The document outlines market demand as the total volume of a product or service purchased by a specified group within a defined area and timeframe. It details various measures of market demand, including potential, target, available, and penetrated markets, as well as methods for estimating current and future demands through techniques such as population indicators and market tests. Additionally, it discusses company sales forecasts, sales quotas, and budgeting in relation to marketing strategies.

1. MARKET DEMAND AND IT'S
MEASUREMENT
BY SANDHYA DEVKOTA
BBA,III SEM(DAY)

2. Market demand
It is the aggregate volume of a
product or service that would be
bought by a defined customer
group in a defined geographical
area in a defined time under
defined marketing environment
and program.
In short, Market demand =
function of ( market area, time
period, marketing environment
and marketing mix)
.

3. MEASURES OF MARKET DEMAND
They are the methods of segregating the
market for demand measurement. They
include potential market, available
market, target market and penetrated
market

4. POTENTIAL MARKET
It consists of a group of potential buyers who have
ample interest in the product and are willing to buy
it although they may or may not be able to afford to
purchase it.
TARGET MARKET
It is a part of available market that consists of
market segments in which the company has
decided to enter and serve.
AVAILABLE MARKET
It is a part of potential market that consists of a
group of customers who have sufficient funds,
interest and access to the offer.
PENERATED MARKET
It is a part of target market that consists of a
group of customers who regularly buy and
consume the company's products.
MEASURES OF
MARKET DEMAND

5. Estimation of Market Demand:
It is conducted at three levels, which
are minimal, maximum and market
sensitivity:
1) Market minimal demand: Minimum
level of market demand that takes
place without any demand stimulation.
2) Market maximum demand:
Maximum level of demand that is
achieved through demand stimulation.
3) Market sensitivity of demand:
Gap between market minimal and
market maximum.

6. Company sales forecasts: The
amount of sales a firm expects to
generate with a chosen marketing plan
in a given marketing environment.
Estimation of Company
demand:
Company demand can be defined as
the company's estimated share of
market demand at alternative levels of
marketing efforts and expenditures in a
defined time period.
It can be estimated on the basis of:
1) Company sales forecasts
2) Sales quota and sales budget
Sales quota and sales budget: The target
that has been set for a particular marketing
parameter or the minimal level of market
demand is known as sales quota. Sales
budget is the analysis of a company's sales
target for a particular period

7. Estimation of Current Demand
Most of the marketing firms estimate market demand for two periods: Current period and Future.
Current demands are estimated to design the marketing mix. It can be estimated using
environmental factors such as total market potential, area market potential, total industry sales
etc.

8. Total market potential
It is the availability of maximum sales for all
the companies in an industry over a certain
time period. The total market potential can
be estimated by the following two
approaches:
1) Population Indicator Method
2) Chain Ratio Method
Population Indicator Method : One of the simplest
method that takes total population of a market and
then deducts the number of people who are not
likely to be the current buyers.
In short, Total market potential = Prospects *
Average quantity of purchase* price
Chain Ratio Method : This method can simply be
implemented by multiplying a base number, such
as total population of the country, by a variety of
adjusting percentages. It requires adequate market
research.

9. Area market potential:
It is calculated to find out potential sales of a particular geographical area, city, region or a
country. The area market demand is estimated through two alternative methods: market build up
and multiple factor indexes.
Market build up:
Very simple method that calls for identifying all potential buyers in each market segments and
estimating their size of purchase. Then, all figures from different segments are added together to
get a precise estimate of area market potential.
Multiple factor index:
This method works best if your business is B2C. Here, factors that influence buying behavior can
be estimated, given specific weights and then rated. It includes a large number of customers.

10. Industry sales and
market share
The total industry
sale is the
combined sales of
all companies
operating in the
market
Once the industry sales figure is available, the firm can
estimate its market share by using the formula :
Market share of a firm =
Total sales of firm/Total sales of industry
For example,
Total sales of noodle in Nepal = 1500 million
Total sales of 2PM in Nepal = 300 million
Now, Market share of 2PM =
Total sales of firm/Total sales of industry
= 300/1500
= 0.2 or 20%
Therefore market share of 2PM is 20%

11. ESTIMATING FUTURE MARKET
DEMAND:
Also known as demand forecasting, it is an art of making
prediction of what customers are likely to do under given
circumstances. It is more difficult and complex process
as it is affected by several unstable variables operating in
micro and macro environment of marketing. Future
demand can be forecasted through following
approaches:
1) Opinion based forecasts
​2) Past sales trend
​3) Market test

12. ESTIMATING FUTURE DEMAND
Forecast
method
Description Use
Survey of
buyers
intentions
Research customers through
surveys about purchase
probability, present and future
finances and expectations
about the economy
The demand for industrial
products, consumer durables,
purchases that need planning
beforehand, and new products
can be predicated.
Composite of
sales force
opinions
Predicting their future sales by
asking the sales
representatives.
To understand developing trends
and gather detailed estimated by
product, territory, customer and
sales representatives.
Expert opinion Collect forecasts from experts,
including dealers, distributors,
suppliers, consultants and
trade associations or buy from
economic-forecasting firms.
To gather estimates from well
informed experts who may offer
internal perception.

13. Forecast
method
Description Use
Past-sales
analysis
Use time-series analysis,
exponential smoothing, statistical
demand analysis, or econometric
analysis to assess past sales as
the foundation of sales forecasts.
To predict future demand
based on analysis of past
demand.
Market test
method
Conduct a direct-market test to
understand customer response
and gauge future sales.
To forecast sales of new
products or sales of an
established and acclaimed
product in a new channel
or area.

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ATTENTION
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