Strategic Marketing Unit 6: Market And Demand Forecasting PDF

STRATEGIC MARKETING UNIT 6: MARKET AND DEMAND FORECASTING 6.1. DEMAND DIMENSIONS Companies must measure and forecast the size, growth and profit potential of each market opportunity. Market forecast: is done by the Marketing Department. FINANCE DEPARTMENT Raise...

STRATEGIC MARKETING UNIT 6: MARKET AND DEMAND FORECASTING 6.1. DEMAND DIMENSIONS Companies must measure and forecast the size, growth and profit potential of each market opportunity. Market forecast: is done by the Marketing Department. FINANCE DEPARTMENT Raise the needed cash for sales and operations MANUFACTURING DEPARTMENT Establish capacity and output levels PURCHASING DEPARTMENT Acquire the right amount of suppliers HUMAN RESOURCES Hire the necessary number of workers MEASURES OF THE MARKET DEMAND HOW TO BREAK DOWN THE MARKET Potential market: set of consumers with enough level of interest in a value proposition. Available market: set of consumers with interest income and access to a particular value proposition. Target market: set of consumers withing the available market that a company decides to pursue. Penetrated market: set of consumers buying the company´s product. 1 STRATEGIC MARKETING 6.2. MEASURING DEMAND Two major concepts: Market demand Company demand Three ideas: Demand function Sales forecast Sales potential / market potential 6.3. DEMAND FORECASTING Total market potential: maximum amount of sales that might be available to all the firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑏𝑢𝑦𝑒𝑟𝑠 𝑥 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑥 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑝𝑎𝑖𝑑 𝑝𝑟𝑖𝑐𝑒 = 𝑡𝑜𝑡𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 The chain – ratio method: 2 STRATEGIC MARKETING METHODS TO ESTIMATE FUTURE DEMAND: 1. Survey of buyers´ intentions 2. Composite of sales force opinions 3. Expert opinions 4. Past sales analysis 5. Market – test analysis SURVEY OF BUYERS´ INTENTIONS Do you intend to buy an automobile withing the next six months? Inquires into consumer´s present and future: Personal finances Expectations on the economy COMPOSITE OF SALES FORCE OPINIONS Ask your sales representatives to estimate their future sales Sales representatives are in touch with the market They cam be optimistic, or pessimistic They may be biased to suggest lower forecasts so that their sales targets are set lower. EXPERT OPINIONS Dealers, distributors, suppliers, marketing consultants They also have strengths and weaknesses Specialized companies PAST SALES ANALYSIS Time series ARIMA models Econometrics MARKET – TEST ANALYSIS A direct market test can help forecasting in new environments or new products where other methods fail. 3 STRATEGIC MARKETING 4