Podcast
Questions and Answers
What is the primary purpose of market forecasting within a company?
What is the primary purpose of market forecasting within a company?
Which of the following best defines the 'potential market'?
Which of the following best defines the 'potential market'?
Which method of estimating future demand relies heavily on direct consumer input?
Which method of estimating future demand relies heavily on direct consumer input?
What does the total market potential represent?
What does the total market potential represent?
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What is the function of the finance department when it comes to market demand?
What is the function of the finance department when it comes to market demand?
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Which demand concept refers to how much of a product consumers are willing to purchase at a given price?
Which demand concept refers to how much of a product consumers are willing to purchase at a given price?
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What can bias sales force opinions when estimating future sales?
What can bias sales force opinions when estimating future sales?
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Which of these options represents a key factor in the estimation of total market potential?
Which of these options represents a key factor in the estimation of total market potential?
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Study Notes
Demand Forecasting
- Companies need to measure and forecast market size, growth, and profit potential.
- Market forecasting is done by the marketing department.
- Finance department manages finances for sales and operations.
- Manufacturing department sets production capacity and supplies.
- Purchasing department secures necessary supplies.
- Human resources hires the necessary employees.
Measures of Market Demand
- World, regional, territorial, customer-based sales are important measures.
- Industry sales and company sales are also considered.
- Product level breakdowns, including line sales, form sales, and item sales, are crucial.
- Forecasts are categorized by short-term, medium-term, and long-term time horizons.
How to Break Down the Market
- Potential market: consumers with interest in a value proposition.
- Available market: consumers with interest and access to a value proposition.
- Target market: consumers within the available market a company chooses to serve.
- Penetrated market: consumers currently buying the company's product.
Measuring Demand
- Two key concepts: market demand and company demand.
- Demand function is a critical concept.
- Sales forecasts and sales potential/market potential are important forecasting ideas.
Demand Forecasting
- Total market potential is the maximum sales achievable by all companies in an industry during a specific period, given marketing efforts and environment.
- The chain-ratio method calculates total market potential by multiplying factors including: population figures, the use of discretionary income to purchase a product, and the average paid price.
Methods to Estimate Future Demand
- Buyer intent surveys, composite sales force opinions, expert opinions, past sales analysis, and market test analyses can help forecast future sales.
- Buyer surveys inquire about future purchase plans.
- Sales representatives' opinions, along with those of industry experts, are valuable forecasting tools.
- Past sales data analysis to identify trends and patterns can be used to predict future sales.
- Market tests that involve direct tests of a product in a limited market can provide useful data in certain conditions.
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Description
This quiz explores the essential concepts of demand forecasting, including market size measurement, growth projections, and profit potential. It delves into the roles of various departments and the importance of categorizing forecasts based on time horizons and market breakdowns. Test your knowledge on how businesses assess and leverage market demand.
