful marketing management include capturing
marketing insights, connecting with customers, building strong brands, shaping the market
offerings, delivering and communicating value, creating long-term growth, and developing
marketing strategies and plans.
The Role of Marketing within a Firm
The official American Marketing Association definition published in July 2013 defines
Marketing as "the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society
at large.‖
While this definition can help us better comprehend the parameters of marketing, it does not
provide a full picture. Definitions of marketing cannot flesh out specific transactions and other
relationships among these elements. The following propositions are offered to supplement this
definition:
1. The overall directive for any organization is the mission statement or some equivalent
statement of organizational goals. It reflects the inherent business philosophy of the organization.
2. Every organization has a set of functional areas (e.g., accounting, production, finance, data
processing, and marketing) in which tasks that are necessary for the success of the organization
are performed. These functional areas must be managed if they are to achieve maximum
performance.
3. Every functional area is guided by a philosophy (derived from the mission statement or company
goals) that governs its approach toward its ultimate set of tasks.
4. Marketing differs from the other functional areas in that its primary concern is with exchanges
that take place in markets outside the organization.
5. Marketing is most successful when the philosophy, tasks, and manner of implementing available
technology are coordinated and complementary to the rest of the business.

Marketing is often a critical part of a firm's success, but its importance must be kept in
perspective. For many large manufacturers such as Proctor & Gamble, Microsoft, Toyota, and
Sanyo, marketing represents a major expenditure, as these businesses depend on the
effectiveness of their marketing effort. Conversely, for regulated industries (such as utilities,
social services, medical care, or small businesses providing a one-of-a-kind product) marketing
may be little more than a few informative brochures.
Marketing as a Source of Competitive Advantage
The specific role of marketing is to provide assistance in identifying, satisfying, and retaining
customers. Noted Harvard Professor of Business Theodore Levitt states that the purpose of all
business is to "find and keep customers.‖ Furthermore, the only way you can achieve this
objective is to create a competitive advantage.
That is, you must convince buyers (potential customers) that what you have to offer them comes
closest to meeting their particular need or want. Hopefully, you will be able to provide this
advantage consistently, so that eventually the customer will purchase your product without
considering alternatives. This loyal behavior is exhibited by people who drive only Fords, brush
their teeth only with Crest, and buy only Dell computers.
Creating this blind commitment - without consideration of alternatives - to a particular brand,
store, person, or idea is the dream of all businesses. It is unlikely to occur, however, without the
support of an effective marketing program.
Principles of Marketing Strategy in the Digital Age
Life for marketers used to be simpler. We had just a few TV channels, some radio stations, a
handful of top magazines and a newspaper or two in each market. Reaching consumers was
easy, if you were able craft a compelling message, you could move product. Marketing was
never easy, but technology has made it a whole lot tougher.

What used to be a matter of identifying needs and communicating benefits now requires us to
build immersive experiences that engage consumers. That means we have to seamlessly
integrate a whole new range of skills and capabilities. It‘s easy to get lost among a sea of
buzzwords and false gurus selling snake oil. Here are 4 principles to guide you:
1. Clarify Business Objectives
There‘s so much going on in the marketing arena today, everybody is struggling to keep up. At
the same time, every marketing professional feels pressure to be ―progressive‖ and actively
integrate emerging media into their marketing program.
However, the mark of a good marketing strategy is not how many gadgets and neologisms are
crammed into it, but how effectively it achieves worthy goals. Therefore, how you define your
intent will have a profound impact on whether you succeed or fail.
Unfortunately, there is a tendency for marketers to try to
create a ―one size fits all‖ approach for a portfolio of
brands or, alternatively, to want to create complicated
models to formulate marketing objectives. However,
most businesses can be adequately captured by
evaluating just three metrics: awareness, sales and
advocacy (i.e. customer referral). 3-pillars of marketing
Some brands are not widely known, others are having trouble converting awareness to sales and
still others need to encourage consumer advocacy. While every business needs all three, it is
important to focus on one primary objective or your strategy will degrade into a muddled
hodgepodge.

2. Use Innovation Teams to Identify, Evaluate and Activate Emerging Opportunities
Marketing executives are busy people. They need to actively monitor the marketplace, identify
business opportunities, collaborate with product people and run promotional campaigns. It is
unreasonable to expect them to keep up with the vast array of emerging technology and tactics,
especially since most of it won‘t pan out anyway.
Therefore, it is essential to have a team dedicated to identifying emerging opportunities, meeting
with start-ups and running test-and-learn programs to evaluate their true potential. Of course,
most of these will fail, but the few winners will more than make up for the losers.
Once an emerging opportunity has performed successfully in a pilot program, it can then be
scaled up and become integrated into the normal strategic process as a viable tactic to achieve an
awareness, sales or advocacy objective.
3. Decouple Strategy and Innovation
Unfortunately, in many organizations, strategy and innovation are often grouped together
because they are both perceived as things that ―smart people‖ do. Consequently, when firms
approach innovation, they tend to put their best people on it, those who have shown a knack for
getting results. That‘s why, all too often, innovation teams are populated by senior executives.
Because innovation is considered crucial to the future of the enterprise (and also due to the
institutional clout of the senior executives) they also tend to have ample resources at their
disposal. They are set up to succeed. Failure, all too often, isn‘t an option.
However, strategy is fundamentally different from innovation. As noted above, a good strategy
is one that achieves specific objectives. Innovation, however, focuses on creating something
completely new and new things, unfortunately, tend to not work as well as standard solutions (at
least at first). The truth is that innovation is a messy business.

So failure must be an option, which is why technologically focused venture capital firms expect
the vast majority of their investments to fail. However, failure must be done cheaply, so
resources (and therefore senior executives) must be kept to a minimum.
4. Build Open Assets in the Marketplace
The primary focus of marketing promotion used to be to create compelling advertising
campaigns that would get the consumer‘s attention and drive awareness. Once potential
customers were aware of the product, direct sales and retail promotions could then close the deal.
That model is now broken. Today, effective promotional campaigns are less likely to lead to a
sale and more likely to result in an Internet search, where consumers‘ behavior can be tracked
and then retargeted by competitors. Simply building awareness and walking away is more likely
to enrich your competition than yourself.
Successful brands are becoming platforms and need to do more than just drive consumers to a
purchase; they have to inspire them to participate. That means marketers have to think less in
terms of USP‘s, and GRP‘s and more in terms of API‘s and SDK‘s. Focus groups are giving way
to accelerators and creation to co-creation. In the digital age, brands are no longer mere corporate
assets to be leveraged, but communities of belief and purpose.
EVOLUTION OF MARKETING
Marketing has changed over the centuries, decades and years.
The production centered system systematically changed into
relationship era of today and over the period; the
specializations have emerged such as sales versus marketing
and advertising versus retailing.
The overall evolution of marketing has given rise to the concept of business development.
Marketing has taken the modern shape after going through various stages since last the end of
19th century.

The Production oriented practice of marketing prior to the twentieth century was conservative
and hidebound by rules-of-thumb and lack of information. Science & technology developments
and specially the development of information technology have now changed the way people live,
the way people do business and the way people sell and purchase. Following is a short summary
of the various stages of evolution of marketing.
Production Orientation Era: The prevailing attitude and approach of the production orientation
era was -―consumers favor products that are available and highly affordable‖. The mantra for
marketing success was to ―Improve production and distribution‖. The rule was ―availability and
affordability is what the customer wants‖. The era was marked by narrow product-lines; pricing
system based on the costs of production and distribution, limited research, primary aim of the
packaging was to protect the product, minimum promotion. Advertising meant, ―Promoting
products with a lesser quality‖.
Product Orientation Era: The attitude changed slowly and approach shifted from production to
product and from the quantity to quality. The prevailing attitude of this period was that
consumers favor products that offer the most quality, performance and innovative features and
the mantra for marketers was ‗A good product will sell itself‘, so does not need promotion.
Sales Orientation Era: The increased competition and variety of choices / options available to
customers changed the marketing approach and now the attitude was ―Consumers will buy
products only if the company promotes/ sells these products‖. This era indicates rise of
advertising and the mantra for marketers was ―Creative advertising and selling will overcome
consumers‘ resistance and convince them to buy‖.

Marketing Orientation Era: The shift from production to product and from product to
customers later manifested in the Marketing Era which focused on the ―needs and wants of the
customers‖ and the mantra of marketers was‖ ‗The consumer is king! Find a need and fill it‘. The
approach is shifted to delivering satisfaction better than competitors are.
Relationship Marketing Orientation Era: This is the modern approach of marketing. Today‘s
marketer focuses on needs/ wants of target markets and aims at delivering superior value. The
mantra of a successful marketer is ‗Long-term relationships with customers and other partners
lead to successes. The following sentences summarize the above evolution of marketing;
1. Production era: ‗Cut costs. Profits will take care of themselves‘
2. Product era: ‗A good product will sell itself‘
3. Sales era: ‗Selling is laying the bait for the customer‘
4. Marketing era: ‗The customer is King!‘
5. Relationship marketing era: ‗Relationship with customers determine our firm‘s future‘
History of marketing thought

The history of marketing thought deals with the evolution of theories in the field of marketing,
from the ancient world. Marketing historians agree that the discipline branched out of at the turn
of the twentieth century, though some argue that scholars in the ancient and medieval ages had
already studied marketing ideas.
Periodization
Robert A Bartels in The History of Marketing Thought categorized the development of marketing
theory decade by decade from the beginning of the 20th century thus: some of the there in
formation is not right
 1900s: discovery of basic concepts and their exploration
 1910s: conceptualization, classification and definition of terms
 1920s: integration on the basis of principles
 1930s: development of specialization and variation in theory
 1940s: reappraisal in the light of new demands and a more scientific approach
 1950s: reconceptualisation in the light of managerialism, social development and quantitative
approaches
 1960s: differentiation on bases such as managerialism, holism, environmentalism, systems, and
internationalism
 1970s: socialization; the adaptation of marketing to social change
With the growth in importance of marketing departments and their associated marketing
managers, the field has become ripe for the propagation of management fads which do not
always lend themselves to periodization.

MARKETING PHILOSOPHIES
The purpose of marketing is to gain a balance between creating more value for customers against
making profits for the organization. To achieve this, many firms have adopted a marketing
philosophy or what is generally termed a "marketing orientation".
A marketing orientation can be defined as focusing the organization on identifying and
understanding the customers' preferences in terms of needs and wants and delivering them more
effectively and efficiently than competitors.
Prior to the adoption of a marketing orientation, many organizations followed what was referred
to as the "production philosophy". This approach focused on improving the efficiency of
production and distribution to reduce costs and deliver more affordable products as the source of
competitive advantage.
Another philosophy that has been followed historically is the "selling concept". This approach
required organizations to aggressively focus on selling and promotion efforts as a way to
stimulate demand and drive sales.
A marketing driven approach or marketing orientation has consistently delivered superior results
over these other philosophies. Adopting a marketing orientation is now widely accepted as
delivering greater levels of customer satisfaction, profitability and sustainability.
Worldwide, Toyota, with its strategy to manufacture cars for different segments of the
population maintains a balance between customer value and profitability. With the marketing
philosophy in mind, it has replaced its original goal of 10% of the world's market share with 'No
1 in customer satisfaction' as it believes its market share will follow the satisfaction it delivers to
its customers.

Concept of Marketing Management Philosophy
Every company can have different ideas or philosophy. For example, a particular company can
have its idea or philosophy that if the production is done on a large scale, the cost would be less
and the product would be sold automatically.
In this way, such a company will concentrate mainly on the large scale production of goods.
Similarly, some other company can have a different idea. It may have an idea that if the quality
of the product is improved, there will be no difficulty in selling the product.
Under the marketing management philosophy, we shall study the following five concepts:
(1) Production Concept
(2) Product Concept
(3) Selling Concept
(4) Marketing Concept
(5) Societal Marketing Concept
1. Production Concept
Those companies who believe in this philosophy think that if the goods/services are cheap and
they can be made available at many places, there cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in
reducing the cost of production and strengthening their distribution system. In order to reduce the
cost of production and to bring it down to the minimum level, these companies indulge in large
scale production.
This helps them in effecting the economics of the large scale production. Consequently, the cost
of production per unit is reduced.

The utility of this philosophy is apparent only when demand exceeds supply. Its greatest
drawback is that it is not always necessary that the customer every time purchases the cheap and
easily available goods or services.
2. Product Concept
Those companies who believe in this philosophy are of the opinion that if the quality of goods or
services is of good standard, the customers can be easily attracted. The basis of this thinking is
that the customers get attracted towards the products of good quality. On the basis of this
philosophy or idea these companies direct their marketing efforts to increasing the quality of
their product.
It is a firm belief of the followers of the product concept that the customers get attracted to the
products of good quality. This is not the absolute truth because it is not the only basis of buying
goods.
The customers do take care of the price of the products, its availability, etc. A good quality
product and high price can upset the budget of a customer. Therefore, it can be said that only the
quality of the product is not the only way to the success of marketing.
3. Selling Concept
Those companies who believe in this concept think that leaving alone the customers will not
help. Instead there is a need to attract the customers towards them. They think that goods are not
bought but they have to be sold.
The basis of this thinking is that the customers can be attracted. Keeping in view this concept
these companies concentrate their marketing efforts towards educating and attracting the
customers. In such a case their main thinking is ‗selling what you have‘.

This concept offers the idea that by repeated efforts one can sell-anything to the customers. This
may be right for some time, but you cannot do it for a long-time. If you succeed in enticing the
customer once, he cannot be won over every time.
On the contrary, he will work for damaging your reputation. Therefore, it can be asserted that
this philosophy offers only a short-term advantage and is not for long-term gains.
4. Marketing Concept
Those companies who believe in this concept are of the opinion that success can be achieved
only through consumer satisfaction. The basis of this thinking is that only those goods/service
should be made available which the consumers want/desire and not the things which you can do.
In other words, they do not sell what they can make but they make what they can sell. Keeping in
mind this idea, these companies direct their marketing efforts to achieve consumer satisfaction.
In short, it can be said that it is a modern concept and by adopting it profit can be earned on a
long-term basis. The drawback of this concept is that no attention is paid to social welfare.
5. Societal Marketing Concept
This concept stresses not only the customer satisfaction but also gives importance to Consumer
Welfare/Societal Welfare. This concept is almost a step further than the marketing concept.
Under this concept, it is believed that mere satisfaction of the consumers would not help and the
welfare of the whole society has to be kept in mind.
For example, if a company produces a vehicle which consumes less petrol but spreads pollution,
it will result in only consumer satisfaction and not the social welfare.
Primarily two elements are included under social welfare-high-level of human life and pollution
free atmosphere. Therefore, the companies believing in this concept direct all their marketing
efforts towards the achievement of consumer satisfaction and social welfare.
In short, it can be said that this is the latest concept of marketing. The companies adopting this
concept can achieve long-term profit.

MARKETING INFORMATION SYSTEMS
A marketing information system (MkIS) is a management information system (MIS) designed
to support marketing decision making. Jobber (2007) defines it as a "system in which marketing
data is formally gathered, stored, analyzed and distributed to managers in accordance with their
informational needs on a regular basis." In addition, the online business dictionary defines
Marketing Information System (MkIS) as ―a system that analyzes and assesses marketing
information, gathered continuously from sources inside and outside an organization.‖
Furthermore, ―an overall Marketing Information System can be defined as a set structure of
procedures and methods for the regular, planned collection, analysis and presentation of
information for use in making marketing decisions.‖ (Kotler, at al, 2006)
Developing a MkIS system is becoming extremely important as the strength of economies rely
on services and to better understand the specific needs of customers. Kotler, et al. (2006) defined
it more broadly as "people, equipment, and procedures to gather, sort, analyze, evaluate, and
distribute needed, timely, and accurate information to marketing decision makers."
As our economy focuses on services, marketing is becoming extremely important to ―monitor the
marketing environment for changes in buyer behavior competition, technology, economic
conditions and government policies.‖ In this sense, the role of marketing is becoming pivotal for
an organization to ―adapt to changes in the market environment.‖ (Harmon, 2003)
Furthermore, as our economy relies heavily on the acquisition of knowledge, MkIS systems are
necessary to be able to define and differentiate the value proposition that one organization
provides with respect to another, as well as to define their competitive advantage. (Harmon,
2003)
The main benefit of MkIS systems is to integrate market-monitoring systems with strategy
development and the strategic implementation of policies and processes that help capture and act
on customer management applications with marketing decision support systems.

This area constitute Marketing intelligence that supports the analysis and market based activities
that support customer relations and customer service with real time information with real time
applications that support market based approaches.
According to Robert Harmon (2003), MkIS systems are composed on four components:
1. User interfaces. The essential element of the MkIS is the managers who will use the system and
the interface they need to effectively analyze and use marketing information. The design of the
system will depend on what type of decision managers need to make.
2. Application software. These are the programs that marketing decision makers use to collect,
analyze, and manage data for the purpose of developing the information necessary for marketing
decisions.
3. Database marketing. A marketing database is a system in which marketing data files are
organized and stored.
4. System support. This component consists of system managers who manage and maintain the
system assets including software and hardware network, monitor its activities and ensure
compliance with organizational policies.
Along with these components, MkIS systems include Marketing Decision Support Systems
(MDSS), which in turn rely on simple systems such as Microsoft Excel, SPSS, and on-line
analytical tools that help collect data. Data compiled for analysis is stored and processed from a
data warehouse, which is simply a data repository system that helps store and further process
data collected internally and externally. (Harmon, 2003)
Components of a marketing information system
A marketing information system (MIS) is intended to bring together disparate items of data into
a coherent body of information. An MIS is, as will shortly be seen, more than raw data or
information suitable for the purposes of decision making.

An MIS also provides methods for interpreting the information the MIS provides. Moreover, as
Kotler's1
definition says, an MIS is more than a system of data collection or a set of information
technologies:
"A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely and accurate
information for use by marketing decision makers to improve their marketing planning,
implementation, and control‖. Figure 9.1 illustrates the major components of an MIS, the
environmental factors monitored by the system and the types of marketing decision which the
MIS seeks to underpin.
Figure 9.1 The marketing information systems and its subsystems
The explanation of this model of an MIS begins with a description of each of its four main
constituent parts: the internal reporting systems, marketing research system, marketing
intelligence system and marketing models.
It is suggested that whilst the MIS varies in its degree of sophistication - with many in the
industrialized countries being computerized and few in the developing countries being so - a
fully fledged MIS should have these components, the methods (and technologies) of collection,
storing, retrieving and processing data notwithstanding.

Internal reporting systems:
All enterprises which have been in operation for any period of time have a wealth of information.
However, this information often remains under-utilized because it is compartmentalized, either
in the form of an individual entrepreneur or in the functional departments of larger businesses.
That is, information is usually categorized according to its nature so that there are, for example,
financial, production, manpower, marketing, stockholding and logistical data.
Often the entrepreneurs, or various personnel working in the functional departments holding
these pieces of data, do not see how it could help decision makers in other functional areas.
Similarly, decision makers can fail to appreciate how information from other functional areas
might help them and therefore do not request it.
The internal records that are of immediate value to marketing decisions are: orders received,
stockholdings and sales invoices. These are but a few of the internal records that can be used by
marketing managers, but even this small set of records is capable of generating a great deal of
information.
 Product type, size and pack type by territory
 Product type, size and pack type by type of account
 Product type, size and pack type by industry
 Product type, size and pack type by customer
 Average value and/or volume of sale by territory
 Average value and/or volume of sale by type of account
 Average value and/or volume of sale by industry
 Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the extent to which it is
providing an acceptable level of customer service. In the same way, comparing stockholding
records with orders received helps an enterprise ascertain whether its stocks are in line with
current demand patterns.
MIS Summary
Marketing information systems are intended to support management decision making.
Management has five distinct functions and each requires support from an MIS. These are:
Planning, Organizing, Coordinating, Decisions and Controlling.
Information systems have to be designed to meet the way in which managers tend to work.
Research suggests that a manager continually addresses a large variety of tasks and is able to
spend relatively brief periods on each of these.
Given the nature of the work, managers tend to rely upon information that is timely and verbal
(because this can be assimilated quickly), even if this is likely to be less accurate then more
formal and complex information systems.
Managers play at least three separate roles: interpersonal, informational and decisional. MIS, in
electronic form or otherwise, can support these roles in varying degrees. MIS has less to
contribute in the case of a manager's informational role than for the other two.
Three levels of decision making can be distinguished from one another: strategic, control (or
tactical) and operational. Again, MIS has to support each level. Strategic decisions are
characteristically one-off situations. Strategic decisions have implications for changing the
structure of an organization and therefore the MIS must provide information which is precise and
accurate.

Control decisions deal with broad policy issues and operational decisions concern the
management of the organization‘s marketing mix. A marketing information system has four
components:
1. The internal reporting system,
2. The marketing research systems,
3. The marketing intelligence system and
4. Marketing models.
Internal reports include orders received, inventory records and sales invoices. Marketing research
takes the form of purposeful studies either ad hoc or continuous. By contrast, marketing
intelligence is less specific in its purposes, is chiefly carried out in an informal manner and by
managers themselves rather than by professional marketing researchers.
MARKET RESEARCH AND MARKETING INTELLIGENCE
Market Research System; The general topic of marketing research has been the prime ' subject
of the textbook and only a little more needs to be added here. Marketing research is a proactive
search for information. That is, the enterprise which commissions these studies does so to solve a
perceived marketing problem. In many cases, data is collected in a purposeful way to address a
well-defined problem (or a problem which can be defined and solved within the course of the
study). The other form of marketing research centers‘ not around a specific marketing problem
but is an attempt to continuously monitor the marketing environment.
These monitoring or tracking exercises are continuous marketing research studies, often
involving panels of farmers, consumers or distributors from which the same data is collected at
regular intervals. Whilst the ad hoc study and continuous marketing research differs in the
orientation, yet they are both proactive. Marketing intelligence systems: Whereas marketing
research is focused, market intelligence is not.

A marketing intelligence system is a set of procedures and data sources used by marketing
managers to sift information from the environment that they can use in their decision making.
Unfocused
scanning
The manager, by virtue of what he/she reads, hears and watches exposes
him/herself to information that may prove useful. Whilst the behavior is unfocused
and the manager has no specific purpose in mind, it is not unintentional
Semi-
focused
scanning
Again, the manager is not in search of particular pieces of information that he/she
is actively searching but does narrow the range of media that is scanned. For
instance, the manager may focus more on economic and business publications,
broadcasts etc. and pay less attention to political, scientific or technological media.
Informal
search
This describes the situation where a fairly limited and unstructured attempt is made
to obtain information for a specific purpose. For example, the marketing manager
of a firm considering entering the business of importing frozen fish from a
neighboring country may make informal inquiries as to prices and demand levels
of frozen and fresh fish. There would be little structure to this search with the
manager making inquiries with traders he/she happens to encounter as well as with
other ad hoc contacts in ministries, international aid agencies, with trade
associations, importers/exporters etc.
Formal
search
This is a purposeful search after information in some systematic way. The
information will be required to address a specific issue. Whilst this sort of activity
may seem to share the characteristics of marketing research it is carried out by the
manager him/herself rather than a professional researcher. Moreover, the scope of
the search is likely to be narrow in scope and far less intensive than marketing
research

Marketing intelligence is the province of entrepreneurs and senior managers within an
agribusiness. It involves them in scanning newspaper trade magazines, business journals and
reports, economic forecasts and other media. In addition it involves management in talking to
producers, suppliers and customers, as well as to competitors. Nonetheless, it is a largely
informal process of observing and conversing.
Some enterprises will approach marketing intelligence gathering in a more deliberate fashion and
will train its sales force, after-sales personnel and district/area managers to take cognizance of
competitors' actions, customer complaints and requests and distributor problems. Enterprises
with vision will also encourage intermediaries, such as collectors, retailers, traders and other
middlemen to be proactive in conveying market intelligence back to them.
Marketing models: Within the MIS there has to be the means of interpreting information in
order to give direction to decision. These models may be computerized or may not. Typical tools
are:
 Time series sales modes
 Brand switching models
 Linear programming
 Elasticity models (price, incomes, demand, supply, etc.)
 Regression and correlation models
 Analysis of Variance (ANOVA) models
 Sensitivity analysis
 Discounted cash flow
 Spreadsheet 'what if models
These and similar mathematical, statistical, econometric and financial models are the analytical
subsystem of the MIS. A relatively modest investment in a desktop computer is enough to allow
an enterprise to automate the analysis of its data.

Some of the models used are stochastic, i.e. those containing a probabilistic element whereas
others are deterministic models where chance plays no part. Brand switching models are
stochastic since these express brand choices in probabilities whereas linear programming is
deterministic in that the relationships between variables are expressed in exact mathematical
terms.
The existence of an adequate information system which would secure data acquisition and
analyses, as well as the transformation of above mentioned data into useful information is an
essential condition for a company to function effectively. Successful companies should be
flexible enough to adapt to the changes brought by intensive alternations in business
environment.
The design of marketing information system has been initiated for this particular purpose. The
main task of this application is to improve the efficiency of a company‘s operations through the
implementation of the research process. Marketing information system is the fundamental
precondition for the successful realization of the research project, i.e. the means used by
producers in order to collect information about the, needs of the consumers. Marketing
information system represents efforts of the companies to provide pertinent decision-making
information to marketing managers on regular basis.
Marketing Information System (M.I.S) is a term that refers to the technology tools and
infrastructure an organization has in place that assist in making informed marketing decisions.
Such marketing tools and infrastructure may include but are not limited to:
1. CRM system ( Customer Resource Management)
2. Email marketing software
3. Customer contact database
4. Complex analytics software and tools
5. Various industry specific methodologies and techniques

Combined with solid market research, a marketing information system allows marketing
managers the ability to discern what resources need to be allocated to various promotional
efforts. For example through solid market research a manger can determine the demographic
most likely to purchase a particular product. A good marketing information system will then be
able to breakdown and segment the raw data from the market research. This processed data can
then be used to allocate the best available resources needed for advertising, personal selling and
other sales promotion efforts.
Marketing information system sets out the framework used by organizations to collect, organize,
store, analyze and distribute information for purposes of marketing decision making. In this case
before a business conducts any form of promotion it is important to develop knowledge about
exactly what they would like to achieve and the challenges associated with the project. This
forms the need for a system that will offer insights about the market, customers and competitors
among other variables that would impact the promotion activity.
Market research involves the gathering of information from the market and is best incorporated
within the company‘s Marketing information system. The information obtained through research
will be fed through the system for purposes of storage, analysis and distribution. Finally the
information will be used to make the best decisions in this case with regards to promotion. This
will also determine the goals of the promotion, type of promotion to be conducted, the time
frame and budgets among other aspects.
Marketing information includes all the date, in terms of facts, opinions, views, guidelines and
policies, which are necessary to make vital marketing decisions. The data is collected from
customers, competitors, company sales force and other staff, government sources, specialized
agencies and sources.
MIS provides relevant, reliable and required information in respect of business environment-both
internal and external environments. Such information is vital for successful decision making.

The benefits of MIS;
1. Helps to recognize trends: - MIS helps managers to recognize marketing trends. The changing
trends may be in respect of prices, product design, packaging, promotion schemes, etc. managers
can take effective decisions in respect of prices, product designs, etc., in response to changing
trends in the environment.
2. Facilitates Marketing Planning and Control: -Effective market planning is required in terms
of product planning, pricing, promotion and distribution. Such planning will be possible only the
company is possessing adequate and relevant information.
3. Quick supply of information: -A firm has to take quick decision for this purpose; it requires
fast flow of information which is facilitated by a properly designed MIS. Due to timely supply of
marketing information, the marketing managers can make quick and effective decisions.
4. Quality of decision Making: -in every aspect of marketing, there is need to make constant and
correct decisions. A properly designed marketing information system promptly supplies reliable
and relevant information. With the help of computers and other data processing equipments, the
marketing managers can make the right decisions at the right time.
5. Tapping of business Opportunities: -There are number of business opportunities which have
remained untapped for various reasons are due to unavailability of sufficient information. MIS
makes it possible to tap business opportunities as it can supply required and reliable data.
6. Provides Marketing Intelligence: -Marketing intelligence refers to information of the events
that are happening in the external environment, i.e., changes in customer tastes, expectations,
competitors‘ strategies, government policies, international environment, etc. with the help of
MIS specialists, it is possible to collect marketing intelligence which is vital to make effective
marketing decisions.

7. Help managers to Recognize Change: -a business firm may be handling or marketing a wrong
line of products. As such the company will not be able to make profits. And if it is does, profits
may not be adequate. A firm which is well equipped with MIS will be able to realize the need to
change the line of business.
8. Integration of Information: -firms, which are largely decentralized can gather information
which is scattered at many centers or departments and integrate it for effective decision making.
Such integration is possible if there is a centralized MIS.
Advantages of Marketing Information Systems
With an increasingly competitive and expanding market, the amount of information needed daily
by an organization is profound. Thus they have to establish a Marketing Information system.
There are several advantages of marketing information systems
1. Organized Data collection – Lots of data can be collected from the market. But the main word
here is ―Organized‖. Organizing data is very important else the data is meaningless. Thus MIS
helps you to organize your database thereby improving productivity.
2. A broad perspective - With a proper MIS in place, the complete organization can be
tracked which can be used to analyze independent processes. This helps in establishing a broader
perspective which helps us know which steps can be taken to facilitate improvement.
3. Storage of Important Data – Several times in pharmaceuticals, when one drug is being
produced they may need data of another drug which was produced years back. Similarly in
Media, photographs are stored in archives. This storage of important data plays a crucial role in
execution and thus proves again that MIS is not important only for information but also for
execution.

4. Avoidance of Crisis – The best way to analyze a stock (share market) is to see its past
performance. Top websites like money control thrive on MIS. Similarly MIS helps you keep
tracks of margins and profits. With an amazing information system established, you can know
where your organization is moving and probably avert a crisis long before it has taken place.
Ignoring hints received from MIS reports is foolhardy.
5. Co-ordination – Consumer durables and FMCG companies have huge number of processes
which needs to be co-ordinated. These companies depend completely on MIS for the proper
running of the organization. There are dedicated people for marketing information systems in
such organizations. This is mainly because of the speed required to access information and
implement it.
6. Analysis and Planning – MIS is critical for planning. You cannot do planning without
information. For planning, the first thing which is needed is the organizations capabilities, then
the business environment and finally competitor analysis. In a proper MIS, all these are present
by default and are continuously updated. Thus MIS is very important for planning and analysis.
7. Control – Just like MIS can help in a crisis, in normal times it provides control as you have
information of the various processes going on and what is happening across the company. Thus it
provides you with a sense of control.
2) Disadvantages – Maintenance, complexity and setting up a MIS are one of the major hindrances
to marketing information systems. Furthermore, wrong information being fed in MIS can
become cumbersome and appropriate filters need to be established.

THE MARKETING RESEARCH PROCESS
The market research process is a systematic methodology for informing business decisions.
The figure below breaks the process down into six steps:
The Market Research Process
Step 1. Define the Objective & Your “Problem”
Perhaps the most important step in the market research process is defining the goals of the
project. At the core of this is understanding the root question that needs to be informed by
market research. There is typically a key business problem (or opportunity) that needs to be
acted upon, but there is a lack of information to make that decision comfortably; the job of a
market researcher is to inform that decision with solid data. Examples of ―business problems‖
might be ―How should we price this new widget?‖ or ―Which features should we prioritize?‖
By understanding the business problem clearly, you‘ll be able to keep your research focused and
effective. At this point in the process, well before any research has been conducted, I like to
imagine what a ―perfect‖ final research report would look like to help answer the business
question(s). You might even go as far as to mock up a fake report, with hypothetical data, and
ask your audience: ―If I produce a report that looks something like this, will you have the
information you need to make an informed choice?‖ If the answer is yes, now you just need to
get the real data. If the answer is no, keep working with your client/audience until the objective
is clear, and be happy about the disappointment you‘ve prevented and the time you‘ve saved.

Step 2. Determine Your “Research Design”
Now that you know your research objects, it is time to plan out the type of research that will best
obtain the necessary data. Think of the ―research design‖ as your detailed plan of attack. In this
step you will first determine your market research method (will it be a survey, focus group,
etc.?). You will also think through specifics about how you will identify and choose your sample
(who are we going after? where will we find them? how will we incentivize them?, etc.). This
is also the time to plan where you will conduct your research (telephone, in-person, mail,
internet, etc.). Once again, remember to keep the end goal in mind–what will your final report
look like? Based on that, you‘ll be able to identify the types of data analysis you‘ll be
conducting (simple summaries, advanced regression analysis, etc.), which dictates the structure
of questions you‘ll be asking.
Your choice of research instrument will be based on the nature of the data you are trying to
collect. There are three classifications to consider:
Exploratory Research – This form of research is used when the topic is not well defined or
understood, your hypothesis is not well defined, and your knowledge of a topic is vague.
Exploratory research will help you gain broad insights, narrow your focus, and learn the basics
necessary to go deeper. Common exploratory market research techniques include secondary
research, focus groups and interviews. Exploratory research is a qualitative form of research.
Descriptive Research – If your research objective calls for more detailed data on a specific topic,
you‘ll be conducting quantitative descriptive research. The goal of this form of market research
is to measure specific topics of interest, usually in a quantitative way. Surveys are the most
common research instrument for descriptive research.
Causal Research – The most specific type of research is causal research, which usually comes in
the form of a field test or experiment. In this case, you are trying to determine a causal
relationship between variables. e.g. does the music I play in my restaurant increase dessert sales

Step 3. Design & Prepare Your “Research Instrument”
In this step of the market research process, it‘s time to design your research tool. If a survey is
the most appropriate tool (as determined in step 2), you‘ll begin by writing your questions and
designing your questionnaire. If a focus group is your instrument of choice, you‘ll start
preparing questions and materials for the moderator. You get the idea. This is the part of the
process where you start executing your plan.
By the way, step 3.5 should be to test your survey instrument with a small group prior to broad
deployment. Take your sample data and get it into a spreadsheet; are there any issues with the
data structure? This will allow you to catch potential problems early, and there are always
problems.
Step 4. Collect Your Data
This is the meat and potatoes of your project; the time when you are administering your survey,
running your focus groups, conducting your interviews, implementing your field test, etc. The
answers, choices, and observations are all being collected and recorded, usually in spreadsheet
form. Each nugget of information is precious and will be part of the masterful conclusions you
will soon draw.
Step 5. Analyze Your Data
Step 4 (data collection) has drawn to a close and you have heaps of raw data sitting in your lap.
If it‘s on scraps of paper, you‘ll probably need to get it in spreadsheet form for further analysis.
If it‘s already in spreadsheet form, it‘s time to make sure you‘ve got it structured properly. Once
that‘s all done, the fun begins. Run summaries with the tools provided in your software package
(typically Excel, SPSS, Minitab, etc.), build tables and graphs, segment your results by groups
that make sense (i.e. age, gender, etc.), and look for the major trends in your data. Start to
formulate the story you will tell.

Step 6. Visualize Your Data and Communicate Results
You‘ve spent hours pouring through your raw data, building useful summary tables, charts and
graphs. Now is the time to compile the most meaningful take-always into a digestible report or
presentation. A great way to present the data is to start with the research objectives and business
problem that were identified in step 1. Restate those business questions, and then present your
recommendations based on the data, to address those issues.
When it comes time to presenting your results, remember to present insights, answers and
recommendations, not just charts and tables. If you put a chart in the report, ask yourself ―what
does this mean and what are the implications?‖ Adding this additional critical thinking to your
final report will make your research more actionable and meaningful and will set you apart from
other researchers.
While it is important to ―answer the original question,‖ remember that market research is one
input to a business decision (usually a strong input), but not the only factor.
So, that‘s the market research process. The figure below walks through an example of this
process in action, starting with a business problem of ―how should we price this new widget?‖

An Example of the Market Research Process in Action

CONDUCTING A MARKETING RESEARCH PROJECT.
While these stages are presented in order, you can be creative and adapt the stages to meet your
business needs. Some stages can be completed in parallel to speed the project as it begins to
develop.
Stage 1: Formulating the Marketing Research Problem
Formulating a problem is the first step in the research process. In many ways, research starts with
a problem that management is facing. This problem needs to be understood, the cause diagnosed,
and solutions developed.
However, most management problems are not always easy to research. A management problem
must first be translated into a research problem. Once you approach the problem from a research
angle, you can find a solution. For example, ―sales are not growing‖ is a management problem.
Translated into a research problem, we may examine the expectations and experiences of several
groups: potential customers, first-time buyers, and repeat purchasers. We will determine if the
lack of sales is due to:
 Poor expectations that lead to a general lack of desire to buy, or
 Poor performance experience and a lack of desire to repurchase.
What then is the difference between a management problem and a research problem?
Management problems focus on an action. Do we advertise more? Do we change our advertising
message? Do we change an under-performing product configuration?
If so, how?
Research problems, on the other hand, focus on providing the information you need in order to
solve the management problem.

Stage 2: Method of Inquiry
The scientific method is the standard pattern for investigation. It provides an opportunity for you
to use existing knowledge as a starting point and proceed impartially.
The scientific method includes the following steps:
1. Formulate a problem
2. Develop a hypothesis
3. Make predictions based on the hypothesis
4. Devise a test of the hypothesis
5. Conduct the test
6. Analyze the results
The terminology is similar to the stages in the research process. However, there are subtle
differences in the way the steps are performed. For example, the scientific method is objective
while the research process can be subjective.
Objective-based research (quantitative research) relies on impartial analysis.
The facts are the priority in objective research. On the other hand, subjective-based research
(qualitative research) emphasizes personal judgment as you collect and analyze data.
Stage 3: Research Method
In addition to selecting a method of inquiry (objective or subjective), you must select a research
method.
There are two primary methodologies that can be used to answer any research question:
experimental research and non-experimental research.
Experimental research gives you the advantage of controlling extraneous variables and
manipulating one or more variables that influences the process being implemented. Non-
experimental research allows observation but not intervention.

Stage 4: Research Design
The research design is a plan or framework for conducting the study and collecting data. It is
defined as the specific methods and procedures you use to acquire the information you need.
Stage 5: Data Collection Techniques
Your research design will develop as you select techniques to use. There are many ways to
collect data. Two important methods to consider are interviews and observation.
Interviews require you to ask questions and receive responses.
Common modes of research communication include interviews conducted face-to-face, by mail,
by telephone, by email, or over the Internet. This broad category of research techniques is known
as survey research.
These techniques are used in both non-experimental research and experimental research.
Another way to collect data is by observation. Observing a person‘s or company‘s past or present
behavior can predict future purchasing decisions. Data collection techniques for past behavior
can include analyzing company records and reviewing studies published by external sources.
In order to analyze information from interview or observation techniques, you must record your
results. Because the recorded results are vital, measurement and development are closely linked
to which data collection techniques you decide on.
The way you record the data changes depends on which method you use.
Stage 6: Sample Design
Your marketing research project will rarely examine an entire population. It‘s more practical to
use a sample—a smaller but accurate representation of the greater population. In order to design
your sample, you must find answers to these questions:
1. From which base population is the sample to be selected?
2. What is the method (process) for sample selection?
3. What is the size of the sample?

Once you‘ve established who the relevant population is (completed in the problem formulation
stage), you have a base for your sample. This will allow you to make inferences about a larger
population. There are two methods of selecting a sample from a population: probability or non-
probability sampling.
The probability method relies on a random sampling of everyone within the larger population.
Non- probability is based in part on the judgment of the investigator, and often employs
convenience samples, or by other sampling methods that do not rely on probability.
The final stage of the sample design involves determining the appropriate sample size. This
important step involves cost and accuracy decisions. Larger samples generally reduce sampling
error and increase accuracy, but also increase costs.
Stage 7: Data Collection
Once you‘ve established the first six stages, you can move on to data collection.
Depending on the mode of data collection, this part of the process can require large amounts of
personnel and a significant portion of your budget. Personal (face-to-face) and telephone
interviews may require you to use a data collection agency (field service).
Internet surveys require fewer personnel, are lower cost, and can be completed in days rather
than weeks or months.
Regardless of the mode of data collection, the data collection process introduces another
essential element to your research project: the importance of clear and constant communication.
Stage 8: Analysis and Interpretation
In order for data to be useful, you must analyze it.
Analysis techniques vary and their effectiveness depends on the types of information you are
collecting, and the type of measurements you are using. Because they are dependent on the data
collection, analysis techniques should be decided before this step.

Stage 9: The Marketing Research Report
The marketing research process culminates with the research report.
This report will include all of your information, including an accurate description of your
research process, the results, conclusions, and recommended courses of action. The report should
provide all the information the decision maker needs to understand the project.
It should also be written in language that is easy to understand. It‘s important to find a balance
between completeness and conciseness. You don‘t want to leave any information out; however,
you can‘t let the information get so technical that it overwhelms the reading audience.
One approach to resolving this conflict is to prepare two reports: the technical report and the
summary report. The technical report discusses the methods and the underlying assumptions. In
this document, you discuss the detailed findings of the research project.
The summary report, as its name implies, summarizes the research process and presents the
findings and conclusions as simply as possible.
Another way to keep your findings clear is to prepare several different representations of your
findings. PowerPoint presentations, graphs, and face-to-face reports are all common methods for
presenting your information.
Along with the written report for reference, these alternative presentations will allow the decision
maker to understand all aspects of the project.
Resource Planning for Your Study
As you are developing your study, you have to account for the expenditure of your resources:
personnel, time, and money. Resource plans need to be worked out with the decision maker and
will range from very formal budgeting and approval processes to a very informal ―Go ahead and
do it‖.

Before you can start the research project, you should get yourself organized and prepare a budget
and time schedule for the major activities in the study. Microsoft Project and similar programs
are good resources for breaking down your tasks and resources.
RESEARCHING IN INTERNATIONAL MARKETS
Have you considered exporting internationally? With 95 percent of the world‘s consumers
located outside the United States, and a high demand for American products, international
markets can be an area of immense opportunity for small businesses. Many entrepreneurs are
intimidated by the thought of going global, but with proper market research and guidance
beforehand, they needn‘t be.

What is the first step in international market research?
―Before a company even starts the research process, they need to determine if they are ‗export
ready,‘ ―says SBDC Business Advisor Lynn Stewart. ―Do they have the resources—time,
money, personnel—to devote to exporting?‖ Stewart recommends the SBA‘s Export Business
Planner as a good tool to get you started assessing your export readiness.
How can doing market research help an entrepreneur determine the best international
markets for his or her products?
―It‘s important to research how well your product fits a foreign market. Is there a demand? What
is the price point? Who are your competitors? With taxes and tariffs, can your product be
competitive?‖ says SBDC Research Coordinator Dr. Christopher Carter. ―Macroeconomic
indicators such as GDP growth, employment rates and birth rates will give you an overview of
the state of the economy and population.‖ A bonus: Research may show you foreign countries
where products that are less successful in the U.S. could be in high demand, adds Stewart.
How can an entrepreneur narrow down which countries to research?
Start by looking at where your competitors are going, Stewart advises. To which countries are
they exporting? Then investigate country and industry reports to identify export trends and
growing markets for your product and/or industry. Trade associations, U.S. government
databases and reports from other global organizations are an excellent source for this type of
information. Because they border the U.S. and benefit from NAFTA, Stewart says, Canada and
Mexico are a good starting point for new exporters.

Once you have narrowed down your options, what are some of the key questions to ask
about each market?
Start with a country assessment, which examines each country‘s geographic, demographic,
economic, cultural, political, legal and infrastructure, says Stewart. Then perform a market
assessment, which examines the size, characteristics and projected growth of the target market;
your competitors‘ products, prices, marketing methods and distribution channels; any licenses or
certifications needed to export to the country; tariffs and import regulations that will affect you;
and how you will distribute your product or service (agent, distributor, licensee, etc.). Finally,
says Carter, research whether you need to modify your products or packaging. ―Certain colors or
designs can have different meanings in different countries,‖ he explains, ―and in some lower-
income countries people want smaller package sizes, since they live on small daily earnings.‖
What resources can help entrepreneur research international markets?
Carter and Stewart cite a wealth of online resources, including the U.S. Department of
Commerce and Department of State, the CIA World Factbook, the International Trade
Administration, Global Edge (hosted by Michigan State University), industry associations and
websites, and TradeStats Express. Offline, you can get help from the SBDC, SBA, SCORE,
Centers for International Trade and Development (CITDs) and U.S. Export Assistance Centers
(USEACs).
Is it necessary to actually visit the countries where you‟re considering selling your products
or to meet with potential retailers?
―Face-to-face meetings are always good, but we have many clients who have successfully
exported using local distributors, without having visited the country,‖ says Carter. However, he
highly recommends participating in trade shows, either in the target country or the general
region. Stewart cautions that you should always vet any distributor or agent carefully. ―Assess

their operation, financial situation, market knowledge, marketing plan, other products they carry
or represent, company background and technical ability.‖
When you have gathered all your research, what factors should you consider in deciding
which market or markets to target?
While there are many variables to consider, Stewart says the main factors are market potential
(where will your product make money?), the competitive environment, ease of market entry and
the presence of qualified partners. It‘s recommended that small businesses select one or two
markets first, then move on to others as they gain experience. ―Selecting regions of focus such as
Asia or Latin America rather than countries in different areas of the world is more cost effective,
especially in terms of marketing, product modifications and travel,‖ Stewart says. ―There is also
the added benefit of regional trade agreements as well as using one country in the region as a
gateway to others.‖
How to research and expand into foreign markets
Some top tips for finding out if there is a foreign market for your small business to expand into
A recent report from the Association of Chartered Certified Accountants showed that strong
domestic businesses that expand internationally have the fastest growth rates.
But how do you know that there is a foreign market for you to expand into? The first step is
always to do plenty of research. From various internet sources to trade magazines, following the
trends in your sector – especially keeping abreast of what is happening internationally – will help
you build the right knowledge base.
General current affairs publications that provide economic analysis will also help you see the big
picture and where future demand is likely to be. Also, you cannot underestimate tapping into
your network and talking to your business contacts. And don't hesitate in approaching new ones;
those accidental encounters that open doors are a reality for many businesses.

INTERNATIONAL MARKET RESEARCH
The 3 basic steps of international market research are: screening markets, assessing their
potential, and drawing your conclusions.
Screen potential markets
 Collect statistics related to your sector that show product or service exports to various
countries.
 Identify 5 to 10 large and fast-growing markets for your product or service. Look at them
over the past 3 to 5 years. Has market growth been consistent year-to-year? Did import
growth occur even during periods of economic recession? If not, did growth resume with
economic recovery?
 Consider smaller emerging markets that may hold ground-floor opportunities for you. If the
market is just beginning to open up, there may not be as many competitors as in an
established market.
 Target a few of the most promising markets for further study.
Assess target markets
 Examine trends that could influence demand for your product or service. Calculate the
overall consumption of products or services like yours and identify the amount imported.
 Study the domestic and international competition. Look at each competitor's Canadian
market share.
 Identify what affects the marketing and use of the product or service in each market, such as
channels of distribution, cultural differences and business practices.
 Find out if you will encounter any trade barriers (tariff or non-tariff) in your potential market,
as well as any Canadian barriers (such as export controls) affecting exports to the country.
 Search for Canadian or foreign government incentives to promote the export of the product
or service.

Draw conclusions
 Analyzing the data you have collected should help you decide which markets to go after, and
assist in the development of your export plan and marketing strategy.
 If you are new to exporting, experts recommend that you focus your energy on no more than
one or two countries at a time.
Find more information on international market research:
 Step-by-Step Guide to Exporting
Find out what you need to know about exporting, including international market research,
export planning, marketing, finances, logistics and legal aspects.
 International markets
Discover new markets for your products and services by studying foreign market reports and
international statistics.
 Country Insights
Get cultural, demographic, and political information on countries with whom you would like
to conduct business.
THE ETHICS OF MARKETING RESEARCH
Marketing research has experienced a resurgence with the widespread use of the Internet and the
popularity of social networking. It is easier than ever before for companies to connect directly
with customers and collect individual information that goes into a computer database to be
matched with other pieces of data collected during unrelated transactions. The way a company
conducts its market research these days can have serious ethical repercussions, impacting the
lives of consumers in ways that have yet to be fully understood. Further, companies can be faced
with a public backlash if their market research practices are perceived as unethical.

Deceptive Practices
The ease with which a company can access and gather data about its customers can lead to
deceptive practices and dishonesty in the company's research methods. This type of ethical
problem can run the gamut — from not telling customers that information is being collected
when they visit a website to misrepresenting research results by changing database numbers. Any
action that uses lies and deception to find out or establish information about consumers falls
under this category.
Invasion of Privacy
One of the most serious ethical considerations involved in market research is invasion of privacy.
Companies have an unprecedented ability to collect, store and match information relating to
customers that can infringe on a person's right to privacy. In many instances, the customer does
not know or understand the extent of the company's infiltration into his life. The company uses
this information to reach the customer with targeted advertising, but the process of targeting can
have a chilling effect on personal freedom.
Breaches of Confidentiality
Another significant ethical consideration involved in market research involves breaches of
confidentiality. Companies regularly share information about customers with partners and
affiliates, requiring the customer to opt-out of the sharing if he doesn't want to be involved.
Some companies sell information they have gathered on customers to outside companies.
Ethically, any unauthorized disclosure of customer information is problematic.
Objectivity
Marketing and advertising have a significant impact on public perceptions. Market researchers
have an ethical obligation to conduct research objectively, so that available data allows for the
development of a balanced or reality-based picture.

Researchers who allow their own prejudices to skew their work tend to contribute to the
perpetuation of stereotypes in advertising, the development of destructive social constructs and
the enabling of unjust profiting from poverty. For example, a market researcher with a one-
dimensional view of minorities could do a fair amount of harm if allowed to shape an advertising
campaign based on skewed data collection.
The Ethics of Marketing Research: Can I? Should I? Would I?
A basic role for a marketing researcher is that of intermediary between the producer of a product
and the marketplace. The marketing researcher facilitates the flow of information from the
market or customer to the producer of the good or service.
Such a situation, with three major players the producer, the customer and the market researcher
often sets the stage for conflicts of interest which, as Plato noted, can give rise to ethical
problems. Given the inevitability of ethical dilemmas in marketing research, well-established
ethical guidelines are critical for their resolution.
In this article, we identify resources for ethical decision making in marketing research in three
key areas where problems often arise:
 In the relationship between the researcher and the client
 Between the researcher and the research subject
 Between the researcher and the marketing research industry
Situation 1: After you make a brilliant final presentation on a business-to-business market
research study, your client thanks you and then asks for the list of companies that responded to
the survey, along with their survey responses, which could indicate whether they were currently
in the market for the client's services. What is your response?

Situation 2: Despite your best efforts, you are unable to shorten a personal interview
questionnaire to less than 30 minutes in order to ask all the questions needed to address your
client's research objectives. You know that most of your subjects won't participate if you are
honest with them about the time commitment. Your boss suggests that you simply state the survey
will "only take a few minutes." Do you take this advice and hope that once the interviews begin
people will be reluctant to stop?
Situation 3: You are in a kick-off meeting with a new client for your marketing research
services. During your discussion, she shows you a previously commissioned research study from
another marketing research provider. You note that the research design—a qualitative study—
was completely inappropriate for the research purpose—a quantitative estimate of market
potential. Your potential client states that she "really liked" the previous study and asks if you
can replicate it in another product category. It is clear that if you say no, she will go back to the
original provider. How do you respond?
Although these situations have been described in terms of marketing research practice, the
essential ethical questions are really very simple:
 Situation 1: Would you go back on your word and betray the trust that others have placed in you?
 Situation 2: Would you lie to get others to cooperate with you?
So far, I have avoided giving answers to the proposed situations other than to cite marketing
research industry codes and standards. That is because ethical decision making is personal. Each
of us must make tough ethical decisions alone, but it can help greatly when there are established
guidelines.

Here are three general observations that might suggest how I would address the ethical
challenges presented:
1. If Plato was right that ethical problems spring from a conflict of interests, you should clearly lay
out your personal perspective sooner rather than later. My generalized response to the first
situation is to initially provide the client with a hardcopy of the Code of Ethics under which I
operate, emphasizing those issues important to the particular project. I make certain that clients
know what to expect from me and what the final deliverables will include. And—most
importantly—I continue to discuss and manage those expectations throughout the entire project.
2. People tend to lie when they think someone else cannot handle the truth. In the second situation,
I have found that if you can honestly persuade the potential respondent that both the research and
their participation are important, you can talk to them indefinitely.
3. Marketing research is an art, not a science. There is no single best solution to any research
situation, and researchers should avoid a rush to judgment situations like the third. And rather
than criticize another's work, it is best to simply state your own position or approach as
articulately and compellingly as possible.
MARKETING ENVIRONMENT
The market environment is a marketing term and refers to factors and forces that affect a firm‘s
ability to build and maintain successful relationships with customers. Three levels of the
environment are:
 Micro (internal) environment - small forces within the company that affect its ability to serve
its customers.
 Meso environment - the industry in which a company operates and the industry‘s market(s).
 Macro (national) environment - larger societal forces that affect the microenvironment

The marketing environment surrounds and impacts upon the organization. There are three key
elements to the marketing environment which are the internal environment, the
microenvironment and the macro environment. Why are they important? Well marketers build
both internal and external relationships. Marketers aim to deliver value to satisfied customers, so
we need to assess and evaluate our internal business/corporate environment and our external
environment which is subdivided into micro and macro.
Macro environment
The macro environment is less controllable. The macro environment consists of much larger all-
encompassing influences (which impact the microenvironment) from the broader global society.
Here we would consider culture, political issues, technology, the natural environment, economic
issues and demographic factors amongst others.
Again for Walmart the wider global macro environment will certainly impact its business, and
many of these factors are pretty much uncontrollable. Walmart trades mainly in the United States
but also in international markets. For example in the United Kingdom Walmart trades as Asda.
Walmart would need to take into account local customs and practices in the United Kingdom
such as bank holidays and other local festivals. In the United Kingdom 2012 saw the 60th
anniversary of Queen Elizabeth II‘s reign which was a national celebration.
The United States and Europe experience different economic cycles, so trading in terms of
interest rates needs to be considered. Also remember that Walmart can sell firearms in the United
States which are illegal under local English law. There are many other macroeconomic
influences such as governments and other publics, economic indicators such as inflation and
exchange rates, and the level nature of the local technology in different countries. There are
powerful influencers such as war (in Afghanistan for example) and natural disasters (such as the
Japanese Fukushima Daiichi nuclear disaster) which inevitably would influence the business and
would be out of its control.

To summarize, controllable factors tend to be included in your internal environment and your
microenvironment. On the other hand less controllable factors tend to be in relation to your
macro environment. Why not list your own controllable versus uncontrollable factors for a
business of your choice?
Internal Environment
The internal environment has already been touched upon by other lessons on marketing teacher.
For example, the lessons on internal marketing and also on the functions within an organization
give a good starting point to look at our internal environment. A useful tool for quickly auditing
your internal environment is known
as the Five Ms which are Men,
Money, Machinery, Materials and
Markets. Here is a really quick
example using British Airways.
Looking internally at men, British
Airways employee‘s pilots, engineers,
cabin crew, marketing managers, etc.
Money is invested in the business by shareholders and banks for example. Machinery would
include its aircraft but also access to air bridges and buses to ferry passengers from the terminal
to the aircraft. Materials for a service business like British Airways would be aircraft fuel called
kerosene (although if we were making aircraft materials would include aluminum, wiring, glass,
fabric, and so on).
Finally markets which we know can be both internal and external. Some might include a sixth M,
which is minutes, since time is a valuable internal resource.
Market Forces Analysis
Markets
Labor forces
(Men)
Raw Materials
Capital expenditure
(Money)
Assets &
Equipment
(Machinery)

Let‘s look at an example of how the internal environment would impact a company such as
Walmart. We are looking at the immediate local influences which might include its marketing
plans, how it implements customer relationship management, the influence of other functions
such as strategy from its top management,
research and development into new
logistics solutions, how it makes sure that
it purchases high-quality product at the
lowest possible price, that accounting is
undertaken efficiently and effectively, and of course its local supply chain management and
logistics for which Walmart is famous.
Microenvironment
The microenvironment is made from individuals and organizations that are close to the company
and directly impact the customer experience. Examples would include the company itself, its
suppliers, other marketing input from agencies, the markets and segments in which your business
trades, your competition and also those around you (which public relations would call publics)
who are not paying customers but still have an interest in your business. The Micro environment
is relatively controllable since the actions of the business may influence such stakeholders.
Walmart‘s Micro environment would be very much focused on immediate local issues. It would
consider how to recruit, retain and extend products and services to customers. It would pay close
attention to the actions and reactions of direct competitors. Walmart would build and nurture
close relationships with key suppliers. The business would need to communicate and liaise with
its publics such as neighbors‘ which are close to its stores, or other road users. There will be
other intermediaries as well including advertising agencies and trade unions amongst others.
Strengths Weakness
Opportunities’ Threats

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