This document discusses market measurement and forecasting. It explains that marketers measure and forecast the size, growth, and profit potential of market opportunities to identify opportunities and inform decision making. Several methods of measuring the total market, areas within the market, and individual company market share and sales are described, including using total numbers of potential buyers, average purchase quantities and prices, and statistical indices. Demand forecasting is important for production planning, cost control, pricing, and marketing program development. Forecasts rely on past sales data, surveys of intended buyer behavior, expert opinions, and test market results.

1. By:-
Pragna Patel
PGDM 1st year
Nova Business school

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. 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. Levels of market measurement
Consumer level
Product level
Geographic level
Time level

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. 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

7. Methods of market measurement
Total market potential
Area market potential
Total industry sales and market shares

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. 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. 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. Forecasting Demand and
Measurement
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. 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. 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. Market demand function

15. Major Concepts in Demand
Measurement
1. Market demand
2. Company demand
Demand function
Sales forecast
Potential

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. Market Demand and Company
Demand
Company Demand
Is the company’s estimated share of market demand at
alternative levels of company marketing effort at a
given time period

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. 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. 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