Environmental Scanning and Monitoring PDF

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QUESTION Write a note on environmental scanning and monitoring.

INTRODUCTION Environmental scanning is a process that systematically surveys and interprets relevant data to identify external opportunities and threats. An organization gathers information about the external world, its competitors and itself. The company then responds to the information gathered by changing its strategies and plans when the need arises. There are several steps to the environmental scanning and monitoring process. The environmental scanning process encompasses several steps. The first step is for an employer to gather information about the world in which it operates, including information about the economy, government, laws and demographic factors such as population size and distribution. Next, the organization should focus on its competitors. The company should examine the research for trends, opportunities and threats that might impact its business. After analyzing competition, the company is to conduct an internal scan of the organization by examining the company's strengths and weaknesses. Consider where the company is now and where it plans to be in five or 10 years. Interviews or surveys of leaders of the company may be conducted to determine what change, if any, should be made. Sometimes an organization also might decide to gather information from community service and religious groups and interview the leaders of the groups or use surveys. This might help a company decide, for example, whether it should try to work with the other organizations and what activities to pursue. The company then might decide to plan joint activities that will meet the needs of both groups or to encourage employees to get involved in community activities, such as building a house for Habitat for Humanity or serving food to the homeless at the local shelter. This creates a good image of the company increasing its public relations. When conducting an environmental scan, a variety of methods should be used to collect data, including publications, focus groups, leaders inside and outside the organization, media, and

civic associations and the library. After the data is collected, the final step is to analyze the data and identify changes that can be made.

DEFINITION Environmental scanning may be defined as “a review of external sources to discover factors that impact a business.” The main goal is to identify and consult sources outside the business. Although these sources are uncontrollable from the business's perspective, it is important to consider them in decision-making processes.

METHOD One popular method of environmental scanning is SWOT analysis. Each letter stands for one area to examine: Strengths, Weaknesses, Opportunities, and Threats. The strengths and opportunities are factors within the company, and the weaknesses and threats come from sources outside the company. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. The company analyzes its own internal environment and the external environment in order to comprehend the various flaws the company has, and the proper steps to take to fix them. The internal environment of an organization consists of various elements like the value system, mission/objectives of the organization, structure, culture, quality of employees, labor unions, technological capabilities, etc. These elements lie within the organization and any changes to them can affect the overall success of the business. The internal environment is essentially those factors which the company has the ability to control and is typically within the organization. The external environment is divided into the macro and micro environment. The internal environment offers strengths and weaknesses to a business while the external environment brings opportunities and threats.

The four influencing environmental factors known as SWOT Analysis are:

1. Strength

An inherent capacity of an organization which helps it gain strategic advantage over its competitors. 2. Weakness Weakness is that which results in a disadvantage for the company. 3. Opportunity A favorable condition in the organization’s environment enabling it to strengthen its position. 4. Threat An unfavorable condition in the organization’s environment causing damage to the organization.

DIAGRAM

QUESTION: Define Marketing Research. What information is required for marketing decisions? What are the reasons for obtaining information? INTRODUCTION

In order to comprehend what exactly marketing research is, one can break down the words. Marketing Research has two words: marketing and research. Marketing means buying and selling activities, while research means a systematic and complete study of a problem, done by experts using scientific methods. Thus it can be said, marketing Research is a systematic method of collecting, recording and analyzing of data, which is used to solve marketing problems. Marketing research helps a company cater to its customers needs and develop a superior product which gives a company an edge over competitors. A company faces many marketing problems. It faces problems about consumers, product, market competition, sales promotion, etc. Marketing research helps to solve these problems. To do so, first data (information) is collected about the marketing problem. Secondly, this data is recorded. Then it is analyzed conclusions are drawn about it. After that, suggestions are derived for solving the marketing-problem. Thus marketing research helps to solve the marketing problems quickly, correctly and systematically. Marketing research collects full information about consumers. It finds out the needs and expectations of the consumers which helps the company produces the goods according to the needs and expectations of the consumers. Marketing research helps the company to make its production and marketing policies. It helps the company to introduce new products in the market. It helps to identify new-markets. Marketing research also collects full information about the competitors. The company uses this information to fight competition. It also helps the marketing manager to take decisions. Marketing research has a wide scope as it includes product research, consumer research, packaging research, pricing research, etc. Marketing research is a continuous process. It has a few limitations. However, a company cannot survive and succeed without it.

DEFINITION According to American Marketing Association (AMA), “Marketing Research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.”

FEATURES The salient characteristics or features of marketing research are as follows: Wide and comprehensive scope 1. Marketing research has a very wide scope. It includes product research, packaging research, pricing research, market research, sales research, etc. It is used to solve marketing problems and to take marketing decisions. It is used to make marketing policies. It is also used to introduce new products in the market and to identify new markets. Marketing research is used to select channels of distribution, in advertising strategy, for sales promotion measures, etc. 2. Systematic and scientific Marketing research is conducted in a step-by-step manner. It is conducted in an orderly fashion. Therefore, it is systematic. Marketing research uses scientific methods. Thus, it is also scientific. 3. Science and art A Science collects knowledge (data) while an Art uses this knowledge for solving problems. Marketing research first collects data. It then uses this data for solving marketing problems. Therefore, it is both, a Science and an Art. 4. Collects and analyzes data Marketing research gathers data accurately and objectively. It first collects reliable data and then analyses it systematically and critically.

5. Continuous and dynamic process The company faces marketing problems throughout the year, thus marketing research is conducted continuously. It continuously collects up-to-date data for solving the marketing problems. Large companies have their own marketing research departments. They

conduct Marketing research continuously throughout the year. Therefore, marketing research is a continuous process. It is a dynamic process because it goes on changing. It does not remain static. It uses new methods and techniques for collecting, recording and analyzing the data. 6. Tool for decision-making The marketing manager has to take many decisions. For this, he requires a lot of data. Marketing research provides correct and up-to-date data to the marketing manager. This helps him to take quick and correct decisions. Therefore, marketing research is an important tool for decision-making. 7. Benefits company and consumers Marketing research is useful to the company in many ways. It increases the sales and profits of the company. It helps the company to fight competition and boost its goodwill in the market. It reduces the marketing risks. In short, marketing research brings success to the company. It also brings the company closer to the consumers. It gives convenience and satisfaction to the consumers. MARKETING INFORMATION COMPONENTS 1) Internal company information The first thing ananlyzed while trying to expand an organization is the strength and capability of the organization to expand. Planning an expansion without having the capacity of it is a waste of time. Thus marketing managers need to have an internal analysis to determine where their own company stands. For these they need regular sales reports, purchase reports, margin reports, costing, customer service expenses etc. All these can be obtained through marketing research and it is the first type of information a marketing manager looks for. 2) Marketing intelligence The second kind of information which will be needed is the business environment or in other words market intelligence. The Market intelligence pertains to overall demand in the market, the potential of the market, competitors in the market etc. Generally a lot of marketing intelligence is

gathered from internal sources such as customers, suppliers and distributors. Marketing intelligence from these sources is important to grasp any day to day changes happening in the business environment. For example, a television company will expect lots of sales in a festive environment and the distributors typically inform companies that they would need a discount in this time. Thus during a festive environment organizations have to use price discounts as a sales promotion tactic and at the same time ensure having a higher inventory of televisions. Furthermore, industry information can also be found by professional organizations. 3) Market Research While internal information and market intelligence is important, the most important information which a marketing manager can receive is “What a customer wants”. Thus time to time market and consumer research is needed for new product ideas as well as expected improvement in processes. This kind of information can be expensive to gather but is worth the expense. Major changes in industries happen mainly because they are in touch with their end customers and they know what their customer wants. Furthermore, predicting how a market will respond to any changes being made in the marketing plan can be answered by end customers only and not by distributors and suppliers. This is why a lot of organizations conduct trial runs. With these three pieces of information, a marketing manager has enough knowledge to go ahead with his marketing plan. If the plan fails, then he has to determine which of the above information is improper. If the marketing plan fails because of internal problems, then his internal company information was improper. If it fails because of poor support from distributors and suppliers, then his marketing intelligence was incorrect. And finally if the end customer does not accept the marketing plan then his market research was improper.

What Types of Data Can a Marketing Research Use? The following are sources of data for marketing research. ● Acquired databases

A truly enormous amount of information is available in the form of databases, and a surprising body of data can be accessed without cost to companies. Government databases, for instance, contain economic and demographic information on individuals, groups, and companies. ● Internal company data Data from sales and marketing activities are sent to the MIS, and the articulation across the databases enables the production of reports. Also, integration of the MIS with the company intranet platform can enable access to different business units, departmental databases, and even employees. An intranet is an internal corporate communications network. ● Marketing intelligence All of the relevant information about the target market environment can be accessed through smart intelligence activities that monitor competitors' websites, industry trade publications, and marketplace observations by people in the trenches. Other avenues for market intelligence include trade shows, talking with customers and prospective customers, conversing with distributors as they go about their business, and engaging in activities such as hiring mystery shoppers and purchasing and testing competitors products. ● Marketing research

The marketing research and data integrated into the MIS includes information from syndicated research reports and custom research reports, which may be derived from secondary research or new primary research. The more specific and unique the market research data is about the business environment, competitors, and customers, generally the more value it has to the company.

Why Collect Information?

1. Marketing Research keeps a company focused on the target consumers or customers. In business the customer is the most important person in the business. However often times companies lose sight of the customer. In fact, even the consumer marketing giant Coca Cola sometimes loses sight of the customer. Back when Donald Keough was CEO and Roberto Goizueta was CMO, Keough told him “My wife doesn’t like our advertising.” Goizueta cooly replied, “Your wife is not my target market.” Marketing Research serves to bring the customer perspective continually into the boardroom and makes customers the focal point for decisionmaking. 2. Marketing Research helps one prioritize, so they can focus on what important. With businesses striving for ultimate productivity, the pressure is on employees to produce. Everyone in every business has too much to do. But how much of this “busyness” is being spent on activities that are truly “important”. How can an organization decide to stop doing something, if it is unknown whether it is important or unimportant? Marketing Research can help orgaanizations understand the difference. 3. Marketing Research helps companies determine which options will be most lucrative. Which of the new product options under consideration will make the most money? Will it be through premium pricing or higher volume? Which marketing materials will bring customers through the door? In marketing, a lot of time is spent choosing between options, and marketing research is the only way to know which choice will be the winner. 4. Marketing Research gives a competitive advantage. The information that is obtained from Marketing Research is exclusive to the organization. This gives a significant competitive advantage, since one now knows, except the organization, knows the information discovered through marketing research, thus leaving competitors in the dark. Marketing research can also be used to attain information about competitors where one can identify their strengths and weaknesses and gain clues about their future strategies. This will keep the organization steps ahead of the competition. 5. Marketing Research helps make better decisions and reduces risk.

If a company is launching a new product or service that has been in development for 18 months at an investment of $1.5M. The cost of failure is ver high here. Marketing research provides the information that can help one feel more confident that ther product launch will provide a good response and reputation. 6. Marketing Research keeps an organization relevant and future focused. Marketing Research can help a company stay ahead of change; by helping it identify and understand trends, behavior, and perceptions that impact customers. What will they want next year? Next month? Marketing research insight is the foundation for plans. Marketing Research is a kind of a superhero for business decision-makers. When a company is standing on the precipice of a difficult and risky marketing decision, information is a company’s lifeline. Marketing Research provides the information that ensures business success – and saves careers from disaster....