Post on 22-Nov-2014
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By:-Pragna PatelPGDM 1st yearNova Business school
IntroductionMarket measuring and forecasting requires an
analysis of the market with an aim of expressing it in quantitative (numeric) quantities both present and in the future.
The quantitative measurement and forecasting of the market, together with its qualitative characteristics, are used as a basis for decision making by marketing management.
Once the research is complete, the company must measure and forecast the size, growth, and profit potential of each market opportunity
Need for measurement and forecasting
The main goal of market measurement and forecasting is to serve as an aid in the decisions that marketing management has to make.
Knowledge of market sizes and probable growth patterns provide the basis for the selection of attractive markets.
It helps in taking decisions in a more objective and scientific manner and to lessen the risk and uncertainty that accompany subjective decisions and guesswork.
It helps organization to decide how best to allocate its marketing resources and activities among market segments in which it is already active.
Levels of market measurementConsumer level Product level Geographic levelTime level
Relevant markets for measurementPotential market Available market Target market Penetrated market
Total market (eg South Africa in total)
100%
Available market (eg metropolitan areas)
60%
Target market (eg age group 15-35)
40%
Penetrated market (actual buyers)
20%
Indicators for evaluating companies competitive position in the market Sales potential
refers to the quantitative indication of what the organization's probable sales in a total market, available market and/or target market should be in view of various possible marketing effort.
Market share indicates the relationship of an organization's sales to the sales of all
participants (competitors) in the same market
It must be noted that these two measures of market share can differ for the same company
Methods of market measurementTotal market potentialArea market potentialTotal industry sales and market shares
Total market potentialThe basic method
Q = n x q x p
where: Q = total market demand n = total number of buyers in the market q = average quantity purchased by a buyer per time
period p = average price of the product per time period
Area market potentialMarket build-up method –business marketers
The method involves the determination of all potential buyers of the product and the quantities they will buy.
The Multiple-factor index method-consumer marketersThe method is based on a statistical index calculated
from the number of potential buyers that form part of a specific market and should be used as a relative measure.
A market index can then be calculated from the various applicable indices for that particular region or market.
Total industry sales and market shares The industry trade association will often collect and publish total industry
sales, although it usually does not list individual company sales separately. With this information, each company can evaluate its performance against the whole industry .
Another way to estimate sales is to buy reports from a marketing research firm that audits total sales and brand sales.
Forecasting Demand and MeasurementPurpose:
Identify market opportunitiesHow:
Measure and forecast size, growth and profit potential of market opportunities
Who: Marketers are responsible for preparing sales
forecast which are based on estimates of demand
Why demand forecastingAppropriate production scheduling so as to avoid the
problem of over-production & the problem of short-supply.Helping the firm to reducing costs of purchasing raw
materials.Determining appropriate price policy.Setting sales targets & establishing controls & incentives.Evolving a suitable advertising & promotion programme.Forecasting short-term financial requirements.
Market Forecast and Market Potential
Market ForecastMarket demand corresponding to the level of
Industry marketing expenditure.
Market PotentialIs the limit approached by the market demand
as an industry marketing expenditures approach infinity for a given marketing environment.
Market demand function
Major Concepts in Demand Measurement
1. Market demand
2. Company demand Demand function Sales forecast Potential
Market Demand and Company DemandMarket Demand
total volume that would be bought.
A defined marketing program
by a defined customer group
in a defined geographical area
in a defined time period
in a defined marketing
environment
Market Demand and Company DemandCompany Demand
Is the company’s estimated share of market demand at alternative levels of company marketing effort at a given time period
Company Sales Forecast and Sales Potential
Company Sales ForecastIs the expected level of company sales based on a
chosen marketing plan and an assumed target market
Company Sales Potential is the sales limit approached by company demand as a
company marketing effort increases relative to that of competitors
Estimating Future DemandAll forecasts are built on one of the three
information bases:1. What people say. (Survey)
2. What people do (Test Market)
3. What people have done. (Buying History)
Estimating Future DemandIt can be estimated bySurvey of buyers behavior
Experts opinion
Composite of sales force opinion
Past sales analysis
Market test method