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 levelProduct levelGeographic levelTime level
Relevant markets for measurementPotential market Total market (eg South 100% Africa in total)Available marketTarget market Available market (eg 60% metropolitan areas)Penetrated market Target market (eg age 40% group 15-35) Penetrated market (actual 20% buyers)
Indicators for evaluating companiescompetitive position in the marketSales 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
Methods of market measurementTotal market potentialArea market potentialTotal industry sales and market shares
Total market potentialThe 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
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 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.
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 andMeasurementPurpose: Identify market opportunitiesHow: Measure and forecast size, growth and profit potential of market opportunitiesWho: Marketers are responsible for preparing sales forecast which are based on estimates of demand
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.
Market Forecast and Market PotentialMarket 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.
Major Concepts in DemandMeasurement 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 in a defined in a defined in a defined customer group geographical area time period marketing environment
Market Demand and CompanyDemandCompany 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 PotentialCompany Sales Forecast Is the expected level of company sales based on a chosen marketing plan and an assumed target marketCompany 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 Demand It can be estimated by Survey of buyers behavior Experts opinion Composite of sales force opinion Past sales analysis Market test method