Marketing Strategy Mostafa Ewees (PhD) Stanford University at California Assistant Professor at German University in Cairo...
Agenda <ul><li>The marketing minute (or five): </li></ul><ul><ul><li>Jessica </li></ul></ul><ul><ul><li>Muzghan </li></ul>...
The Marketing Minute
Class objectives <ul><li>Compare and contrast the different methods of calculating and forecasting market demand estimates...
Our perspective in this class <ul><li>The Chain of Marketing Productivity </li></ul>
Understanding  Customer Behavior Opportunity Assessment Marketing Strategy Marketing Assets Segmentation Targeting Positio...
Some theory <ul><li>Assessing & Estimating Market Demand </li></ul>
Market definitions <ul><li>Market demand – total volume that would be bought by: </li></ul><ul><ul><li>a defined customer ...
Methods for market demand assessment <ul><li>Estimates provided by information suppliers (e.g. AC Nielsen) </li></ul><ul><...
Methods for market demand assessment <ul><li>Top-down: Chain ratio method </li></ul><ul><ul><li>String chain of percentage...
Recommendations for market demand assessment <ul><li>Simpler methods are frequently preferred </li></ul><ul><li>Use severa...
The Product Development Process Concept  Development  and Testing Marketing  Strategy Development Idea  Screening Idea Gen...
<ul><li>Unaware </li></ul><ul><li>Aware </li></ul><ul><li>Interested </li></ul><ul><li>Consider </li></ul><ul><li>Trial </...
Analyzing Consumer Preferences – Concept Testing <ul><li>Presenting the product concept, symbolically or physically, to ta...
Analyzing Consumer Preferences – Conjoint Analysis <ul><li>Products as a bundle of attributes </li></ul><ul><li>Estimate a...
Analyzing Consumer Preferences – Conjoint Analysis <ul><li>Main steps: </li></ul><ul><ul><li>Define the levels of each att...
The case <ul><li>Nestle Refrigerated Foods </li></ul><ul><li>Contadina </li></ul>
<ul><li>Would you launch? </li></ul>
Would you launch?
Nestle Refrigerated Foods: Contadina <ul><li>Using the BASES model described in Exhibit 9, forecast the estimated demand (...
Here I am, stuck in the middle with you?
What Nestle Refrigerated Foods did next <ul><li>Cunliffe launched Contadina Pizza on a national basis without the benefit ...
Class objectives <ul><li>Compare and contrast the different methods of calculating and forecasting market demand estimates...
Homework for next class <ul><li>Delivering & Capturing Customer Value </li></ul><ul><li>Read : Major Sales: Who Really doe...
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Marketing Strategy Assessing &amp; Estimating Market Demand

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Marketing Strategy Assessing &amp; Estimating Market Demand

  1. 1. Marketing Strategy Mostafa Ewees (PhD) Stanford University at California Assistant Professor at German University in Cairo (GUC) EDUCATIONAL CONSULTANT Assessing & Estimating Market Demand
  2. 2. Agenda <ul><li>The marketing minute (or five): </li></ul><ul><ul><li>Jessica </li></ul></ul><ul><ul><li>Muzghan </li></ul></ul><ul><li>Class objectives for this session </li></ul><ul><li>Some theory </li></ul><ul><li>Introduction to Contadina case: </li></ul><ul><ul><li>Richard </li></ul></ul><ul><ul><li>Casey </li></ul></ul><ul><li>The Nestle Refrigerated Foods – Contadina Case </li></ul><ul><li>Homework for next class </li></ul>
  3. 3. The Marketing Minute
  4. 4. Class objectives <ul><li>Compare and contrast the different methods of calculating and forecasting market demand estimates. </li></ul><ul><li>Illustrate and evaluate the new product development process for consumer packaged goods. </li></ul><ul><li>Illustrate market research techniques employed to gauge consumer preferences and demand. </li></ul><ul><li>Analyze and interpret research findings to determine market acceptance for a product. </li></ul><ul><li>Identify the different stages in the consumer decision-making process. </li></ul><ul><li>Explain how marketers may implement effective marketing strategies to influence the decision outcome at each stage of the consumer decision-making process. </li></ul>
  5. 5. Our perspective in this class <ul><li>The Chain of Marketing Productivity </li></ul>
  6. 6. Understanding Customer Behavior Opportunity Assessment Marketing Strategy Marketing Assets Segmentation Targeting Positioning 4Ps: . Product . Price . Distribution . Promotion Financial Position The Chain of Marketing Productivity
  7. 7. Some theory <ul><li>Assessing & Estimating Market Demand </li></ul>
  8. 8. Market definitions <ul><li>Market demand – total volume that would be bought by: </li></ul><ul><ul><li>a defined customer group </li></ul></ul><ul><ul><li>in a defined geographical area </li></ul></ul><ul><ul><li>in a defined time period </li></ul></ul><ul><ul><li>in a defined marketing environment </li></ul></ul><ul><ul><li>under a defined marketing program </li></ul></ul><ul><li>Market potential – limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment </li></ul><ul><li>Company demand – company’s estimated share of market demand at alternative levels of company effort in a given time period. </li></ul>
  9. 9. Methods for market demand assessment <ul><li>Estimates provided by information suppliers (e.g. AC Nielsen) </li></ul><ul><ul><li>Point of sale store scanner data </li></ul></ul><ul><ul><li>Consumer panel data </li></ul></ul><ul><ul><li> Not available in all the countries </li></ul></ul><ul><ul><li> Normally expensive </li></ul></ul><ul><li>Analogy method </li></ul><ul><ul><li>Extrapolate from the relationship between indicators and demand in another country </li></ul></ul><ul><ul><li>What indicators to use? </li></ul></ul><ul><ul><li>Which country to use as comparison? </li></ul></ul>
  10. 10. Methods for market demand assessment <ul><li>Top-down: Chain ratio method </li></ul><ul><ul><li>String chain of percentages </li></ul></ul><ul><ul><li>Country data to product-level data </li></ul></ul><ul><li>Bottom-up approach </li></ul><ul><ul><li>Start with: What is required for consumer to buy product? Identify all potential buyers in each market and estimate their potential purchases </li></ul></ul><ul><li>Cross-sectional regression analysis </li></ul><ul><li>Judgmental methods (e.g. composite of sales force opinions, expert opinions) </li></ul>
  11. 11. Recommendations for market demand assessment <ul><li>Simpler methods are frequently preferred </li></ul><ul><li>Use several methods simultaneously </li></ul><ul><li>Understand why differences may occur </li></ul><ul><li>Do a sensitivity analysis </li></ul><ul><li>Use interval as opposed to point estimates </li></ul><ul><li>Develop customized indicators which are specific to the product-market in question </li></ul><ul><li>Favor observations of behavior over reports of opinion </li></ul><ul><li> Don’t be mislead by the numbers! Make sure you know the reasoning behind them. </li></ul>
  12. 12. The Product Development Process Concept Development and Testing Marketing Strategy Development Idea Screening Idea Generation Analysis Sales, Costs, Profits Product Development Market Testing Commerciali- zation
  13. 13. <ul><li>Unaware </li></ul><ul><li>Aware </li></ul><ul><li>Interested </li></ul><ul><li>Consider </li></ul><ul><li>Trial </li></ul><ul><li>Repeat </li></ul>Consumer Decision Making – Hierarchy of Effects Model
  14. 14. Analyzing Consumer Preferences – Concept Testing <ul><li>Presenting the product concept, symbolically or physically, to target consumers and getting their reactions </li></ul><ul><ul><li>Communicability (clear benefits) and believability </li></ul></ul><ul><ul><li>Need level – does the product solve a problem of fill a need </li></ul></ul><ul><ul><li>Gap level – do other products currently meet this need and satisfy you? </li></ul></ul><ul><ul><li>Perceived value – is the price reasonable in relationship to value? </li></ul></ul><ul><ul><li>Purchase intention </li></ul></ul><ul><ul><li>Who would use this product, when and how often </li></ul></ul><ul><li>Relatively inexpensive, easily understood but: </li></ul><ul><ul><li>Main problem: If consumers rate the product concept poorly, how do we fix it? </li></ul></ul>
  15. 15. Analyzing Consumer Preferences – Conjoint Analysis <ul><li>Products as a bundle of attributes </li></ul><ul><li>Estimate attribute utilities (weights) by decomposing overall product preference ratings </li></ul><ul><li>Basic idea: </li></ul><ul><ul><li>By forcing consumers to make trade-offs among product attributes, we can determine the value of each attribute considered individually. </li></ul></ul><ul><li>Main Steps: </li></ul><ul><ul><li>Define the product concept </li></ul></ul><ul><ul><li>Define the relevant attributes; use focus groups and depth interview </li></ul></ul><ul><ul><ul><li>Attributes should be actionable </li></ul></ul></ul>
  16. 16. Analyzing Consumer Preferences – Conjoint Analysis <ul><li>Main steps: </li></ul><ul><ul><li>Define the levels of each attribute </li></ul></ul><ul><ul><ul><li>Look for extremes (consult R&D) </li></ul></ul></ul><ul><ul><ul><li>Look for saturation effects (focus groups and interviews) </li></ul></ul></ul><ul><ul><li>Choose a sample size and respondent type </li></ul></ul><ul><ul><li>Perform study </li></ul></ul><ul><ul><li>Interpretation, and further study </li></ul></ul><ul><ul><ul><li>Generate “Ideal” products </li></ul></ul></ul><ul><ul><ul><li>Generate Elasticities </li></ul></ul></ul><ul><ul><li>Value systems are estimated at the individual level </li></ul></ul><ul><ul><ul><li>Can be useful method for defining market segments based on differing attributes of importance </li></ul></ul></ul>
  17. 17. The case <ul><li>Nestle Refrigerated Foods </li></ul><ul><li>Contadina </li></ul>
  18. 18. <ul><li>Would you launch? </li></ul>
  19. 19. Would you launch?
  20. 20. Nestle Refrigerated Foods: Contadina <ul><li>Using the BASES model described in Exhibit 9, forecast the estimated demand (trial and repeat) for the two Pizza options under consideration. </li></ul><ul><li>What can one learn from Exhibits 13, 14, 15? </li></ul><ul><li>How does the pizza concept test data (Exhibits 19, 20, 21) compare to the pasta concept test data (Exhibit 6)? </li></ul><ul><li>What is your reading of Exhibits 23 and 24 (include Exhibit 18 if you wish)? </li></ul><ul><li>In general, how would you compare the pizza opportunity to the pasta opportunity? What are the similarities? Differences? </li></ul><ul><li>Why was the pasta product so successful? </li></ul><ul><li>Would you launch the pizza? </li></ul>
  21. 21. Here I am, stuck in the middle with you?
  22. 22. What Nestle Refrigerated Foods did next <ul><li>Cunliffe launched Contadina Pizza on a national basis without the benefit of a test market </li></ul><ul><li>Product performed below expectations in sales, market share, and profitability </li></ul><ul><li>The marketing mix was changed, but sales did not improve </li></ul><ul><li>Due to inflexible manufacturing capacity, the price could not be cut </li></ul><ul><li>Pricing and product positioning were the main reasons for the product’s subsequent failure </li></ul>
  23. 23. Class objectives <ul><li>Compare and contrast the different methods of calculating and forecasting market demand estimates. </li></ul><ul><li>Illustrate and evaluate the new product development process for consumer packaged goods. </li></ul><ul><li>Illustrate market research techniques employed to gauge consumer preferences and demand. </li></ul><ul><li>Analyze and interpret research findings to determine market acceptance for a product. </li></ul><ul><li>Identify the different stages in the consumer decision-making process. </li></ul><ul><li>Explain how marketers may implement effective marketing strategies to influence the decision outcome at each stage of the consumer decision-making process. </li></ul>
  24. 24. Homework for next class <ul><li>Delivering & Capturing Customer Value </li></ul><ul><li>Read : Major Sales: Who Really does the Buying (HBR) </li></ul><ul><li>Case : Salesoft (HBS case) </li></ul><ul><li>The second of eight cases eligible for write-up </li></ul><ul><li>Case intro: Lanz Cook </li></ul><ul><li>Niki Craig </li></ul><ul><li>Marketing Minute: Renee Johnson </li></ul><ul><li>Atif Zaidi </li></ul>
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