Chapter 5: Capabilities for Learning About Customers and Markets

Prepared by:

Ma. Anna Corina G. Kagaoan Instructor College of Business and Accountancy

Learning About Customers and Markets

Every discussion of market orientation emphasizes the ability to learn about customers, competitors, and channel members in order to continually sense and act on events and trends in present and prospective markets. Market-driven companies display innovative skills in gathering, interpreting, and using information to guide their business and marketing strategies and to achieve competitive advantage. Learning about markets information that finding it. is more about interpreting

Market Sensing Processes

Building open-minded inquiry processesshow an openness to studying change to avoid complacency. Analyzing competitors actionsdetailed attention to rivals tactics and strategies to develop understanding of their plans and capabilities. Listening to front-line employeesmotivating the involvement of staff who are in contact with customers in building understanding of change and new opportunities and threats.

Market Sensing Processes

Searching for latent customer needsfinding unserved needs through dialogue, observation and engagement with customers.
Scanning the periphery of the marketactively looking for opportunities in the market. Encouraging experimentationbuilding and culture and process around continuous curiosity and new ideas.

Learning Organizations
Guided by a shared vision that focuses the energies of organizational members on creating superior value for customers. Continuously acquire, process, and disseminate throughout the organization knowledge about markets, products, technologies and business processes. Do not hesitate to question long held assumptions and beliefs regarding their business. Knowledge is based on experience, experimentation, and information from customers, suppliers, competitors and other sources. Reach a shared interpretation of the information, which enables them to act swiftly and decisively to exploit opportunities and defuse problems. Exceptional in their ability to anticipate and act on opportunities in turbulent and fragmenting markets.

Learning and Competitive Advantage

From learning, the organization is able to quickly and effectively respond to opportunities and threats, and to satisfy customers needs with new products and improved services. Learning capabilities and skills are central to business agility. Learning drastically reduces the time necessary to accomplish projects such as new product development. Market sensing capabilities and knowledge-generation may directly create competitive advantage. It is increasingly common with large customers that suppliers are required to identify end-use market opportunities for their buyers, and market learning and knowledge developments are key elements of competing.

Learning About Markets

Objective Inquiry. Companies often encounter problems because of faulty or incomplete market sensing. Open-minded inquiry helps to anticipate value migration threats, which are frequently initiated by competitors from outside traditional market or industry. Information Distribution for Synergy. Synergistic distribution works to remove functional hurdles and practices. Cross-functional teams are useful to encourage transfer of information across functions. Mutually Informed Interpretations. The mental model of the market guides managers interpretation of information. The intent is to reach a shared vision about the market and about the impact that new information has on this vision. Accessible Memory. This part emphasizes the importance of keeping and gaining access to prior learning. The objective is not to lose valuable information that can continue to be used.

Barriers to Market Learning Processes

Managers that do not understand or accept the value of new information and insight from the marketplace, they are likely to maintain existing perspectives and reject new ones. Rigid organizational structures and inflexible information systems may stand in the way of learning and knowledge-sharing in an organization. Political interests may defend the status quo, or the pressure of existing business operations may block the capacity of managers to take on new ideas. Companies falling prey to active inertia responding to market shifts by accelerating activities that succeeded in the pastwith the result that the market changes but the company does not and performance declines.

Marketing Information and Knowledge Resources

Internalcompany records, market research studies. Externalmarket researching agencies and consultants.

Existing informationGoogle searches for competitor offerings.

New information resourcesobservation studies or survey work.

Scanning Processes
Making existing functional groups responsible for scanningwill focus only with the familiar, not the periphery. Create ad hoc issue groupsidentify important questions to address and assign them to task forces. A high-level lookouta team scanning specific topics at the periphery of the organization and sharing insights with top management. New initiativesencourages managers to envision and test new opportunities beyond the core business. Investing in start-upsmodest investments which may build a clear view of emerging technologies and markets. Outsourceuse consultants for fresh perspectives on the business to be incorporated in strategic decision making.

Scanning Processes
Probability of the Event Occurring
High Medium Low

7 6 5 4 3 2 1 Things to Watch Utopia Field of Dreams

Effect of the Event on the Company

Danger

Future Risks
Exhibit 1. A Grid for Market Sensing

1 = Disaster, 2 = Very bad, 3 = Bad, 4 = Neutral, 5 = Good, 6 = Very good, 7 = Ideal

Specific Marketing Research Studies

Marketing research is the processing, and analyzing interpreted, will help the opportunities and reduce risks
Research Project and Scope
Describe the topic for the study and the background.

systematic gathering, recording, of marketing data which, when marketing executive to uncover in decision making.
Research Questions
Identify the specific pieces of information required and the questions that need to be asked to obtain that information.

Research Objectives
Set specific goals for the study why is it being undertaken?

Planned Outcomes
When completed, how should the results be presented for management use?

Exhibit 2. Problem Definition to Guide Marketing Research Studies

Considerations for Research

Defining the Problem. Essential to spell out exactly what information is needed to solve the problem. Understanding the Limitations of the Research. Quality of the Research. Factors include the experience of the research personnel, skills in carefully managing and controlling the data collection process, the size of the sample, the wording of questions, and how the data are analyzed. Costs. Evaluating and Selecting Suppliers. Talk with prior clients to determine their satisfaction with the research firm. Research Methods.

Existing Marketing Information Sources

In-Company Resources. Databases. Information in the organizations current system. Open Source Resources. A wide variety of information resources exist in the form of published information which can be accessed freely or at low cost. Government and international agencies provide valuable statistical sources in such areas as population trends, economic development, household purchasing, and international market differences. Research Agency Resources. May be subscribed. Key advantage of standardized information in these resources is that the costs of collection and analysis are shared by many users. The major limitation is that the information may not correspond well with the users individual needs.

Creating New Marketing Information

Observation and Ethnographic Studies. Ethnography is a social science based on anthropology, and its use is marketing studies is based on the idea that richer information and insight can be generated by immersion in the consumers life. Research Surveys. Initiated in response to problems or special information needs. Internet-Based Research. New and speedy ways of conducting studies using electronic questionnaires, e-mail questionnaires, and electronic panels are expanding rapidly. Useful insights can also be built by examining customer online behavior.

Marketing Information Systems

Provides a mechanism for integrating marketing information and intelligence resources. Consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

It is developed from internal company records, marketing intelligence activities, and marketing research.
Inward-oriented firms emphasize enhanced operating efficiency and reduced costs through automating information processing.

The market-oriented firm looks for ways in which information systems can make the firm more effective in the marketplace.

Management Information Systems

MIS provides raw data to decision makers throughout a firm. The system collects data on the transactions and operations of the firm and may include competitor and environmental information. Decision makers and systems analysts are responsible for extracting data relevant for a decision and in the appropriate format to facilitate the process. The system can provide information for decisions at all levels of the organization. Lower and middle-level managers are likely to use the system most often for operating decisions.

Marketing Decision-Support Systems

A decision-support system (DSS) assists in the decision making process using the information captured by the MIS.

An MDSS integrates data that are not easily found, assimilated, formatted, or readily manipulated with software and hardware into a decision making process that provides the marketing decision maker with assistance when needed. The MDSS allows the user flexibility in applications and in format.
An MDSS can be used for various levels of decision making ranging from determining reorder points for inventory to launching a new product. May operate autonomously or instead require interaction with the decision maker during the process.

Marketing Intelligence
Many companies have invested in in-company intelligence units to coordinate and disseminate soft or qualitative data and improve shared corporate knowledge. May come from published materials in trade and scientific journals, salesperson visit reports, programs of customer visits by executives, social contacts, feedback from trade exhibitions and personal contacts, or even rumor in the marketplace. Formal marketing intelligence gathering activities may be an important element of the scanning processes.

Knowledge Management
Knowledge about customers should be managed as a strategic asset, because competitive advantage can be created by not merely possessing current market information but by knowing how to use it. Market knowledge is obviously linked to organizational learning and market orientation in the market-driven company.

Role of Chief Knowledge Officer

Improves an organizations knowledge management and learning processes. Builds infrastructure and related knowledge management functions. Develops and enhances company-wide learning processes.

Leveraging Customer Knowledge

Creating Customer Knowledge Development Dialogues. Running customer events to be a venue for employees to connect with them through informal conversations and semi-formal round tables.
Operating Enterprise-Wide Customer Knowledge Communities. Provide Internet accounts of websites where individuals throughout its divisions and functions can exchange knowledge with each other and with the customer.

Leveraging Customer Knowledge

Capturing Customer Knowledge at the Point of Customer Contact. CRM systems capture customer behavior and response information which offers rich potential for better insights into issue like customer defection and competitors strengths, as well as emerging customer needs and perceptions. Management Commitment to Customer Knowledge. Investing resources, time, and attention in maintaining customer dialogues and communities as a commitment to enhanced organizational understanding of the customer.

Ethical Issues in Collecting and Using Information

Invasion of Customer Privacy. Ask customers to indicate their preferences concerning mailing lists and other uses of information. Information and Ethics. Example: should a prospective client share a suppliers detailed project proposal with a competing supplier? A central issue concerns which organization pays for the cost of preparing the proposal. If the proposal is prepared at the expense of the supplier, the proposal is the property of the supplier. Sharing the proposal with its competition would be an issue of questionable ethics.