Market measurement

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Market measurement

  1. 1. By:-Pragna PatelPGDM 1st yearNova Business school
  2. 2. IntroductionMarket 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
  3. 3. 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.
  4. 4. Levels of market measurementConsumer levelProduct levelGeographic levelTime level
  5. 5. Relevant markets for measurementPotential market Total market (eg South 100% Africa in total)Available marketTarget market Available market (eg 60% metropolitan areas)Penetrated market Target market (eg age 40% group 15-35) Penetrated market (actual 20% buyers)
  6. 6. Indicators for evaluating companiescompetitive position in the marketSales potential  refers to the quantitative indication of what the organizations 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 organizations 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
  7. 7. Methods of market measurementTotal market potentialArea market potentialTotal industry sales and market shares
  8. 8. Total market potentialThe basic method Q=nxqxp  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
  9. 9. Area market potentialMarket 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 marketers  The 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.
  10. 10. 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.
  11. 11. Forecasting Demand andMeasurementPurpose:  Identify market opportunitiesHow: 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
  12. 12. Why demand forecasting Appropriate 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.
  13. 13. Market Forecast and Market PotentialMarket Forecast Market demand corresponding to the level of Industry marketing expenditure.Market Potential Is the limit approached by the market demand as an industry marketing expenditures approach infinity for a given marketing environment.
  14. 14. Market demand function
  15. 15. Major Concepts in DemandMeasurement 1. Market demand 2. Company demand Demand function Sales forecast Potential
  16. 16. Market Demand and Company DemandMarket Demand total volume that would be bought. A defined marketing program by a defined in a defined in a defined in a defined customer group geographical area time period marketing environment
  17. 17. Market Demand and CompanyDemandCompany Demand Is the company’s estimated share of market demand at alternative levels of company marketing effort at a given time period
  18. 18. Company Sales Forecast and Sales PotentialCompany Sales Forecast  Is 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
  19. 19. Estimating Future DemandAll 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)
  20. 20. Estimating Future Demand It can be estimated by  Survey of buyers behavior  Experts opinion  Composite of sales force opinion  Past sales analysis  Market test method

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