The 3rd chapter of Kotler’s text in marketing management conveys the importance of measurement and forecasting information in marketing. What makes the book of Kotler useful in the modern marketing academic studies is the presentation of his text which is full of case examples that my learners can ponder the relationship between the theories used in each chapter and the case from the business journals adopted by the text. One major aspect that marketing information utilizes the most is the current and ever changing demographic behavior. This is where Kotler’s emphasis on demographic behavior relative to measurement and forecasting will make sense in the real marketing world. Consequently, Kotler segments the market demand subject for measurement in four major types. First, is potential market which targets the capacity and capability of the group of customer to buy the given goods or products. Second, is the available market that refers to the right demographic of customers that can buy the product. The example given is the motorcycle product that under 21 customers can’t avail the product but rather eligible adults can only avail the motorcycle product offering. Qualified available market is applied to many products in the market today that every marketer must adhere to the techniques how to market the product in a limited span of the demographic. Third, is the target market itself. This area of demand usually directs to the class A market segment that most of the companies are giving more attention and market operation’s time and investment to constantly satisfy the A market. Lastly, is the penetrated market or the existing customers who are buying the product. This segment must be well informed of the updates and changes of the company.
Market demand is constantly changing as to the many
determinants that a given demographic will naturally change its market behavior
course and will affect to the marketing operations of the company. Market potential (Q2) will interact
relatively to the market minimum of a given demographic. High market expenditure will affect the
market demand relatively. Likewise,
market sensitivity of demand is the gap and distance between market minimum and
market potential. The distance between
Q1 and Q2 is relatively large. Marketing strategy and technique is always a
challenge in this part of market demand neutralization. Ultimate goal of every marketer in this term
is the distance and gap between market minimum and market potential is the
effectiveness of its market penetration.
It is vital to any market operation that during the analysis of data in
forecasting the market, one must see to it that the market index must satisfy
the market objectives of the company. If
the market index is low the possibility of high profit is possible and the
shares are also high. Thus, Share
penetration index would also be vital in the market performance of the company.
On the contrary, market forecast is also a significant part of getting the
right data allowing the correct data information gathering and interpretation that
will gain a more in-depth marketing relationship with the different market
segment of the given product lines of the company.
Market potential can be predicted through
market forecasting in order to get the market demand with the product given to
the market. Sales forecast is another
gauge of marketing that requires several intensive mathematical tool to achieve
a much thorough forecast or prediction. Though, GDP is not that effective in
predicting a given demographic economy but still GDP is useful in some terms in
data mining and analysis. Thus, market
buildup and potential must be carefully analyze according to the population,
personal discretionary income per capita, average percentage of discretionary
income spent, Average percentage amount spent on any given commodities
according to the actual demographic situation.
The challenge of many marketers today is how to find or create the
market buildup. One organization in the
US today is focusing their research studies on the classifications and the
demographics of customers. North American Industry Classification
System is developed by the US Bureau of Census in conjunction with
the Canadian and Mexican governments.
The NAICS classifies all manufacturing into 20 major industry sectors
and further breaks each sector in a hierarchical structure. Another aspect that market can be analyzed is
through Multiple-Factor Index Method. In getting the data and use it as
variables for analysis that will give the company several indexes for analysis,
forecasting and planning. Several
companies today specifically the international companies are maximizing the
Brand Development Index to get the pulse of its demographic area in a given
country. For example in the US, Seattle,
Portland, Boston, Toledo, Chicago, and Baltimore will give different results in
terms of the percentage of sales according to the brand category and the
overall Brand Development Index. With these, future demand of the market can be
forecasted. Thus I mentioned above that
forecasting of gross domestic product is a way to know and consider the
environmental indicators, to forecast industry sales. How do firms develop forecasts? One subject that can be a good consideration
in forecasting is the market research and the continued research on market
strategy and planning.
Commonly used by
many conglomerates now a days is to adopt a flexible evaluation in terms of
market research both internal and external that a given company will not only
utilize the given output information but strategic planning applied to market
research can be applied to achieve a more robust data analysis and marketing
information output for decision making.
As an instructor to my learners first few chapters of the text is a
challenge for me as to how can I print in the minds of my learners the actual
business operation applying the research and development in terms of strategic
planning for marketing. Note that business operations and supply chain
management along the value chain differs according to the product being
produced. To expound on this matter, every
product considered in marketing are subject to the different accommodation in
terms of the logistics protocols. If the
goods in transit are consumer food products one must consider the standards of
the ISO, GMP, & GMP approval. These kinds of licenses will allow the
acceptance of the product entries of the company to the international
market. Moreover, political background
and laws of the recipient country must also be considered in terms of the value
chain flow during regular business operation.
A good example that we can consider is the political implementation of
embargoes and sanctions. The common case
example is Cuba when the humanitarian trade from US is being banned. US issued
a sanction giving a specific coercive trade measures such as the cancellation
of trade financing or the prohibition of high-technology trade, while embargoes
will be in a broader sense were by US prohibit economic trading entirely.
This aspect is in the rulings of the WTO and
the UN. Thus, marketing strategy in an
international market setting will always consider the ethical side of the
national and international environmental scanning. Usually external environment are subject to
the national and relatively affected by the international ethical
standards. As such, a huge factor in
forecasting in an international market is the behavior of the given market
demographic. The ultimate aim of getting
the market information regarding the future market demand are subject to the
macro and micro economic performance of the company. Companies commonly prepare
a macroeconomic forecast first, followed by an industry forecast, followed by a
company sales forecast. The macroeconomic forecast projects inflation,
unemployment, interest rates, consumer spending, business investment,
government expenditures, net exports, and other variables. The end result is a
forecast of gross domestic product (GDP), which the firm uses, along with other
environmental indicators, to forecast industry sales. The company derives its
sales forecast by assuming it will win a certain market share. Finally,
companies today are maximizing their full potential to gather data and
information for the continued strategic planning and operation along the value
chain, as what Kotler and the research of Kaplan emphasize deeply the
importance of strategic scientific planning using the most precise mathematical
technique to gather the recent and accurate market information for research and
development.
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