Forecasting &
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FORECASTING & DEMAND MEASUREMENT
TOTAL MARKET POTENTIAL
AREA MARKET POTENTIAL
MARKET DEMAND • M. D for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program…
MARKET POTENTIAL • M. P is the limit approached by
market demand as industry marketing effort (expenditure) goes to infinity for a given environment…
MARKET FORECAST • Only one of the many possible levels
of industry marketing effort (expenditure) will actually occur. The market demand corresponding to the market effort is called Market Forecast…
ESTIMATING CURRENT DEMAND • STANDARD INDUSTRIAL CLASSIFICATION – Major Industry Groups – Each into Sub Groups – Product Category
1
2
3
S.I.C Annual Sales No. Of Establishments Potential Sales M.P (Mln) per Sale ( ) 1x2x3 2511
2521
$1
6
`
10
$5
2
10
$1
3
5
15
$5
1
5
25
MARKET POTENTIAL =
60 100
200
MULTIPLE FACTOR INDEX METHOD
• Single Index eg. Population % (2.28%)
Market Potential
• Buying Power Index (B. P. I) % – – –
Disposable Personal Income Retail Sales U. S. Population
2.00 1.96 2.28
Weight 0.50 0.30 0.20
BRAND DEVELOPMENT INDEX
B. D. I
Territory (City) % Brand Sales
% Category Sales
(a/b) * 100
114
1
3.09
2.71
65
2
6.74
10.41
91
3
3.49
3.85
120
4
0.97
0.81
140
5
1.13
0.81
104
6
3.12
3
Lower B D I
Higher Market Opportunity
Higher B D I
Higher Market Opportunity to Increase Share
INDUSTRY SALES & MARKET SHARE
• INDUSTRY TRADE ASSOCIATION – Elcoma, IEMA, FMA
• MARKET RESEARCH AUDIT REPORT – ORG, Nielsen
• OWN METHODS / MODELS
ESTIMATING FUTURE DEMAND 1) What People Say….. Buyer’s opinion, Sale, Expert
1) What People Do….. Test Market Response
1) What People Have Done….. Time services, Statistics
WHAT PEOPLE SAY Survey of Buyer’s Intentions o Do you intend to buy within the next…..month/ yr. No Chance Certain 0.00 100.00 (Purchase Probability Scale) Composite of Sales Force Opinions Expert Opinion: Trade Consultants, Associations.
WHAT PEOPLE DO • TEST MARKET (NEW PRODUCT)
WHAT PEOPLE HAVE DONE • Post Sales Analysis • Time Series • Exponential Smoothing • Statistical Demand Analysis (Casual Factors) • Econometric Analysis
TOTAL MARKET POTENTIAL
AREA MARKET POTENTIAL
MARKET DEMAND • M. D for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program…
MARKET POTENTIAL • M. P is the limit approached by
market demand as industry marketing effort (expenditure) goes to infinity for a given environment…
MARKET FORECAST • Only one of the many possible levels
of industry marketing effort (expenditure) will actually occur. The market demand corresponding to the market effort is called Market Forecast…
ESTIMATING CURRENT DEMAND • STANDARD INDUSTRIAL CLASSIFICATION – Major Industry Groups – Each into Sub Groups – Product Category
1
2
3
S.I.C Annual Sales No. Of Establishments Potential Sales M.P (Mln) per Sale ( ) 1x2x3 2511
2521
$1
6
`
10
$5
2
10
$1
3
5
15
$5
1
5
25
MARKET POTENTIAL =
60 100
200
MULTIPLE FACTOR INDEX METHOD
• Single Index eg. Population % (2.28%)
Market Potential
• Buying Power Index (B. P. I) % – – –
Disposable Personal Income Retail Sales U. S. Population
2.00 1.96 2.28
Weight 0.50 0.30 0.20
BRAND DEVELOPMENT INDEX
B. D. I
Territory (City) % Brand Sales
% Category Sales
(a/b) * 100
114
1
3.09
2.71
65
2
6.74
10.41
91
3
3.49
3.85
120
4
0.97
0.81
140
5
1.13
0.81
104
6
3.12
3
Lower B D I
Higher Market Opportunity
Higher B D I
Higher Market Opportunity to Increase Share
INDUSTRY SALES & MARKET SHARE
• INDUSTRY TRADE ASSOCIATION – Elcoma, IEMA, FMA
• MARKET RESEARCH AUDIT REPORT – ORG, Nielsen
• OWN METHODS / MODELS
ESTIMATING FUTURE DEMAND 1) What People Say….. Buyer’s opinion, Sale, Expert
1) What People Do….. Test Market Response
1) What People Have Done….. Time services, Statistics
WHAT PEOPLE SAY Survey of Buyer’s Intentions o Do you intend to buy within the next…..month/ yr. No Chance Certain 0.00 100.00 (Purchase Probability Scale) Composite of Sales Force Opinions Expert Opinion: Trade Consultants, Associations.
WHAT PEOPLE DO • TEST MARKET (NEW PRODUCT)
WHAT PEOPLE HAVE DONE • Post Sales Analysis • Time Series • Exponential Smoothing • Statistical Demand Analysis (Casual Factors) • Econometric Analysis
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