Demand Forecasting & Market Potential Analysis

Research-MeaningWhy people undertake research?

Definition-Marketing Research(MR) “MR refers to the systematic gathering, recording and analysing of data about problems relating to marketing of goods & services.”

-By A.M.A.

“MR is the systematic design, collection, analysis, and reporting of data & findings relevant to a specific marketing situation facing the company.”

- By Philip Kotler

The most common MR activities Determination of mkt. characteristicsMeasurement of mkt. potentialsMkt. share analysisSales analysisStudies of business trendsCompetitive product studiesNew product acceptance & potentialPricing studies, etc.

Market Research-Definition “It deals with actual & potential buyers and a specific market.”

e.g. Formulation of mktg. mix for a urban or rural or metro market.

Example-HUL gets the managers to interact directly with

consumers to minimise risk.It launched a programme called “Consumer

Windows in Jan.2000” This focuses upon consumers life in general-

what matters to him/her, his/her life style, etc.The inputs are all documented on what the

company calls DOCKETS (Dossier in Consumer Knowledge, Experiences and Trends)

This data can be referred to at a later date.

Research Process-Steps involved in research process1. Define R. problem -focus manner2. Review of literature -Books, websites,etc.3. Research objectives -specific, measurable, attainable4. R.design -scope,time,entire frame work5. Sampling design

6.Formulation of hypothesis(if any)

7.Data collection8.Analysis of data9.Results & inferences10.Preparation of report and presentation/Report writing

MIS - IntroductionWhenever we study-Mktg. plans, mktg, strategies, sales forecasting & mktg. control, etc.

We realise that every decision area of mktg. needs the support of mktg. information.

MIS-Definition “ A continuously interacting structure of people, equipment & procedure to gather, sort, analyse, evaluate and distribute relevant, accurate & timely information to the marketing decision makers.”

Advantages of MIS to an OrganisationHelps in mktg. planning by making available the

right information at the right time, place & price.Helps in effective tapping of mktg. opportunities

& protection from mkt. threats.Provides information about the changing trends

through mkt. intelligence.Helps in adaptation of mkt. offerings as per the

changing tastes of customers.Better quality of mktg. information improves the

quality of mktg. decisions.Helps in controling the mktg. activities.

What is forecating?It helps in analysing mkt. opportunities & developing & monitoring an effective mktg. programme.

Demand implies 3 things: 1.Willingness to buy a

product(interest)2.Ability(money)3.Willingness to purchase it with

the above means (access)

Demand depends on several factorsPrice of productPrice of substitutesIncome levelTastes & preferencesSize & composition of population, etc.

Market demand-Definition It 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 programme.

It is not a fixed no. but a function of specific conditions.

It is called ‘mkt. demand function or mkt.response function’

It may be estimated per product, per pdt. line, per region, per zone, etc. demand depends to a large extent on the mktg. programme.

What is demand forecasting?(D.F.)An activity of estimating the quantity of

a pdt/service that consumers will purchase.

It is the prediction of what will happen to your company’s existing pdt. sales.

It would be the best to determine D.F. using multi-functional approach.

The final D.F. is the consensus of all participating managers.

Marketing forecastIt indicates how much of a product is likely to be bought by customers during a specified future period in a specified mkt. at specified prices.

In context of sales, it is called -----------

Company sales forecast-It is the expected volume it would sell during a future period with its specified mktg. plan and tactics in the given mktg. environment.

Company Potential It is a quantitative estimate of the total possible sales of a product of a company under the highest mktg. effort made by the company.

Market potential It is a quantitative estimate of the total possible

sales by all the firms selling the pdt.in a specified market.

It is an estimate of sales under most favourable conditions.

It is given by, Q=nqp

Where, Q= Total mkt. potential

n=No. of buyers in a mkt.

q=Quantity purchased by an average buyer

p=Average price per unit

What is Market Potential Analysis(MPA)It reveals the potential demand for pdts. &

services in a market.Got Growth –

. Discover demand for your pdts. & s/cs

.Rank & prioritize markets to enter.

.Find unfulfilled potential in existing mkts.

Benefits of MPA-Understand mkt. potential for a single

store, network of stores or for new mkts.

Deploy resources effectively by ranking mkts. in priority order.

Forecast total opportunity in terms of no. of customers & revenue potential.

Estimate your mkt. share